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Which of the following statements about capitalizing costs is correct?

a. Capitalizing costs refers to the process of converting assets to expenses.
b. All costs incurred to acquire an asset may be capitalized.
c. Capitalizing a cost means to record it as an asset.
d. Capitalizing costs results in an immediate decrease in net income.

Sagot :

Answer: Capitalizing a cost means to record it as an asset.

Explanation:

This statement is incorrect. Capitalizing costs defers the expense, spreading it over the asset's useful life through depreciation or amortization, which means it does not immediately affect net income.

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