Goods sent on approval basis' have been recorded as 'Credit sales'. This is an example of____________?
Correct answer: A. Error of principle
- A. Error of principle
- B. Error of commission
- C. Error of omission
- D. Error of duplication
Explanation
Goods sent on approval remain the seller’s inventory until the customer approves them, so treating them as credit sales applies the wrong accounting principle. This makes it 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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