61. Which of the following statements about capitalizing and expensing costs
is least accurate?
least accurate?A. Companies that capitalize costs will have lower debt-to-asset and debtto-
equity ratios than expensing companies.
B. Companies that expense costs will show the same total cash flows as
the capitalizing firm but show higher early year profitability.
C. Companies that capitalize costs and depreciate them over time will
show smoother reported income than expensing companies.
D. In the early years, companies that expense costs will have lower
profitability ratios, such as return on assets and return on equity, than
capitalizing companies.
Who has explanation for this question?
Thanks in advance.
61. Which of the following statements about capitalizing and expensing costs
is least accurate?
least accurate?A. Companies that capitalize costs will have lower debt-to-asset and debtto-
equity ratios than expensing companies.
B. Companies that expense costs will show the same total cash flows as
the capitalizing firm but show higher early year profitability.
C. Companies that capitalize costs and depreciate them over time will
show smoother reported income than expensing companies.
D. In the early years, companies that expense costs will have lower
profitability ratios, such as return on assets and return on equity, than
capitalizing companies.
Who has explanation for this question?
Thanks in advance.
B is least accurate, companies that expense costs will show lower early year profitability. Those capitalizing costs will show higher early year profitability.
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