(Appendix) If purchases are recorded at the net amount, assuming ...

[james0929]

(Appendix) If purchases are recorded at the net amount, assuming that all available cash discounts will be taken, the net-price method of recording the purchase has been used.
 a. True
   b. False
   Indicate whether the statement is true or false

Question 2

Explain when a cost should be recorded as a capital expenditure rather than an expense.
 
  What will be an ideal response?

[aruss1303]

Answer to Question 1

True

Answer to Question 2

A capital expenditure is an expenditure that will be recorded as an asset because it represents something of future value to the business. Capital expenditures involve buying an asset or extending its useful life or operating efficiency. An expense, on the other hand, is a normal, routine cost that has no benefits that extend beyond the current accounting period. It should be treated as an expense in the period incurred.