If the Cost of a Major Service on a Motor

question 2

Multiple Choice

If the cost of a major service on a motor vehicle,which did not increased the vehicles' useful life was incorrectly capitalised and added to the carrying amount of the vehicle rather than being expensed:

• A)Expenses would be overstated,fixed assets would be overstated and equity would be understated
• B)Expenses would be understated,fixed assets would be understated and equity would be overstated
• C)Expenses would be understated,fixed assets would be overstated and equity would be understated
• D)Expenses would be understated,fixed assets would be overstated and equity would be overstated

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Definitions:

Net Sales

The amount of sales generated by a company after deductions for returns, allowances for damaged or missing goods, and discounts.

Accounts Receivable

Amounts owed to a business by its customers for goods or services that have been delivered but not yet paid for.

Receivables Turnover Ratio

A financial metric that measures how efficiently a company collects cash from credit customers.

Sales Returns

Goods returned by customers to the seller after the sale has occurred, typically due to defects or dissatisfaction.