The Proper Accounting for the Costs Incurred in Creating Computer

question 7

Multiple Choice

The proper accounting for the costs incurred in creating computer software products that are to be sold, leased, or otherwise marketed to external parties, is to

• A) capitalize all costs until the software is sold to external parties.
• B) charge research and development expense when incurred until technological feasibility has been established for the product.
• C) charge research and development expense only if the computer software has alternative future uses.
• D) capitalize all costs as incurred until a detailed program design or working model is created.

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Definitions:

Stop Payment

An order issued to a bank by an account holder not to pay a specific check that has been written and issued but not yet cashed.

Secondhand Car

A vehicle that has had one or more previous owners before the current possession.

Acceptor

A drawee of a draft who has promised to honor the draft as presented by signing it on its face.

Draft

A written order by which the party creating it orders another party to pay money to a third party. Also called bill of exchange.