If a capital expenditure is incorrectly recorded on a company's books as a revenue expenditure,which of the following statements will be true?
A)Net income will be understated for the year.
B)Stockholders' equity will be overstated at year end.
C)Total assets will be overstated at year end.
D)Net income in the following year will be understated.

Question

Quizplus · Accepted Answer

When a capital expenditure is incorrectly recorded as a revenue expenditure, it is expensed immediately rather than being capitalized and depreciated over time. This leads to higher expenses in the current year, which reduces net income for that year.

If a Capital Expenditure Is Incorrectly Recorded on a Company's