very trickiest questions on cbe help??

Aabdulwahabsiddiq16y ago

1. An revenue expenditure is correctly recorded in the cash books but debited to the research and development account. What type of error is that:
a.Error of original entry
b.Compensating error
c.Error of principle
d.Error of commission

2. An oil refinery machine is purchased at a cost of 2000000$ by crediting bank but debited to goodwill account what type of error is that:
a.Error of principle
b.Error of commission
c.Error of original entry
d.Trial balance is not balanced.

((deleted)15y ago#1

error of principle occurs when a transaction has been entered on the right side of the wrong class of account- hence i settle for answer B on the first question coz research and dvlpmnt costs myt b treated as capital expenditure therefore it wld b wrong to treat revenue expenditure as research and dvlpmt costs coz they belong to different classes...

for your second question i wld go for error of commission coz the transaction was entered in the right class(both machinery and goodwill are assets) but in a wrong real (personal) account and this suit the definition of error of commission..