A Capital Expenditure is something you buy that (a) is expensive (costs more than $5000, according to current IRS definitions) AND (b) you will use for more than a year. Preparation:

1. Think about the definition above. What would be an example of a typical Capital Expenditure for a...

Construction company? Bank? Restaurant? Auto body shop? Videogame developer? Accounting firm?

Try to name at least one example for each of these types of businesses, to make the concept tangible to you.

2. Now think about how Capital Expenditures are different from Cost of Goods? Try answering this in one sentence in your own words, as if you were helping a classmate understand it. If you find yourself struggling, go back a page and do some more reading/refreshing yourself. If it helps, contact your study buddy to test your explanation!

3. Now think about how Capital Expenditures are different from Operating Expenses (aka Fixed Costs)? Again, try answering this in one sentence in your own words, as if you were explaining it to a peer. If it's difficult, do more research and/or call a peer now.