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61. Which of the following statements about capitalizing and expensing costs

is 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.