A Company's Accountant Capitalizes a Payment That Should Be Recorded

question 38

Multiple Choice

A company's accountant capitalizes a payment that should be recorded as an expense. Which of the following is true?

• A)Revenue is overstated.
• B)Expenses are overstated.
• C)Assets are overstated.
• D)Liabilities are overstated.

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Definitions:

Mutual Release

An agreement between two parties in which each side agrees to release the other from any possible claims or liabilities arising from a certain event or situation.

Canceling Order

An instruction to cancel a previously issued order before it is executed, commonly used in trading and procurement.

Express Repudiation

The clear and unequivocal refusal to perform one's obligations under a contract.

Anticipatory Breach

Occurs when one party to a contract indicates, either through their actions or words, that they will not fulfill their contractual obligations, allowing the other party to seek remedies before the breach actually occurs.