An owner purchased machinery for her business at a cost of $5000. In the accounting records, this was recorded as revenue expenditure. She also put an extra $2000 of capital into the business and recorded this as a revenue receipt in the accounting records. What was the net effect of these errors on her profit for the year (ignore depreciation)?
- A$3000 overstated
- B$3000 understated
- C$7000 overstated
- D$7000 understated