Accounting for IGCSE & O level - Accounting Procedures (Section 15 - No. 23)
Which scenario would lead to an overstatement of profit?
Capital expenditure incorrectly classified as revenue expenditure.
Revenue expenditure incorrectly classified as capital expenditure.
Understating non-current assets.
Overstating liabilities.
Explanation
Classifying revenue expenditure as capital expenditure means the expense is not immediately recognized, resulting in higher reported profit.
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