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

question 41

Multiple Choice

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

• A)Net income is overstated.
• B)Revenues are understated
• C)Assets are understated.
• D)Liabilities are overstated.

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Definitions:

Fixed Asset Sales

The process of selling long-term assets, such as property, plant, and equipment, often to generate cash or reduce operational scope.

Company's Strategy

A detailed plan outlining how a business intends to achieve its goals and improve its competitive position in the market.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a specific period.

Beginning Inventory

The initial quantity of goods available for sale at the start of an accounting period.