Which of the Following Is Not True of Ordinary Repairs

question 25

Multiple Choice

Which of the following is not true of ordinary repairs?

• A) They primarily benefit the current accounting period.
• B) They can be referred to as revenue expenditures.
• C) They maintain the expected productive life of the asset.
• D) They increase the productive capacity of the asset.

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Definitions:

Acquisition Method

An accounting technique used to consolidate the financial statements of two companies when one company acquires control of another.

Net Present Value

A method used in capital budgeting to assess the profitability of an investment by calculating the difference between the present value of cash inflows and outflows.

Future Cash Flows

Projections of the money a business expects to receive and pay out over a future period, influencing decision-making and valuation.

Replacement Cost

The cost to replace an asset with another of similar nature and capacity at the current prices, without considering any physical deterioration or obsolescence.