ACCA Applied Knowledge · Financial Accounting · Trial balance
A business paid $450 for repairs to a delivery van. The bookkeeper debited the van cost account (non-current assets) with $450 and credited bank with $450. What type of error is this?
This is an error of principle. Repairs are revenue expenditure that belong in an expense account, but the entry was made to a non-current asset account, a different class of account. Total debits still equal credits, so the trial balance does not reveal it.
- AError of commission
- BError of principleCorrect
- CError of omission
- DCompensating error
Explanation
Repairs are revenue expenditure and should be debited to a repairs expense account. Debiting a non-current asset account is posting to the wrong class of account, which is an error of principle. Debits still equal credits, so the trial balance balances. An error of commission would involve the wrong account of the same class.
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