If a Revenue Expenditure Is Treated as a Capital Expenditure

question 79

Multiple Choice

If a revenue expenditure is treated as a capital expenditure, then:

• A) expenses are overstated and owners' equity is understated.
• B) expenses are overstated and assets are overstated.
• C) expenses are understated and owners' equity is overstated.
• D) net income is overstated and owners' equity is understated.

---

Definitions:

Parol Evidence Rule

A legal principle that prevents parties from presenting extrinsic evidence that contradicts or adds to the written terms of a contract.

Exceptions

Specific conditions or circumstances that alter or nullify the general rule or application of a law.

Contractual Rights

The specific legal rights and obligations that are established by a contract between two or more parties.

Assigned

The process of transferring rights, duties, or properties to another party, often seen in contracts or legal agreements.