Question

Inclusion of freight paid on purchase of an office equipment in freight account is an example of error of _________.

• A. principle
• B. oimission
• C. commission
• D. compensating

Answer 1

Answer: (A)

principle

While doing the accounting, if the basic rule of accounting is not followed, there is an error of principle.

For example, freight paid on purchase of equipment is debited to freight account. Its an error of principle as capital expenditure is debited as revenue expenditure. This will affect the profitability of the business. But in such case, there will be no affect on agreement of trial balance.