ExpertEasy2 marksMultiple Choice
ACCA · Question 18 · Preparing a trial balance
Section A
Which of the following describes an 'error of principle'?
Section A
Which of the following describes an 'error of principle'?
Answer options:
A.
Entering a transaction with the correct amounts but on the wrong side of both accounts
B.
Entering the purchase of a motor vehicle into the motor expenses account
C.
Entering a payment to supplier A into supplier B's account
D.
Completely omitting a transaction from the accounting records
How to approach this question
Recall the definitions of different types of errors. Principle = wrong class of account (asset vs expense). Commission = wrong account, right class. Omission = completely missed.
Full Answer
B.Entering the purchase of a motor vehicle into the motor expenses account✓ Correct
An error of principle is when an entry is made in the wrong class of account, violating accounting principles. For example, treating capital expenditure (buying a vehicle) as revenue expenditure (motor expenses).
Common mistakes
Confusing error of principle with error of commission.
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