A bookkeeper mistakenly treats a capital expenditure item as revenue expenditure. What is the effects of this error?
ایک بک کیپر غلطی سے سرمائے کے اخراجات کی چیز کو محصول کے اخراجات کے طور پر سمجھتا ہے۔ اس غلطی کے اثرات کیا ہیں؟
Answer: Total assets are understated
Explanation
If a capital expenditure is mistakenly treated as revenue expenditure, total assets are understated.
This error reduces the recorded value of assets and expenses.
It causing the net profit to be overstated because the capital expenditure.
It should be capitalized, is incorrectly recorded as an expense.
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