Comparing the Effects of Capitalizing & Expensing

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

Marking an item against the profits of a company at the time that it is purchased is known as which one of the following?

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1. Delineating a purchase as an asset of the company is referred to as _____.

2. Which of the following is a benefit of capitalizing a purchase?

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About This Quiz & Worksheet

Find out what you know about capitalizing versus expensing with this worksheet and quiz. The quiz will test you on certain accounting principles and how to categorize purchases.

Quiz & Worksheet Goals

These study tools will guide you to:

  • Name the term for marking an item against a company's profits when it is purchased
  • Understand what delineating a purchase as a company asset is referred to as
  • Recognize a benefit of capitalizing a purchase
  • Identify how to categorize the purchase of post-it notes
  • Explain how the purchase of a computer should be categorized

Skills Practiced

Use the following study skills:

  • Reading comprehension - ensure that you draw the most important information from the related accounting lesson
  • Making connections - use understanding of the concept of how fast something may be used up and how it affects accounting
  • Knowledge application - use your knowledge to answer questions about capitalizing versus expensing

Additional Learning

You can explore this subject further with the lesson entitled Comparing the Effects of Capitalizing & Expensing. The lesson will cover the following study objectives:

  • Define expensing
  • Explain capitalizing
  • Understand the importance of knowing what to capitalize and what to mark as an expense
  • Examine a scenario to better understand how capitalizing and expensing affect a business
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