单选题

Which of the following statements about capitalizing expenses and depreciation is most accurate?(     )

【正确答案】 C
【答案解析】

The sum-of-years digits method depreciation decreases each year by (1/sum-of-years digits). For example, for a three-year property, the firstyear depreciation is 3/6, the second-year depreciation is 2/6, and the third-year depreciation is 1/6. Each year depreciation decreases by a constant amount-one-sixth of the depreciable cost of the asset. Capitalizing an expenditure instead of expensing it will result in a lower debt to equity ratio because the amount of capitalized expenses is added to assets which also increases equity by increasing net income and retained earnings. Also, capitalizing expenses will lower the fixed asset turnover ratio since assets are increased and they are also in the denominator of the fixed asset turnover ratio.