Question on: JAMB Economics - 2003
The distinction between capital and recurrect expenditure lies in the
A
nature of the goods and services to be provided
B
time frame of the expenditure
C
source of the revenue generated
D
amount of expenditure involved
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Correct Option: B
The distinction between capital and recurrent expenditure lies primarily in the time frame or the longevity of the benefits derived from the expenditure.
- Recurrent expenditure: This type of spending is for day-to-day operational expenses. These are usually short-term expenditures that are consumed or used up within a year. Examples include salaries, rent, and the purchase of consumable goods.
- Capital expenditure: This type of spending is for assets that have a long-term benefit, usually lasting for more than a year. They are investments in long-term assets like buildings, machinery, and infrastructure.
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