Free «Saving and Spending Money on Capital Assets» Essay
With the continued cropping up of different business activities today, business owners are faced with the challenge of having to manage the business resources effectively. This is by ensuring that the necessary capital assets and the other required business resources are always in place. Business strategists and economists have therefore commonly argued that this can only be achieved by good planning and by ensuring that there are always funds to be spent on such assets and the required resources. This write-up discusses the means by which business owners can manage to obtain money for expenditure on the capital assets while saving at the same time.
According to Sherman (2012), capital assets are types of property held by business in order to help generate income. These assets may include machinery, business vehicles, land, buildings and other equipment. They are normally held by a business for a long time. Therefore, in order to purchase and maintain such assets, any business has to spend money from its income and, at the same time, save for the other future activities.
The ability of business to save and spend money on capital assets at the same time is made possible by the fact that businesses normally make profits which are put into such activities. This can be achieved by using some part of the profits of businesses to purchase and maintain capital assets. Sherman (2012) notes that some portion can also be saved for future activities before the rest can be distributed to the owners as dividends.
Sander, Lambert & Entrepreneur Magazine (2006) also notes that a business can save and create money for spending on capital assets by economically using the available resources. This can be achieved by limiting the unnecessary expenditures, which in the long run ensures that money is saved for the capital assets’ acquisition. Additionally, they state that a business may create a special fund for the purchase of capital assets, which will then ensure that there will always be money saved for use in other business activities.
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A business can also raise money for spending on capital assets by selling obsolete assets. This also ensures that some money is saved on the cost of replacing the old assets.
Finally, a business may save money from the capital allowances, which are normally granted by the government on some particular capital assets such as machinery (Sander, Lambert & Entrepreneur Magazine, 2006).
In conclusion, with a proper business plan and management, it is very possible for a business to save and, at the same time, spend its money on purchase and maintenance of capital assets.