Which of the following is not a reason management might be tempted to classify costs as assets rather than expensing them during periods in which production exceeds sales?
A) The company's bank may be more likely to extend financing to the firm.
B) Income taxes will be lower.
C) Net income will be higher.
D) Management bonuses may be higher.

Question

Quizplus · Accepted Answer

Classifying costs as assets rather than expenses increases net income, which does not lower income taxes; it may actually increase them.

Which of the Following Is Not a Reason Management Might