Question

In case the accountant is unable to differentiate between capital expenditure and revenue expenditure it is type of error ________.

• A. Accounting error
• B. Errors of principle
• C. Errors of omission
• D. Errors of commission

Answer 1

The correct option is B Errors of principle

When a transaction is passed in the books of account by not following the fundamental rule of accounting, it is an error of principle. Like capital expenditure are debited to revenue expenditure. For example, purchase of machinery debited to purchase account.