Question

When transaction has been recorded in total disregard to the fundamentals of double entry system, the mistake or error is called errors of ______.

• A. Principle
• B. Omission
• C. Commission
• D. None

Answer 1

The correct option is A Principle

Accounting entries are recorded as per the generally accepted accounting principles. If any of these principles are violated or ignored, errors resulting from such violation are known as errors of principle. An error of principle may occur due to incorrect classification of expenditure or receipt between capital and revenue. This is very important because it will have an impact on financial statements. It may lead to under/over stating of income or assets or liabilities, etc.