Section A

A bookkeeper correctly entered a $500 payment for motor repairs in the cash book, but debited the motor vehicles (asset) account instead of the motor expenses account.

What type of error is this?

Answer options:

Error of commission

Error of principle

Error of original entry

Compensating error

How to approach this question

Identify the classes of the accounts involved. Motor repairs is an expense. Motor vehicles is an asset. Mixing up classes is an error of principle.

Full Answer

B.Error of principle✓ Correct

An error of principle occurs when a transaction is entered in the wrong class of account, such as recording an expense (motor repairs) as an asset (motor vehicles).

Common mistakes

Confusing error of principle with error of commission.

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Practice the full ACCA FA — Financial Accounting Practice Exam 5

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