If a Company Capitalizes Costs That Should Be Expensed,how Is

question 106

Multiple Choice

If a company capitalizes costs that should be expensed,how is its income statement for current period impacted?

• A)Net income will be lower than it should be.
• B)Revenues will be lower than they should be.
• C)Expenses will be lower than they should be.
• D)Assets will be lower than they should be.

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Definitions:

Redundant Component

A component in a system that is not essential for immediate function but serves as a backup to increase reliability.

System Reliability

The probability that a system will perform its required functions without failure under stated conditions for a specified period of time.

Breakdowns

Refers to unexpected failures or malfunctions in machinery, systems, or processes that can lead to operational delays or stoppages.

Product Failure Rate

The frequency at which an engineered system or component fails, expressed in failures per unit of time.