ACCA Applied Knowledge · Financial Accounting · Trial balance
A bookkeeper paid $1,200 for office repairs by debiting the machinery (non-current asset) account and crediting the bank account. Which describes this error?
This is an error of principle. Repairs are revenue expenditure that should be debited to an expense account, but the amount was debited to a non-current asset account, a wrong class of account. Debits equal credits, so the trial balance still balances and the error stays hidden.
- AError of principleCorrect
- BError of omission
- CCompensating error
- DError of original entry
Explanation
Repairs are revenue expenditure and should be debited to a repairs expense account. Debiting a non-current asset account treats it as capital expenditure, which is a wrong class of account, so it is an error of principle. The trial balance still balances. Original entry would involve a wrong amount.
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