The first of these is “capital expenditures” or CAPEX.
CAPEX is a unique category of spending that has significant implications for both taxing and reporting purposes. It’s money that is spent to create a new business asset, i.e. money spent on land, buildings, equipment, and certain types of intellectual property. In other words, it’s something the business will reap value from for a long time.
The other term is “operating expenditures” or OPEX.
OPEX is all the money spent in the business that is not CAPEX. Basically, it means all the money used to run current business operations.
One way of thinking about these is: CAPEX is money spent to create future business value, and OPEX is money spent to run the business currently.