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CBSE Class 11-commerce Answered

Wages paid for installation of newly purchased mach machinery debited to weges account. Such type of error is known as
Asked by Lalitkhatri | 14 Jan, 2020, 11:13: AM
answered-by-expert Expert Answer
When wages paid for installation of new machinery are debited to Wages Account instead of debiting it to Machinery Account, it is termed as Error of Principle. 
 
When transactions are recorded in the books of accounts in contravention to the generally accepted accounting principles, it is known as an Error of Principle. In the given situation also, since the amount of wages for installation of New Machinery are incorrectly classified as Revenue Expense instead of capitalising or adding the wages to the Machinery Account/Value of Asset it will be classified as an error of Principle.

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Surabhi Gawade
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Answered by Surabhi Gawade | 14 Jan, 2020, 02:21: PM

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