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:

Pituitary

A small, pea-sized gland located at the base of the brain, known as the "master gland," it secretes hormones that regulate various physiological processes, including growth, reproduction, and metabolism.

Thyroid

The thyroid is a gland in the neck that produces hormones regulating metabolism, body energy levels, and overall growth and development in the body.

Gonad

A generic term for an organ in the body that produces sex cells; in males, this refers to the testes, and in females, the ovaries.

Peer Approval

The acceptance or recognition one receives from their peers or contemporaries, often influencing behavior and self-esteem.