Accounting for IGCSE & O level - Accounting Procedures (Section 26 - No. 3)
The incorrect recording of a capital expenditure as a revenue expenditure will cause which impact on the income statement and the statement of financial position?
Expenses will be understated.
Profit will be understated.
Non-current assets will be understated.
The financial position will be unstable.
Explanation
If the capital expenditure has been incorrectly recorded as a revenue expenditure, the non-current assets will be understated. The profit will also be understated.
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