O-LevelAccountingAccounting principles and policies7707/11 · Oct/Nov 2013 · Q151 Mark

Capital expenditure is treated in error as revenue expenditure. What effect will this have?

AThe balance sheet will not balance.

BThe expenses will be overstated.

CThe expenses will be understated.

DThe trial balance will not balance.

✓ Correct answer

B: The expenses will be overstated.

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Topic: Accounting principles and policies, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source: O-Level Accounting, Oct/Nov 2013 Paper 1 Variant 1, question 15.

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