If a capital expenditure is erroneously treated as a revenue expenditure, will the net income of the current year be over-stated or understated? Will this error have any effect on the net income reported in future years? Explain.

Q: What types of ordinary and statutory income do not constitute assessable income?

A: Ordinary Income is that income which is taxable at ordinary rates or earned from working. Like…

Q: Gon Incorporated reported its inventory balance on December 31, 2016 at P5,000,000. During the…

A: 1) Good purchased and sold in the same year as per periodic system are not recorded.  Hence Gross…

Q: When does tax allocation within a period become necessary?How should this allocation be handled?

A:

Q: ollowing situations does not base an accounting measure on a present value? Prepaid insurance ,…

A: It analyzes comprehension of how accounting measures and financial reporting may or may not require…

Q: Which of the following would not overstate current-period net income?a. Capitalizing an expenditure…

A: Net income: Net income refers to the income earned by the company after providing for all the…

Q: Are there differences between financial reporting standards and income tax rules thatwill not cause…

A: Normally, business follow GAAP in preparing their financial statements in order to arrive at their…

Q: Why should the beginning retained earnings be adjusted for prior period errors and effects of change…

A: Prior period errors are the omissions from and miss-statements in entity's financial statement for…

Q: What is meant by “tax allocation within a period”? What is the justification for such practice?

A: Tax: Tax refers to a compulsory payment or a contribution to the state revenue, levied by the…

Q: What is meant by the term unearned revenue? Where should an unearned revenue account appear in the…

A: Revenue: It refers to the amount earned by a business from selling its goods or services to the…

Q: Which of the following is not an expense excluded when calculating EBITDA? Depreciation expense,…

A: EBITDA is the earning available to compare the profitability of various companies, this eliminates…

Q: Discuss, using practical example how revenue expenditure should not be capitalized?

A: SOLUTION- Thus, a revenue expenditure which increases the utility or productive capacity of an…

Q: temporary difference Interest earned on investments in tax-exempt government securities. Interest…

A: Nondeductible expenses refer to those expenses which a company can subtract from its income in order…

Q: deferred revenues

A: Income statement represents the net income that is calculated by deducting the expenses from the…

Q: What are the implications of a revised accounting estimate

A: The implications of a revised accounting estimate will be explained :

Q: PART III If a capital expenditure is mistakenly treated as sa reveune expenditrue, how will the…

A: Whenever a company made expenditure it is categorized as revenue expenditure or capital expenditure,…

Q: What is the real return?   Multiple Choice   The after-tax return on assets.   The pre-tax return…

A: Rate of return is the percentage of profit that is earned on an investment.

Q: What is the net effect of the above errors in the 2021 net income? (If understated, put a negative…

A: The accrued expense are those expenses that are due but the payment of these expenses are not made…

Q: Interest revenue need not be added to the gross income to compute for the total income.

A: Gross income and net income are two concepts associated with the accounting that helps to identify…

Q: Does the deductibility of an expense or loss follow accounting practice?

A: The accounting practice is the practice of recording the day-to-day financial transactions of the…

Q: Should we include income derived from illegal sources in the computation of gross income? Why or why…

A: Taxes are a form of dues and obligations which needs to be paid by the individual on income earned…

Q: What are the benefits of calculating depreciation differently for financial reports and for tax…

A: Depreciation means decline in the estimation of benefit inside its valuable life because of mileage…

Q: PROBLEM A Your examination of the financial statements of Water Corporation revealed the following…

A: Net income means the amount of profit earned after deducting all expenses from the revenue of the…

Q: How does accrued but uncollected revenue affect the bal-ance sheet?

A: Accrued revenue: It can be defined as the revenue that has already been earned by the business but…

Q: This kind of errors happens in the event of not knowing the accounting rules properly or not knowing…

A: There are various types of errors that occur while recording or posting accounting transactions.…

Q: How will a capital gain

A: Real estate investment trusts (REITs) are a popular way for investors to own income-generating real…