Accounting for IGCSE & O level - Accounting Procedures (Section 15 - No. 5)
What is the impact on a company's financial position if a revenue expenditure is incorrectly recorded as a capital expenditure?
Non-current assets are understated.
Non-current assets are overstated.
The financial position is unaffected.
The company's liabilities will increase.
Explanation
Incorrect recording of revenue expenditure will overstate the non-current assets, which in turn, distorts the financial position of the company.
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