The Cost of Replacing the Engine on a Motor Vehicle

question 26

Multiple Choice

The cost of replacing the engine on a motor vehicle, which increased the vehicles' useful life by five years, was charged as an expense rather than being capitalised and added to the carrying amount of the vehicle. This error would result in profit being:

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

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Definitions:

Neurotransmitter

Chemical substances in the brain that transmit signals from one neuron to another across synapses.

Grossly Disorganized Behaviour

Extreme difficulty in goal-directed behavior, often manifesting as unpredictable or inappropriate actions or responses.

Dancing

The act of moving rhythmically to music, typically following a set sequence of steps, and often used as a form of expression or social interaction.

Diathesis-Stress Model

A model that recognizes the combination of a diathesis (i.e., vulnerability) and sufficient amounts of life stress that, combined, are likely to produce a disorder.