PRC-1 · Chapter 3 · Question 10 of 100
A routine maintenance repair costing Rs. 5,000 for a delivery truck was incorrectly debited to the Motor Vehicles (asset) account instead of the Repair Expense account. Which type of error does this represent?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Error of principle
Explanation
An error of principle occurs when an entry is posted to the correct side (debit) but to an account of the wrong nature, such as treating a revenue expense (repairs) as a capital expenditure (asset).
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