If the Cost of Ordinary Repairs Is Capitalized as an Addition

question 73

Multiple Choice

If the cost of ordinary repairs is capitalized as an addition to the building account during the current year,

• A) net income for the current year will be understated.
• B) stockholders' equity at the end of the current year will be understated.
• C) total assets at the end of the current year will not be affected.
• D) total liabilities at the end of the current year will not be affected.

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Definitions:

Process Costing

A costing method used in manufacturing where costs are assigned to batches or process levels, suitable for homogeneous products.

Service Provider

A company or individual that offers specific professional services or products to customers or businesses.

Indirect Materials

Materials used in the production process that cannot be directly linked to specific products or jobs, such as lubricants and cleaning supplies in a manufacturing facility.

Process Costing

A costing method used in manufacturing where costs are assigned to batches or processing departments, suitable for homogeneous products.