Improperly Classifying a Fixed Asset by Recording the Amount in the Repairs

question 92

Multiple Choice

Improperly classifying a fixed asset by recording the amount in the repairs and maintenance expense account will have an effect on which of the following financial statements until the asset would normally have been depreciated?

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

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Definitions:

Income Statement

A financial statement that reports a company's revenues, expenses, and net income over a specific period, showing profitability.

Special Item

Unusual or infrequent gains or losses not classified as extraordinary but significantly important to understand a company's financial health.

Asset Increase

An increase in the total value of assets owned by a company, which can occur due to acquisitions, improvements, or valuation increases.

Corresponding Decrease

A decrease in one variable or metric that occurs in response to an increase in another variable.