Accounting for IGCSE & O level - Accounting Procedures (Section 10 - No. 8)
What will cause an understatement of owner's equity?
Overstating revenue
Incorrectly recording a capital receipt as a revenue receipt.
Incorrectly recording a revenue receipt as a capital receipt.
Understating expenses.
Explanation
If a revenue receipt is incorrectly recorded as a capital receipt, it will result in an understatement of both revenue and owner's equity.
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