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2. The Effect of Capital vs Revenue Expenditures

in Chapter 7 (Problem 2 of 5)

If an expenditure is treated as a revenue expenditure, instead of as a capital expense, which of the following statements is true?

  1. The current year’s net income will be higher and future depreciation expense will be higher.
  2. The current year’s net income will be lower and future depreciation expense will be higher.
  3. The current year’s net income will be higher and future depreciation will be lower
  4. The current year’s net income will be lower and future depreciation will be lower.
Watch Solution (2:51) Hide Solution Reveal Solution

The Rest Of The Practice Problems

Click Here to View All Chapter 7 Problems at Once View
1 The Effect of Amortization Easy
2 The Effect of Capital vs Revenue Expenditures
You are here. 		Easy
3 Calculating Depreciation using DDB Moderate
4 Change in Depreciation Moderate
5 Failure to Record Depreciation Moderate
← Chapter 6

Chapter 7 Videos

1 Acquisition Cost of Assets 13:23
2 Lump Sum Purchases 6:01
3 What is Depreciation? 11:23
4 Straight Line Depreciation 4:33
5 Double Declining Balance 13:58
6 Units of Production 3:43
7 Partial Year Depreciation 5:50
8 Capital vs. Revenue Expenditures 10:42
Chapter 8 →