If the cost of ordinary repairs is capitalized as an addition to the building account during the current year,
A) net income for the current year will be understated.
B) stockholders' equity at the end of the current year will be understated.
C) total assets at the end of the current year will not be affected.
D) total liabilities at the end of the current year will not be affected.

Question

Quizplus · Accepted Answer

Capitalizing ordinary repairs as an addition to the building account increases the asset's recorded value, thus not directly affecting liabilities. It does not change the total amount of liabilities on the balance sheet.

If the Cost of Ordinary Repairs Is Capitalized as an Addition