4. Amsyari Enterprise bought the secondhand motor vehicles for RM40,000. He incurred a major overhaul cost of RM10,000. The car was repainted for RM2,000. He also spent RM800 on road tax and insurance. He recorded RM40,000 as the cost of the motor vehicles whereas the other expenditure was treated as expenses. How the effect of the accounting error on Amsyari Enterprise's statement of profit and loss and statement of financial position?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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4. Amsyari Enterprise bought the secondhand motor vehicles for RM40,000. He
incurred a major overhaul cost of RM10,000. The car was repainted for RM2,000.
He also spent RM800 on road tax and insurance. He recorded RM40,000 as the
cost of the motor vehicles whereas the other expenditure was treated as expenses.
How the effect of the accounting error on Amsyari Enterprise's statement of profit
and loss and statement of financial position?
Transcribed Image Text:4. Amsyari Enterprise bought the secondhand motor vehicles for RM40,000. He incurred a major overhaul cost of RM10,000. The car was repainted for RM2,000. He also spent RM800 on road tax and insurance. He recorded RM40,000 as the cost of the motor vehicles whereas the other expenditure was treated as expenses. How the effect of the accounting error on Amsyari Enterprise's statement of profit and loss and statement of financial position?
Explain why firms must correctly classify expenditures incurred as either capital
expenditure or revenue expenditure.
Transcribed Image Text:Explain why firms must correctly classify expenditures incurred as either capital expenditure or revenue expenditure.
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