Capital Expenditure Vs Operating Expense

Capital Expenditure (or “CapEx”) is the money that a business spends on acquiring or upgrading physical assets such as buildings and machinery, while Operating Expense (or “OpEx”) represents the costs incurred by a business to operate day-to-day. The distinction between CapEx and OpEx can be seen in the way each is accounted for on the balance sheet. CapEx is typically a one-time expense that is recorded as an asset and depreciates over its useful life, while OpEx is recorded as an expense in the current period and does not create any long-term asset value.