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

question 145

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 overstated 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 understated for the year.

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Definitions:

ATC

Average Total Cost, which is the total cost of production divided by the quantity of output produced, representing the per-unit cost of production.

Long Run

A period in economics during which all inputs, including capital and labor, can be varied, allowing for full adjustment to changes.

Output

The total value of goods and services produced by an economy over a specific time period.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.