Accounting for IGCSE & O level - Accounting Procedures (Section 21 - No. 7)
What's the impact on the balance sheet if a revenue receipt is incorrectly recorded as a capital receipt?
Business liabilities will be understated.
Owner's equity will be overstated.
Business liabilities will be unaffected.
Non-current assets will be overstated.
Explanation
If a revenue receipt is incorrectly recorded as a capital receipt, then owner's equity will be understated and liabilities will be unaffected.
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