Which of the following represents a principle-based accounting error?

Show Answers

5,000 received from Sham was mistakenly credited to Ram's account5,000 spent on installing new machinery was recorded under travelling expenses500 paid for wages was incorrectly debited to the salary account500 worth of raw materials purchased was wrongly charged to the purchase accountNone of the above

Explanation

A principle error occurs when costs or revenues are recorded against incorrect accounting principles or categories. In this case, the 5,000 spent on installing new machinery should be capitalized as a fixed asset, but it was wrongly charged to travelling expenses, which is an error of principle. The other options are errors of clerical nature or misposting within similar accounts.