Which of the following measures initially decrease as a result of a firm’s decision to capitalize its expenditure instead of expensing them?

Yes, Option C is the right answer.

C-------------------------------------------------------

Expenditure Capitalization creates3 impacts 

1-Total asset value goes up

2-Company profit goes up &

3-Cash outflow from operation goes down (because expense amount will be shown under investing activity )

Therefore (C) is the right answer.  

Correct Answer is A. Total Assets is the measure in which firm's decision to capitalize its expenditure instead of expense them.

option C=====================

C. Cash outflows from operations.  

The correct option is B) debt-to-equity

The rational of this option is that if the firm decides to capitalize its expenditures  which already have been incurred or paid then such measure would increase the value of total assets instead of any decrease and also such decision doesn't have any impact on cash flow from operation because cash is not flowing out it by way expenditures  it is  only capitalizing .

The only measure would be decreased is debt-to-equity ratio, because as a result of capitalization fixed or total assets will increase consequently it will increase equity  (Assets-Liabilities =Equity) and total liabilities are intact or no change in it so that debt -to-equity ration will be decreased or equity will be improved against total debt.