Accounting for capital expenditures is an important part of any business’s financial planning. It involves the tracking and recording of long-term investments made by the company, such as buildings, machinery, tools or equipment. Capital expenditures are typically recorded on a balance sheet as either an asset or a liability, depending on the type of expenditure involved. Companies must report their capital expenditure obligations as part of their regular accounting auditing procedure. Properly accounting for and correctly recording capital expenditures helps ensure that businesses have accurate financial information that reflects their true value.