Mr Bassey purchased a motor vehicle for use in his business and debited the purchases account with the same value. This is an error of?

Mr Bassey purchased a motor vehicle for use in his business and debited the purchases account with the same value. This is an error of?

Answer Details

The error described in the question is an error of principle. An error of principle occurs when a transaction is recorded in the wrong account, but the amount is correct. In this case, the purchase of a motor vehicle should have been debited to the motor vehicle account, which is a fixed asset account, instead of the purchases account, which is an expense account.