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Unit-9 Errors And Their Rectification

Learn about the types of errors which are usually committed in the process of accounting, the procedure for locating and rectifying those errors.

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Give two examples of errors of principle.

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Learning Pundits Content Team

Written on Apr 16, 2019 4:29:17 PM

Examples of errors of principle are:

i) A credit purchase of fixed assets recorded in the Purchases Journal instead of the Journal Proper. This results in debiting the Purchases Account instead of the concerned fixed asset account. This is an error of principle because it amounts to treating an expenditure of capital nature as a revenue expenditure.

ii) An expenditure incurred on repairs of machinery debited to Machinery Account. You know repairs to machinery is a revenue expenditure and should have been debited to Repairs to Machinery Account. Debiting this expenditure to Machinery Account amounts to treating it as a capital expenditure. I't is therefore an error of principle.

iii) Salary paid to Ganga Ram recorded in Cash Book as a payment to Gzinga Warn. This would result in debiting Ganga Ram's personal account instead of treating it as an expense and debiting it to Salaries Account.