Accounting for IGCSE & O level - Accounting Procedures (Section 18 - No. 32)
What is the impact on the financial statements when a capital receipt is incorrectly recorded as a revenue receipt?
Revenue and profit are overstated, owner's equity is understated.
Revenue and profit are understated, owner's equity is overstated.
Revenue and profit are overstated, owner's equity is unaffected.
Revenue and profit are understated, owner's equity is unaffected.
Explanation
Incorrect classification will cause profit and capital to be understated.
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