Question

Which of the following statements is correct about capital assets?

a) Human capital and research and development are both considered capital assets for financial accounting purposes, but not for managerial accounting purposes.

b) For managerial accounting purposes, "capital assets" are defined more broadly than for financial accounting purposes.

c) Capital assets are only those that can be depreciated, whether using managerial or financial accounting.

d) For managerial accounting purposes, "capital assets" are defined more narrowly than for financial accounting purposes.

Answer 1

Ans is b For managerial accounting purposes, "capital assets" are defined more broadly than for financial accounting purposes.

Explanation: Human capital is not recorded in financial accounting so stament a is incorrect, and Capital assets also includes non-depreciable assets such as land, so option C is also wrong, with remaining options B and D, Managerial Accounting studies things more broadly since it involves decision making that is outside the purview of financial accounting so option D is also wrong, Option B is right since Management accounting views the capital assets more broadly like concept of intellectual capital that is not recorded in financial accounting.