Purchase account is overcast by ₦200, while wages account is undercast by ₦200. This is
Answer Details
This is an example of a compensating error. A compensating error is when an overstatement in one account is offset by an understatement in another account by the same amount. In this case, the overcast in the Purchase account by ₦200 is offset by the undercast in the Wages account by ₦200. As a result, the total of the accounts is not affected and the error goes unnoticed.