D because capital expense is wrongly regarded as revenue expense and this type of errors comes under error of principle. It must be debited to building a/c.

Error of Principle: Explanation

An error of principle occurs when a transaction is recorded in the wrong account due to a mistake in the application of accounting principles. In this case, the wages paid for construction of a building are debited to wages account, which is an incorrect accounting treatment. The correct account to be debited in this case is the construction account.

The following are the key points that explain why this is an error of principle:

1. Nature of the transaction: The transaction involves the construction of a building, which is a capital expenditure. Capital expenditures are recorded in the construction account, which is a capital account, and not in the wages account, which is an expense account.

2. Accounting principles: The principle of consistency requires that similar transactions should be recorded in the same way across different accounting periods. In this case, the wages paid for construction of a building should be recorded in the construction account consistently with other similar transactions.

3. Impact on financial statements: Recording the wages paid for construction of a building in the wages account instead of the construction account will result in an incorrect presentation of the financial statements. The income statement will show higher expenses, while the balance sheet will show lower capital expenditures, which will affect the accuracy of the financial information presented to users.

Conclusion

In conclusion, the error of principle occurs when a transaction is recorded in the wrong account due to a mistake in the application of accounting principles. In this case, the wages paid for construction of a building are debited to wages account, which is an incorrect accounting treatment. The correct account to be debited in this case is the construction account.