Failure to Capitalize a Fixed Asset at the Correct Amount

question 60

Multiple Choice

Failure to capitalize a fixed asset at the correct amount would impact which financial statements?

• A)the balance sheet only
• B)the income statement only
• C)the cash flow statement only
• D)both the income statement and the balance sheet

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Definitions:

Operating Revenues

The income earned from a company's main business operations, excluding income from investments or secondary sources.

Operating Expenses

The costs associated with the normal operations of a business, excluding costs related to producing goods or services, like rent, utilities, and salaries.

Interest Expense

The cost incurred by a company for borrowed funds, shown as an expense on the income statement.

Dividend Payments

The distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.