Certain costs of doing business are capitalized when incurred and then amortized over subsequent accounting periods to:
A) aid management in decision-making.
B) match the costs incurred with revenues earned.
C) conform to the conservatism constraint.
D) conform to the comparability characteristic.
E) reduce the income tax.

Question

Quizplus · Accepted Answer

Capitalizing certain costs and then amortizing them over subsequent accounting periods helps in matching the costs with the revenues earned. This is in accordance with the matching principle of accounting, which requires that expenses be recognized in the same period as the revenues to which they relate. This helps in providing a more accurate picture of the profitability of the business.

Certain Costs of Doing Business Are Capitalized When Incurred and Then