very trickiest questions on cbe help??

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  • Avatar of abdulwahabsiddiq
    abdulwahabsiddiq
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    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.


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    deevah
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    • Topics: 0
    • Replies: 5

    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..

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