Error of Principle: Misclassifying Transaction Type

Steps:

• Define error of principle as recording a transaction in the wrong class of account, like treating revenue expense as capital asset.
• Examine each option for violation of accounting principles on asset vs. expense classification.
• Identify D as misclassifying repair cost (revenue nature) into machinery account (capital nature).
• Confirm others involve omission, wrong posting, or amount errors, not principle violation.

Why D is correct:

• Repairs are revenue expenditure per accounting principles, but debiting machinery account treats it as capital, violating the distinction between capital and revenue items.

Why the others are wrong:

• A: Error of complete omission, as no entry was made at all.
• B: Error of commission, as returns inwards account was used but on the wrong side.
• C: Error of amount or posting, as it involves incorrect recording of invoice value in the journal.

Final answer: D