If a Revenue Expenditure Is Incorrectly Recorded on a Company's

question 147

Multiple Choice

If a revenue expenditure is incorrectly recorded on a company's books as a capital expenditure,which of the following statements will be true?

• A) Stockholders' equity will be understated at year end.
• B) Net income in the following year will be unaffected.
• C) Total assets will be understated at year end.
• D) Net income will be overstated for the year.

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Definitions:

Central Limit Theorem

A statistical theory stating that, given a sufficiently large sample size from a population with a finite level of variance, the mean of all samples from the same population will be approximately equal to the mean of the population.

Consistent Estimator

An estimator that, as the sample size increases, converges in probability to the true parameter value.

Population Mean

The average value of all the members of a population.

Random Sample

A subset of individuals chosen from a statistical population in such a way that each individual has an equal chance of being selected.