Section A

Which of the following describes an 'error of principle'?

Answer options:

Entering a transaction with the correct amounts but on the wrong side of both accounts

Entering the purchase of a motor vehicle into the motor expenses account

Entering a payment to supplier A into supplier B's account

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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Practice the full ACCA FA — Financial Accounting Practice Exam 1

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