Match the Proper Deduction Method with the Correct Expenditures

question 85

Multiple Choice

Match the proper deduction method with the correct expenditures.
-Start-up costs over $5,000.

• A)Capitalized and amortized over a number of accounting periods
• B)Expensed in the period incurred
• C)Not deductible
• D)Can be capitalized and amortized or deductible depending on the amount of the expenditure

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Definitions:

Indirect Methods

A technique used in cash flow statement preparation that adjusts net income for changes in balance sheet accounts to calculate operating cash flow.

Direct Methods

A way to prepare the cash flow statement where actual cash flow information from the company’s operations is used, directly showing sources and uses of cash.

Operating Activities

Activities that constitute the primary or main activities of an organization, such as sales of goods or services, and are reported on the statement of cash flows.

Operating Expenses

Costs associated with the day-to-day functions of a business like rent, utilities, and salaries, excluding the cost of goods sold.