Question

Give two examples of errors of principle.

Answer 1

Here are the examples of errors of Principle
(i) Expenses Paid for Installation of Machinery Debited to Expenses Account. In this transaction, expenses paid for the installation of machinery which is a capital expenditure and should be debited to machinery account has been treated as revenue expenditure and wrongly sundry expenses account. This error violates the accounting principle.
(ii) Amount Spent on Repair of Machinery Debited to Machinery Account. In this transaction, amount of repair is revenue expenditure and should be debited to repair account which has been treated as capital expenditure and wrongly debited to the machinery account. This error also violated the accounting principle.