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Which one of the following would occur if the purchase of computer stationary was debited to the computer equipment at cost account?
A. An overstatement of profit and an overstatement of non-current assets
B. An understatement of profit and an overstatement of non-current assets
C. An overstatement of profit and an understatement of non-current assets
D. An understatement of profit and an understatement of non-current assetsThe answer is A but I don’t understand the link between profit and non-current assets and the reasons why over/understatement of each. I have searched for explanation in Vietnamese (my own language) and English but haven’t found anything satisfied yet. Please help explaining, thank you very much!
This is all explained in my free lectures (and you cannot expect me to type out all of my lectures here).
The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
(Computer stationery is an expense for the SOPL, computer equipment is a non-current asset for the SOFP.)
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