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Purchase of office furniture Rs. 1,200 has been debited to General Expense Account.It is :
- a)A Clerical error;
- b)An error of principle;
- c)An error of omission.
- d)Compensating error.
Correct answer is option 'B'. Can you explain this answer?
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Most Upvoted Answer
Purchase of office furniture Rs. 1,200 has been debited to General Exp...
Explanation:
An error of principle occurs when a transaction is recorded in the wrong account due to a misunderstanding of the accounting principles involved. In this case, office furniture is a capital expenditure, and as such should be recorded in the Fixed Assets account, not the General Expense account. Recording it in the General Expense account is a violation of the accounting principles, and therefore an error of principle.
To summarize:
- The purchase of office furniture is a capital expenditure, and should be recorded in the Fixed Assets account.
- Recording it in the General Expense account is a violation of the accounting principles.
- This is therefore an error of principle.
An error of principle occurs when a transaction is recorded in the wrong account due to a misunderstanding of the accounting principles involved. In this case, office furniture is a capital expenditure, and as such should be recorded in the Fixed Assets account, not the General Expense account. Recording it in the General Expense account is a violation of the accounting principles, and therefore an error of principle.
To summarize:
- The purchase of office furniture is a capital expenditure, and should be recorded in the Fixed Assets account.
- Recording it in the General Expense account is a violation of the accounting principles.
- This is therefore an error of principle.
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Community Answer
Purchase of office furniture Rs. 1,200 has been debited to General Exp...
An error of principle because error had occurred while applying the accounting principle. here capital expenditure as been treated as revenue expenditure.
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Purchase of office furniture Rs. 1,200 has been debited to General Expense Account.It is :a)A Clerical error;b)An error of principle;c)An error of omission.d)Compensating error.Correct answer is option 'B'. Can you explain this answer?
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