ACC 101 Lab-Fall 2023 Lab Assignment #7 Multiple Choice (2.5 points each) 1. When a company records a capital expenditure as a revenue expenditure (i.e. expenses it), what affect does this erro have on the company's financial statements in that year? a. Total Assets are overstated and Net Income is overstated. b. Total Assets are understated and Net Income is overstated. Total Assets are understated and Net Income is understated. d. Total Assets are overstated and Net Income is properly stated. C. Name: a. $800,000 b. $610,000 2. Plum Corporation purchases new office equipment for $5,000,000 on January 1, 2023. Plum estimates that the equipment has a $200,000 residual value and a useful life of 6 years. Plum uses the straight-line method to reco depreciation. Assume that on January 1, 2026, after three years, Plum estimates that the equipment's remaining life is 8 years and residual value is $120,000. A depreciation schedule would show depreciation exp for 2026. c. $496,000 d. $443,636 e. $310,000 Frin Ayala