Accounting for IGCSE & O level - Accounting Procedures (Section 19 - No. 7)
What is the effect on the income statement when a capital expenditure is incorrectly recorded as a revenue expenditure?
Expenses are understated, and profit is overstated.
Expenses are overstated, and profit is understated.
Both expenses and profit are overstated.
Both expenses and profit are understated.
Explanation
Immediate expense recognition will reduce profit.
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