PRC-1 · Chapter 8 · Question 80 of 100
Office supplies purchased (and held in stock as assets/prepayments) were mistakenly debited to the Purchases account. This type of error is called:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Error of principle
Explanation
Recording an asset acquisition (office supplies to be held) in an expense/cost of goods sold account (Purchases) is a misapplication of accounting principles.
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