PRC-1 · Chapter 3 · Question 73 of 100
The purchase of a new office computer for Rs. 50,000 was debited to the Office Stationery (expense) account instead of the Computer Equipment (asset) account. What type of error has occurred?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Error of principle
Explanation
An error of principle occurs when a transaction is recorded in an account of the wrong fundamental class, such as classifying a capital expenditure (asset) as a revenue expenditure (expense).
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