The Effect of Recording a Capital Expenditure as a Revenue

question 47

Multiple Choice

The effect of recording a capital expenditure as a revenue expenditure is that:

• A) expenses are overstated, and owners' equity is understated.
• B) net profit is understated, and owners' equity is overstated.
• C) expenses are understated, and accumulated depreciation is overstated..
• D) assets are overstated, and expenses are understated.

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Definitions:

House Fire

A destructive event involving the combustion of a dwelling, often resulting in damage and danger to occupants.

Reliable Evidence

Information or data that is dependable and can be trusted to be accurate for use in making decisions or drawing conclusions.

Furniture

Movable objects intended to support various human activities such as seating, eating, and sleeping, as well as to hold objects at a convenient height for work.

Arson Evidence

Physical proof or indicators found at the scene of a fire that can suggest the fire was started intentionally.