Question

Given an example of an item which may have been treated wrongly as Revenue Expenditure and charged in the Trading Account when it should have been treated as Capital Expenditure?​

Answer 1

When an fundamental accounting principles are not followed while recording a transaction, it is an error of principle. For example, treating capital expenditure as revenue expenditure or vice -versa.

For example, purchase of machinery is debited to trading purchases. Its an error of principle.