O-LevelAccountingAccounting principles and policies7707/11 · May/June 2017 · Q111 Mark

An item of capital expenditure has been incorrectly treated as revenue expenditure. What is the effect of this error? assets profit for the year A overstated overstated B overstated understated C understated overstated D understated understated

Aassets (overstated), profit for the year (overstated)

Bassets (overstated), profit for the year (understated)

Cassets (understated), profit for the year (overstated)

Dassets (understated), profit for the year (understated)

✓ Correct answer

D: assets (understated), profit for the year (understated)

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Topic: Accounting principles and policies, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source: O-Level Accounting, May/June 2017 Paper 1 Variant 1, question 11.

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An item of capital expenditure has been incorrectly treated as revenue expenditure. What is the effect of this error? assets profit for the year A overstated overstated B overstated understated C understated overstated D understated understated

✓ Correct answer

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