Multiple choice

The amount of the dishonoured bill has been wrongly debited to general expenses account, which type of error has been committed?

  1. Error of principle

  2. Error of commission

  3. Compensating error

  4. Error of omission

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

An error of principle occurs when a transaction is recorded in violation of the fundamental accounting principles. Dishonour of a bill is a financial matter that should not be treated as a general expense. Recording it in general expenses account violates the principle of classifying transactions by their nature - it's a receivable issue, not an operating expense.