A machine purchased for business use is debited to the Purchases Account instead of the Machinery Account. What type of error is this?
Correct answer: C. Error of principle
- A. Error of complete omission
- B. Error of commission
- C. Error of principle
- D. Compensating error
Explanation
A machine is a capital asset, whereas purchases normally represent goods bought for resale. Recording the transaction in the wrong class of account is an error of principle, although the trial balance may still agree.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Correction of Errors and Suspense Accounts
Accounting errors are corrected by journal entries after identifying whether the mistake affects one account or both sides of double entry. Suspense accounts temporarily hold an unexplained trial balance difference and must be cleared, while errors of omission, commission, principle, original entry and reversal require different corrections.
Practise Correction of Errors and Suspense Accounts
34 free Correction of Errors and Suspense Accounts MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Accounting questions like this
Accounting is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Correction of Errors and Suspense Accounts questions
The purchases book is undercast by Rs. 4,000. Which entry rectifies the error?
Which type of error is most likely to create a suspense account difference?
A transaction is completely omitted from the books of account. What is its effect on the trial balance?
Two independent errors cancel each other so that the trial balance agrees. What are these errors called?
If the credit side of a trial balance exceeds the debit side before rectification, what balance will the suspense account normally show?
A payment of Rs. 7,500 to a creditor is correctly posted to the creditor's account but is omitted from the Cash Account. Which entry rectifies the error?