Accounting for IGCSE & O level - Accounting Procedures (Section 9 - No. 33)
If a business records revenue expenditure as a capital expenditure, which of the following is the impact?
Profit will be overstated and the financial position will be overstated.
Profit will be overstated and the financial position will be understated.
Profit will be understated and the financial position will be understated.
Profit will be understated and the financial position will be overstated.
Explanation
Recording revenue expenditure as capital expenditure leads to understated expenses, which means profit is overstated, and non-current assets are overstated on the balance sheet.
Comments (0)
