Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Capex & Revex
- This topic has 7 replies, 2 voices, and was last updated 10 years ago by John Moffat.
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- July 12, 2014 at 4:20 pm #178742
Profit for a business was calculated as being $10,200. It was later discovered that capital expenditure of $3,000 had been treated as revenue expenditure, & revenue expenditure of $1,400 had been treated as capital exp.
What should have been the correct profit ?
July 16, 2014 at 6:48 am #178961Capital expenditure should appear in the Statement of financial position – not in the Statement of profit or loss. Revenue expenditure should appear in the Statement of profit or loss – not in the Statement of financial position.
So to get the correct profit, the capital expenditure of 3000 should be added back (because it should not have been charged) and the revenue expenditure of 1400 needs subtracting (because it should have been charged).
July 16, 2014 at 9:00 pm #179029But in bpp text both 3,000 and 1,400 are added in 10,200
July 17, 2014 at 8:39 am #179050My answer to what you typed is correct.
Either BPP have made a mistake, or you have mistyped the question (are you sure it says revenue expenditure of $1400 and not revenue receipt of $1400 ??)
July 18, 2014 at 11:24 am #179119Oh yes Sorry that’s my mistake. It is revenue receipt not expenditure.
July 19, 2014 at 9:38 am #179149Then they are correct to add it 🙂
Revenue receipts appear in the Statement of profit or loss;
July 19, 2014 at 1:39 pm #179166What’s the difference between revenue exp. & receipts ?
July 20, 2014 at 11:32 am #179205Expenditure is when you pay out money for expenses – e.g. rent, electricity etc.
Receipts are when you receive money – e.g. sales, rent received.I do suggest that you watch the free lectures on here.
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