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:

Serotonin

A neurotransmitter that is mainly found in the brain, bowels, and blood platelets and is significant in regulating mood, appetite, sleep, and arousal among other functions.

Norepinephrine

A neurotransmitter and hormone essential in the body's response to stress, affecting parts of the brain where attention and responding actions are controlled.

Double-blind Technique

A research method in which both the participants and the experimenters are unaware of who receives the treatment, eliminating bias.

Antipsychotic Drug

Medication primarily used to treat psychosis, including delusions, hallucinations, and schizophrenia.