The Decision to Expense or Capitalise an Item Is Important

question 27

Multiple Choice

The decision to expense or capitalise an item is important because:

• A) It may have direct implications for the value of the organisation and wealth of managers.
• B) It may have an impact on contractual arrangements that are based on accounting numbers related to profits and/or assets.
• C) It may give managers scope to maximise personal wealth, in line with Positive Accounting Theories.
• D) All of the given answers are correct.

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Definitions:

Massachusetts Supreme Court

The highest court in the Commonwealth of Massachusetts, responsible for interpreting and applying the law.

Commonwealth v. Hunt

A landmark 1842 Massachusetts Supreme Court case that declared labor unions and strikes legal for the first time in the United States.

Labor Unions

Organizations formed by workers to protect their rights and interests, negotiate with employers over wages, benefits, and working conditions.

National Industrial Recovery Act

A 1933 U.S. law aimed at boosting economic growth during the Great Depression through industrial codes of fair competition and workers' right to unionize.