To Capitalize an Expenditure Is To

question 91

Multiple Choice

To capitalize an expenditure is to:

• A) Debit an expense account.
• B) Credit an expense account.
• C) Debit an asset account.
• D) Credit an asset account.
• E) Credit the owner's capital account.

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Definitions:

Income Statement

A financial document that provides an overview of a company's performance over a specific period, detailing revenues, expenses, and net earnings.

Net Operating Income

An indicator of a firm's earnings generated from its principal business activities, not accounting for interest and tax deductions.

Variable Costing

An accounting method that includes only variable production costs in product costs, excluding fixed overhead.

Absorption Costing

An accounting strategy that considers every manufacturing expense, including direct materials, direct labor, and overhead costs (both variable and fixed), in determining a product’s cost.