Which items are categorized as capital items?

• A. Buildings, Equipment, and Furniture
• B. Overhead Costs
• C. Salaries and Benefits
• D. PRN Staff

Answer: (A)

Capital items are long-term assets that provide value for more than one year and are recorded on the balance sheet and depreciated over their useful life. Buildings, equipment, and furniture fit this category because they are tangible assets used to operate the business over many years. In contrast, overhead costs, salaries and benefits, and PRN staff are ordinary operating expenses incurred in the current period and are expensed rather than capitalized, so they’re not capital items.