Capitalizing an Expenditure Rather Than Recording It as a Revenue

question 150

Multiple Choice

Capitalizing an expenditure rather than recording it as a revenue expenditure

• A)impacts the total book value of plant assets reported on the balance sheet and the amount of net income reported during a period.
• B)impacts the total book value of plant assets on the balance sheet, but has no effect on the amount of net income reported during an accounting period.
• C)impacts the amount of net income reported during an accounting period, but has no effect on the total book value of plant assets on the balance sheet.
• D)has no impact on the book value of plant assets on the balance sheet or the amount of income reported on the income statement.

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Definitions:

Costs

The value of resources sacrificed to achieve a particular objective, such as producing goods or services.

Benefits

Forms of value, such as financial support, goods, or services, provided to individuals or organizations, typically as part of employment or governmental support.

Marginal Benefit Assessment

The evaluation of the additional benefits received from using one more unit of a good or service.

Economic Efficiency

A state where resources are allocated in the most effective manner, maximizing the production of goods and services while minimizing waste and costs.