Question

Net capital spending is equal to:_________.
a. ending net fixed assets minus beginning net fixed assets plus depreciation.
b. ending total assets minus beginning total assets plus depreciation.
c. beginning net fixed assets minus ending net fixed assets plus depreciation.
d. ending net fixed assets minus beginning net fixed assets minus depreciation.
e. ending total assets minus beginning total assets minus depreciation.

Answer 1

Answer:

a. ending net fixed assets minus beginning net fixed assets plus depreciation.

Explanation:

Net capital spending can be defined as the total amount of money being spent by a business firm or an organization for the acquisition of fixed assets such as equipment, plants or factory, property, vehicle, software applications etc in a specific accounting period.

Net capital spending is equal to ending net fixed assets minus beginning net fixed assets plus depreciation. Thus, a change in net fixed assets (ending net fixed assets minus beginning net fixed assets) plus depreciation is used to calculate the net capital spending of a business.

Mathematically, the net capital spending is given by the formula;

$N = (En - Bn) + D$

Where;

N = net capital spending.

En = ending net fixed assets.

Bn = beginning net fixed assets.

D = depreciation of the fixed assets.