Accounting for IGCSE & O level - Accounting Procedures (Section 12 - No. 41)
What effect does recording a capital expenditure as a revenue expenditure have on the balance sheet?
Non-current assets are overstated.
Non-current assets are understated.
Liabilities are overstated.
Owner's equity is overstated.
Explanation
Misclassifying capital expenditure as revenue means the asset is not recorded, therefore the assets are understated.
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