Capitalizing an Expenditure Rather Than Recording It as a Revenue

question 150

Multiple Choice

Capitalizing an expenditure rather than recording it as a revenue expenditure

• A)impacts the total book value of plant assets reported on the balance sheet and the amount of net income reported during a period.
• B)impacts the total book value of plant assets on the balance sheet, but has no effect on the amount of net income reported during an accounting period.
• C)impacts the amount of net income reported during an accounting period, but has no effect on the total book value of plant assets on the balance sheet.
• D)has no impact on the book value of plant assets on the balance sheet or the amount of income reported on the income statement.

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Definitions:

Liabilities

A debt owed by a business to another organization or individual.

Assets

Resources owned by a business or individual that have economic value and can provide future benefits.

Venture Capitalist

An investor who provides capital to startup ventures or supports small companies that wish to expand but do not have access to equities markets.

Emerging Businesses

Companies in the early stages of operation, often characterized by rapid growth and development in its sector.