If a company incurs an expense,but treats it as an asset,net income would be understated.

Question

Quizplus · Accepted Answer

When a company treats an expense as an asset, it does not immediately recognize the expense in the income statement. Instead, the cost is capitalized on the balance sheet and may be amortized or depreciated over time. This treatment delays the recognition of the expense, leading to a higher net income in the short term.

If a Company Incurs an Expense,but Treats It as an Asset,net