Accounting for IGCSE & O level - Accounting Procedures (Section 14 - No. 36)
If a business records a capital expenditure as a revenue expenditure, what is the impact on the income statement?
Expenses will be overstated.
Profit will be overstated.
Assets will be understated.
Liabilities will be overstated.
Explanation
Because you've expensed something that shouldn't have been expensed, the expenses go up, and the assets go down. This will also lead to an underestimation of profit.
Comments (0)
