The Decision to Expense or Capitalise an Item Is Important

question 38

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 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) The decision should only be based on providing an unbiased report of the company.
• E) All of the given answers.

---

Definitions:

Somatogenic

Pertaining to the idea that mental disorders originate from biological, physiological, or bodily causes.

Psychotropic

Pertaining to drugs that affect a person's mental state, used to treat psychiatric disorders and conditions.

Psychogenic

Originating from psychological or emotional factors rather than physical causes.

Hopeless

A feeling of despair or defeat, believing that there is no possibility of improvement or success in a particular situation.