Ah, some lovely financial jargon for you all!
You may have heard of capital expenditure, sometimes called capex, and revenue or operational expenditure, also known as opex. If these terms are a mystery to you, please read on and continue to build your financial knowledge…
Capital expenditure is money invested in the ‘fixed assets’ of your organisation. Fixed assets are items that are usually expected to last for more than one year and typically fall into categories such as land and buildings, office & IT equipment, furniture and fittings and motor vehicles. Capital expenditure is shown on the balance sheet and therefore usually has its own separate budget and can involve considerable spend. The assets your capital expenditure is investing in should give the organisation a healthy return for the money.
Revenue or operational expenditure is money being spent on general, every-day items that are shown in your profit and loss account costs, including stationery, rent, rates, gas & electricity, telephone, travel and entertaining, etc.
So now you know! Are you starting to believe that finance may not to be too complicated after all…?!
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