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
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.
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..
You must be logged in to reply to this topic.