Capitalizing costs that should be expensed:
A)is a practice mostly found in large, well-established companies.
B)usually has no effect on net income.
C)has the effect of increasing net income by the same amount of the capitalized costs.
D)is a healthy practice if they written off shortly after the transaction takes place.

Question

Quizplus · Accepted Answer

Capitalizing costs that should be expensed increases net income because it defers the recognition of the expense, spreading it over future periods instead of recognizing it immediately.

Capitalizing Costs That Should Be Expensed