Examples of Expenditures That Are Not Part of the Cost

question 17

Multiple Choice

Examples of expenditures that are not part of the cost of an intangible asset include:

• A)costs of testing that the asset is functioning properly
• B)costs of employee benefits arising directly from bringing the asset to its working condition
• C)costs of conducting business in a new location or with a new class of customer
• D)none of the above

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Definitions:

Net Income

The sum a company retains as earnings after deducting expenses and taxes from its turnover.

Noncash Charges

Expenses recorded in accounting but do not involve any actual cash flow, such as depreciation or amortization.

Available-For-Sale Securities

Financial instruments that are not classified as held-to-maturity or trading securities, and are instead intended to be sold for reasons other than temporary declines in value.

Unrealized Gain

The potential profit that exists on paper resulting from an investment that has not yet been sold for cash.