Final answer:
The cost of land is recorded in the land account as an asset, not an expense. Land, along with labor and capital, are considered factors of production that influence business profitability and decisions in industrial site location analysis.
Step-by-step explanation:
The cost of land owned by a business is recorded in the land account. However, it would be false to classify this account as an expense. In traditional accounting and economic terms, land or natural resources are considered a factor of production. When businesses acquire land, it is actually accounted for as an asset, not an expense. This is because the land has potential to generate future economic benefits for the business, either through its use in operations or by appreciation in value over time. Over time, as farming becomes more expensive and less profitable for small farms, there may be a need to sell this land, often to developers. The process of selling requires an accurate property title, calculation of acreage, and various other legal and business considerations.
Labor and capital, along with land, make up the main costs associated with building and running a business, which are all critical to its profitability. These factors directly influence decisions made in the industrial site location analysis, a critical component for the financial success of new manufacturing plants or facilities.