Buildings account is debited with an amount towards repairs. This is an example of?
Correct answer: D. Error of principle
- A. Error of commission
- B. Compensating error
- C. Error of omission
- D. Error of principle
Explanation
Repairs are revenue expenditure and should be debited to Repairs Expense, not to the Buildings Account, which represents capital expenditure. Misclassifying revenue expenditure as an asset is an error of principle.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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