If a Cost Is Recorded as an Asset (For Example

question 81

True/False

If a cost is recorded as an asset (for example, prepaid rent for an office building), it becomes an expense when the asset has been consumed.

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Definitions:

Capital Gains

The increase in value of an asset or investment over time, realized upon the sale of that asset.

Residual Dividend Policy

A strategy where dividends paid to shareholders are set as the remaining profits after all project financing and working capital needs are met.

Capital Budget

The process and plan for determining and allocating resources, such as funds and investments, towards major long-term expenditures or projects of a company or government.

Dividend Payout Ratio

The fraction of net income a firm pays to its shareholders in dividends, expressed as a percentage of the company's total earnings.