Syllabus Edition
First teaching 2025
First exams 2027
Error of Principle (Cambridge (CIE) IGCSE Accounting): Revision Note
Exam code: 0452 & 0985
Error of principle
What is an error of principle?
An error of principle occurs when one entry for a transaction is entered into an incorrect account and the type of account is also incorrect
A transaction for an expense could have been entered into an asset account
The correct amount is included in the total for the debits and the total for the credits
The totals will therefore balance
Examiner Tips and Tricks
It is very easy to confuse an error of principle with an error of commission. An error of commission occurs when an account is confused with another account that has something in common. For example, they are both expenses, or they are both trade receivables.
How do I correct an error of principle?
You correct an error of principle the same way as you would correct an error of commission
Undo the entry in the incorrect account
This means making an equal entry on the opposite side of the account
Make an entry in the correct account
Worked Example
On 1 March 2024, Ashika identified an error where $50 was paid for petrol, but the entry was made in the vehicles account rather than the vehicle expenses account. The transaction was entered correctly in the cash book.
Prepare journal entries to correct the error. A narrative is required.
Answer:
The accounts currently look like:
Debit vehicles $50
Credit cash/bank $50
The accounts should look like:
Debit vehicle expenses $50
Credit cash/bank $50
Fix the errors
The vehicles account has been debited by mistake, as this is an asset account not an expense account
Undo the mistake by crediting the vehicles account
Debit the vehicle expenses account
Journal
Date | Details | Debit $ | Credit $ |
2024 Mar 1 |
Vehicle expenses |
50 | |
Vehicles | 50 | ||
Correction of error of principle - vehicle expenses were debited to the vehicles account |
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