Additions and Improvements

question 115

Multiple Choice

Additions and improvements

• A) occur frequently during the ownership of a plant asset.
• B) normally involve immaterial expenditures.
• C) increase the book value of plant assets when incurred.
• D) typically only benefit the current accounting period.

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Definitions:

Cost Concept

An accounting principle that dictates that all assets are recorded and reported at their original purchase cost rather than their current market value.

Owner's Equity

The residual interest in the assets of a business after all liabilities have been deducted, often referred to as net assets or shareholder equity.

Assets

Resources owned by a business with future economic benefits.

Investments

The balance sheet caption used to report long-term investments in stocks not intended as a source of cash in the normal operations of the business.