2025 · Q79
When purchase of an asset is treated as an expense, in the accounting context, it is called:
General Accounting Principles, Auditing and InsuranceFinal accounts
- AError of principle
- BError of omission
- CError of commission
- DCompensating error
Explanation
Treating the purchase of an asset (a capital item) as an expense (a revenue item) violates the fundamental principle distinguishing capital and revenue, so it is an error of principle. It is not an omission (nothing is left out), a commission (wrong person/amount), or a compensating error.