Which of the following error is an error of principle
A)5,000 received from Sham credited to Ram A/c
B)5,000 incurred on installation of new plant debited to travelling expenses A/c
C)500 paid for wages debited to salary A/c
D)500 being purchase of raw material debited to purchase A/c ` 50

Question

Quizplus · Accepted Answer

An error of principle occurs when an accounting transaction is recorded in the wrong category, violating the fundamental principles of accounting. In choice B, the cost incurred on the installation of a new plant, which should be capitalized as part of the plant's cost, is incorrectly debited to the travelling expenses account. This misclassification between capital and revenue expenditure is an error of principle.

Which of the Following Error Is an Error of Principle