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P2 C1 Rectification ofErrors — Account STD 11 Commerce — Question

Gujarat BoardEnglish MediumSTD 11 CommerceAccountP2 C1 Rectification ofErrors2 Marks
Question
What is errors of principle? How to rectify these errors? Explain with illustration.
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Answer

When an error arises because of non-compliance of accounting principles it is known asan errors of principles. Because of ignorance of principles of accountancy when insteadof one account, any other account is debited or credited, error of principle occurs. Insuch type of errors, capital expenditure is debited to revenue expenditure account orrevenue expenditure is debited to capital expenditure account and capital income is credited to revenue income account or revenue income is credited to capital incomeaccount. This type of errors do not affect the trial balance. e.g. Installation charges of machinery $Rs.2,500$ is debited to wages A/c. Here installation charges of machinery is capital expense so wages A/c, will not be debited. By recording it in wrong A/c rule of principle will be break, this journal will be rectified by the following journal proper
Date Particulars L.F. Debit(Rs.) Credit (Rs.)
  Machinery A/c. Dr.   $2,500$  
  To wages A/c.     $2,500$
  (Being error rectified for installation charges for machinery is debited to wages A/c.      

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