ACCA Applied Knowledge · Financial Accounting · Correction of errors
Mehta Co's bookkeeper recorded a cash sale of $2,400 by debiting cash $2,400 and crediting sales $2,400. The sale was in fact a sale on credit to a customer, Ravi. Which type of error has occurred?
This is best classified as an error of principle, because the debit was posted to cash, a different class of account, instead of receivables. The amount was right and the transaction was recorded, so it is not omission or original entry.
- AError of omission
- BError of original entry
- CError of principleCorrect
- DError of commission
Explanation
A credit sale should have been debited to receivables, but the debit was made to cash, an account of a different class. The amount is correct, so it is not original entry, and the transaction was recorded, so it is not omission. Since the wrong class of account was debited, it is an error of principle in this question's classification.
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