Question

Give two examples for error principles

Answer 1

Answer:

1. Furniture was purchased on credit for $500 to be used in the office purpose. It was debited to purchases account.

2. Rent received from a tenant, $100, was credited to premises account.

Explanation:

1. Furniture was purchased on credit for $500 to be used in the office purpose. It was debited to purchases account.  (This means a capital expenditure is being treated as revenue expenditure.)

2. Rent received from a tenant, $100, was credited to premises account, (This means a revenue receipt is being treated as a capital receipt.)