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what are the differences between the cash disbursement and the capital expenditure?
Disbursement is the act of paying out or disbursing money, which can ... the money flowing out of a business and may differ from actual profit or loss.
capital expenditure is money spent by a business or organization on acquiring or maintaining fixed assets, such as land, buildings, and equipment
An expenditure is a payment or disbursement. The expenditure may be for the purchase of an asset, a reduction of a liability, a distribution to the owners, or it could be an expense. For instance, an expenditure to eliminate a liability is not an expense, while expenditures for advertising, salaries, etc. will likely be recorded immediately as expenses.
Cash disbursement is mainly on account of Expenses, which benefits the organization for short term ex. Rent, Telephone Charges, Electricity, etc. Whereas Capital Expenditures are mainly on acquisition of Assets, which has useful life of more than 12 months (or 1 Year) and provides long term benefit.
Certainly, there are differences between the cash disbursement and the capital expenditure. Let us define first each term before outlining their differences.
Cash disbursements, also called cash payments, in accounting refer to payments made by a company during a specified period, such as quarter or year. It includes payments made by cash, but also by cash equivalents like checks or electronic fund transfers.
Capital expenditure or capital expense ("CAPEX") is an expense where the benefit continues over a long period, rather than being exhausted in a short period. Such expenditure is of a non-recurring nature and results in acquisition of permanent assets. It is thus distinct from a recurring expense
Now, with a better understanding of both terms, we can now outline their difference:
Cash disbursements encompasses all kinds of payments in the form cash & cash equivalents whether the payment is for a capital expenditure which is non-recurring in nature or a regular expense of the company in the ordinary course of business which includes but is not limited to salaries expense, advertising, rent expense, payment of accounts payable and etc.
Cash disbursement is like paying back the cash expensed out for a project
Capital expenditure are the expenses which are for fixed assets