Accounting for IGCSE & O level - Accounting Procedures (Section 17 - No. 32)
If a company incorrectly records a cash payment for rent as a capital expenditure, what will be the immediate impact on the financial statements?
Assets will be overstated and expenses will be understated.
Assets will be understated and expenses will be overstated.
Assets and owner's equity will be understated.
Liabilities and owner's equity will be overstated.
Explanation
Cash outflow impacts assets.
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