Question

Treating a revenue expense as a capital expenditure is an example of __________.

• A. compensating errors
• B. errors of principle
• C. errors of omission
• D. errors of commission

Answer 1

The correct option is B errors of principle

When an fundamental accounting principles are not followed while recording a transaction, it is an error of principle. For example, treating capital expenditure as revenue expenditure or vice -versa.

For example, purchase of machinery is debited to trading purchases. Its an error of principle.