A Capital Expenditure Results in a Debit to

question 62

Multiple Choice

A capital expenditure results in a debit to

• A)an asset account
• B)an expense account
• C)a liability account
• D)a capital account

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Definitions:

Retained Earnings

The cumulative net income that has been retained by a company for reinvestment in its operations or to pay debt, not distributed to stockholders as dividends.

Depreciation Expense

The allocation of the cost of a tangible asset over its expected useful life to account for the loss of value over time.

Cash Dividends

A portion of a company's earnings distributed to shareholders in the form of cash.

Treasury Stock

Represents the portion of shares that a company keeps in its own treasury. These shares can be repurchased from the market and do not confer ownership rights.