Accounting for IGCSE & O level - Accounting Procedures (Section 25 - No. 45)
If an expense is incorrectly debited to the wrong account, how does it affect the financial statements?
It has no impact.
It impacts the balance sheet but not the income statement.
It impacts the income statement but not the balance sheet.
It impacts both the income statement and the balance sheet.
Explanation
Expenses directly influence profit (income statement) and, indirectly, equity (balance sheet).
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