What is the difference between capital and current expenses?

Asked over 1 year ago - Chicago, IL

Mainly, I am not too clear on capital and current expenses. What is the difference of the two?


Attorney answers (1)

  1. Dana Whitney Atchley

    Contributor Level 14


    Lawyer agrees

    Answered . Are you asking for tax purposes or as a general matter of accounting? In general, a capital expenditure is a cost you incur to create or purchase a long-lived asset, such as a car, or a computer, or a piece of machinery used in the trade or business. An expense, on the other hand, is, generally speaking, a cost incurred as part of doing business that doesn't create or provide a long-lived asset. A good example is paying the janitor for sweeping up; all you get from that is a clean floor, which will most likely be dirty again within a week's time.

    There are a lot of areas where the distinction is not nearly so clear; for those matters you should be consulting an accountant or a CPA.


Can't find what you're looking for? Ask a Lawyer

Get free answers from experienced attorneys.


Ask now

26,587 answers this week

2,849 attorneys answering

Ask a Lawyer

Get answers from top-rated lawyers.

  • It's FREE
  • It's easy
  • It's anonymous

26,587 answers this week

2,849 attorneys answering

Legal Dictionary


Browse our legal dictionary