When an expenditure is made and it is treated as an expense but should have been capitalized, the resulting impact in the year of the expenditure would be: A. Assets would be overstated, net income would be understated. B. Both the assets and net income would not be affected. C. Assets would be understated, net income would be understated. D. Assets would be understated, net income would be overstated.

When an expenditure is made and it is treated as an expense but should have been capitalized, the resulting impact in the year of the expenditure would be: A. Assets would be overstated, net income would be understated. B. Both the assets and net income would not be affected. C. Assets would be understated, net income would be understated. D. Assets would be understated, net income would be overstated.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 6MC: If a company capitalizes costs that should be expensed, how is its income statement for the current...

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	A.	Assets would be overstated, net income would be understated.
	B.	Both the assets and net income would not be affected.
	C.	Assets would be understated, net income would be understated.
	D.	Assets would be understated, net income would be overstated.