Which of the following statements is INCORRECT?
A)The rules for determining whether a cost should be expensed or capitalized are so complete and clear that judgment is not needed.
B)Capital expenditures are capitalized when the cost is added to an asset account.
C)Most companies expense all small (immaterial)costs regardless of whether the costs are capital in nature.
D)An expense merely maintains the asset in its present condition or restores it to working order.

Question

Quizplus · Accepted Answer

The statement that the rules for determining whether a cost should be expensed or capitalized are so complete and clear that judgment is not needed is incorrect. This is because there are often situations where the line between a capital expenditure and an expense is not clear-cut, and judgment is needed to determine how to treat the cost.

Which of the Following Statements Is INCORRECT