A Company's Accountant Capitalized a Payment That Should Have Been

question 83

Multiple Choice

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

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

---

Definitions:

Output

The quantity of goods or services produced in a given time period.

Price Per Unit

The cost of a single unit of a product or service.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded by consumers, typically downward sloping.

Marginal Revenue

Marginal revenue is the additional income earned from selling one more unit of a good or service.