Give two examples of errors of principle?
'Errors of principle' refer to those errors that are committed when recording of transactions is done against the accounting principle. Below given are the examples of error of principle
1. Wages paid for construction of building debited to Wages Account
In this transaction, wages paid for the construction of building is a capital expenditure and accordingly building account should have been debited. However, in this case, it is treated as revenue expenditure and is debited to Wages Account. This error violates the accounting principle.
2. Amount spent on repair of machinery debited to Machinery Account
In this transaction, amount of repair is a revenue expenditure and not a capital expenditure. It should have been debited as ‘Repairs’, but was wrongly debited to the Machinery Account.