If a Company Classifies an Expenditure as a Capital Expenditure

question 6

Multiple Choice

If a company classifies an expenditure as a capital expenditure instead of a revenue expenditure, which of the following will be false?

• A) Profit for the year of acquisition will be higher.
• B) The initial cost basis of the asset will be higher.
• C) Depreciation expense will be higher over the asset's life.
• D) It will be expensed in the year in which the expenditure takes place.

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Definitions:

Protective Optimism

An optimistic outlook that can serve as a psychological buffer against the negative effects of stress or adversity.

Overwhelming Pride

A feeling of excessive self-esteem or self-importance that can lead to arrogance and lack of concern for others.

Intrinsic Motivation

Motivation driven by an interest or enjoyment in the task itself, rather than external pressure or rewards.

Mildred Parten

A researcher known for her work on the social development and play stages of preschool children.