Accounting for IGCSE & O level - Accounting Procedures (Section 5 - No. 40)
What happens if a capital receipt is recorded as a revenue receipt?
Revenue and profit will be overstated.
Revenue and profit will be understated.
Capital employed will be overstated.
The balance sheet will be unaffected.
Explanation
Recording a capital receipt as revenue will decrease the income and profit and will decrease the capital employed.
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