Accounting for IGCSE & O level - Accounting Procedures (Section 18 - No. 31)
If a company records a revenue expenditure as a capital expenditure, what is the impact on the company's financial position in the current year?
Non-current assets will be overstated.
Non-current assets will be understated.
Profit will be unaffected.
Liabilities will be understated.
Explanation
Capitalizing something that is a revenue expense leads to a higher asset book value.
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