Question

Which of the following is true?

a. Capitalized costs decrease stockholders' equity.
b. Capitalized costs increase long-lived assets.
c. Expenses increase assets.
d. Expenses increase stockholders' equity.

Answer 1

B is the correct answer and I’m not just saying that

Answer 2

B) Capitalized costs increase long-lived assets.

Step-by-step explanation:

Capitalized costs refers to cost associated with the purchase of a fixed asset. Capitalized costs increase the cost basis of the fixed assets since they are added to the purchase cost. E.g. a company buys a new machine, besides the cost of the machine itself, the cost basis must include delivery charges, installation charges, etc.