A Company's Accountant Capitalized a Payment That Should Be Recorded

question 76

Multiple Choice

A company's accountant capitalized a payment that should be recorded as a revenue expenditure. How will this error affect the financial statements of the company?

• A)Net income will be understated.
• B)Expenses will be overstated.
• C)Assets will be overstated.
• D)Liabilities will be overstated.

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Definitions:

Twisted-pair Cable

A type of cabling that consists of pairs of wires twisted together, used for transmitting voice and data communications.

Coaxial Cable

A type of electrical cable consisting of a central conductor surrounded by an insulating layer and an outer conductive shielding, used for transmitting data and communication signals.

Peer-to-peer Network

A network model where each participant (peer) has equal capabilities and either participant can initiate a communication session, often used for sharing files or resources.

Client/server Network

A network architecture where multiple client devices, such as computers or mobile phones, connect to a server to access shared resources.