What is Capex and how to pass CWIP entry in system

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Capex stands for capital expenditure, which refers to funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, equipment, or technology.

Capex is used for long-term investments in assets that will provide benefits over a long period of time.
CWIP (Capital Work in Progress) refers to the costs incurred for an asset that is under construction or development.
To pass CWIP entry in the system, the amount spent on the asset under construction is recorded as a debit to the CWIP account and a credit to the corresponding cash or accounts payable account.
Once the asset is completed, the CWIP account is closed and the cost is transferred to the appropriate fixed asset account.
Example: If a company is building a new office building, the costs incurred during the construction phase would be recorded as CWIP until the building is completed and ready for use.

What is Capex and how to pass CWIP entry in system

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