However, the decision to spend costs will be reflected in the cash flow from operations. • Reported Assets: The company's total assets will be lower. • Financial Ratios: When it comes to various financial ratios, the decision to spend will result in higher operational efficiency ratios. Spending LimitationsThere are some special spending limitations, especially when it comes to starting a business. In many cases, immediate costs can often be capitalized even if they normally do not necessarily fall within the capitalization rules during the company's first financial year. You should also keep in mind that, although research and development costs are generally considered an expense, some legal fees involved in acquiring these, as well as patents, may be capitalized. Additionally, you should be careful when incurring costs related to repairs or upgrades. If the value of the item increases significantly or the lifespan of the item expands, it is best to capitalize the costs. Ultimately, expenses will reduce the company's revenue and therefore you need to take care to ensure that your short-term finances are able to adapt to this