Which of the following statements about capitalizing costs is correct?A. Capitalizing costs refers to the process of converting assets to expenses.B. Only the purchase price of the asset is capitalized.C. Capitalizing a cost means to record it as an asset.D. Capitalizing costs results in an immediate decrease in net income.
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Which of the following statements about capitalizing costs is correct?
A. Capitalizing costs refers to the process of converting assets to expenses.
B. Only the purchase price of the asset is capitalized.
C. Capitalizing a cost means to record it as an asset.
D. Capitalizing costs results in an immediate decrease in net income.
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- Which sentence is incorrect? Select one: a. Depreciation is not the actual change in the value of the asset. b. Accumulated Depreciation account has effects on the cash flow statement. c. Accumulated Depreciation is called a contra asset account. d. Depreciation is the process of allocating the cost of an asset to expense, not a valuation process.1. How do we decide whether to capitalize (record as an asset) or expense a particular cost? 2. Provide one example of each to capitalize (record as an asset) or expense a particular cost.Capitalizing a cost means to record the cost into a(n) a. contributed capital. Ob. asset. С. expenditure. d. income statement. A Moving to the next question prevents changes to this answer.
- Which of the following statements is/are FALSE: I. Following the acquisition of an item of property, plant and equipment, subsequent expenditure for this item that will extend the asset’s useful life and increase the asset’s capacity is capitalised. II. Investment property does not get depreciated, unless it is measured at cost. III. In the statement of comprehensive income, costs can be analysed according to function or nature. Costs analysed according to function are classified into the following categories: distribution & selling costs; administrative expenses; other operating expenses (or income). IV. Because of the prudence convention, inventories are expensed in the income statement as cost of goods sold when they are sold, and not when they are bought in by the business and paid for. V. A complete set of financial statements consists of the statement of financial position, the statement of comprehensive income, the statement of changes in equity and the statement of…The adjusted basis of an asset is the original cost (or basis) plus capital recoveries less capital additions. True FalseIn accounting, which statement accurately reflects the Historical Cost Accounting concept and its implications for financial reporting? a ) Historical Cost Accounting records assets at their original purchase price. b) Historical Cost Accounting adjusts asset values based on current market prices. c) Historical Cost Accounting emphasizes future projected values for assets. d) Historical Cost Accounting disregards the original purchase price of assets.
- Expense Recoognition: What does it mean when assets are "expensed"? Why do costs do not qualify as an asset? Explain, Please.Which of the following is not true in regard to selling fixed assets? a.If the selling price is more than the book value, a gain is recorded. b.The cash receipt is recorded. c.The journal entry is similar to discarding fixed assets. d.Accumulated Depreciation will be credited.As compared to capitalizing a cash expenditure, what is the initial effect on asset turnover of immediately expensing the expenditure, all else equal? Asset turnover is: higher. lower. the same.
- Demonstrates the difference between depreciation costs as expenses and the cash flow generated by the purchase of a fixed asset? Give an example?Which of the following is INCORRECT regarding depreciation? Select one: O a. It is not a matter of valuation. O b. It is a means of cost allocation. Oc. O d. It is an attempt to reflect the fair market values of the related assets. It is part of the matching of revenues and expenses.Depreciation is a process that involves:a. Increasing the value of assetsb. Distributing the cost of an asset over its useful lifec. Eliminating the need for financial statementsd. Reducing the value of liabilities