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Net profit was calculated as being $10,200. it was later discovered that the capital expenditure of $3000 had been treated as revenue expenditure , and revenue receipts of $1400 had been treated as capital receipts.
what is the net profit after correcting this error?
sir here why are we adding capital and revenue both? i think the revenue should be subtracted nd capital added. what logic or concept am i lacking here?Capital expenditure (purchase of NCA’s) should appear on the SOFP and not in the SOPL.
Revenue expenditure should appear in the SOPL and not in the SOFP.Revenue receipts should appear in the SOPL and do not affect the SOFP.
Capital receipts (sale of NCA’s) affect the SOFP and should not appear in the SOPL.sir we need to correct the error..we should subtract 3000? coz we considered it capital expenditure and revenue to be added..coz we considered it as capital receipt..but at the back the answer only states of adding it all..no reason given..i do understand the concept but we need to correct error to get the net profit
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