O-LevelAccountingAccounting principles and policies7707/11 · May/June 2021 · Q111 Mark

What is the effect of treating an item of capital expenditure as revenue expenditure? 1 Cost of non-current assets is overstated. 2 Cost of non-current assets is understated. 3 Depreciation for the year is overstated. 4 Depreciation for the year is understated.

A1 and 3

B1 and 4

C2 and 3

D2 and 4

✓ Correct answer

D: 2 and 4

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Topic: Accounting principles and policies, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source: O-Level Accounting, May/June 2021 Paper 1 Variant 1, question 11.

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