Q.Which of the following is an example of an 'Error of Principle'?

An Error of Principle is not a clerical slip at all — it is a violation of a fundamental accounting rule, most classically treating capital expenditure as revenue expenditure or vice versa.

Why (b) is correct: Office furniture is a fixed asset — a capital expenditure that should be capitalised on the Balance Sheet and depreciated over its useful life. Debiting it to the Purchases Account (a revenue/expense head) violates the fundamental accounting distinction between capital and revenue expenditure. This is precisely what an Error of Principle means: the double entry is technically complete and the Trial Balance still agrees, but the treatment itself is conceptually wrong, understating fixed assets and overstating expenses (and therefore understating profit).

Why the distractors are wrong:

• (a) The transaction is posted to the correct class of account (a personal/debtor account) but to the wrong individual name — this is a clerical slip, i.e. an Error of Commission, not a violation of any accounting principle.
• (c) An overcast (wrong total) in a subsidiary book is a simple arithmetical mistake — again an Error of Commission, not a matter of principle.
• (d) A transaction never entered anywhere at all is a complete Error of Omission — nothing is recorded wrongly; it is simply missing.

Students often label any mistake involving the 'wrong account' as an Error of Principle. The correct test is narrower: it is an Error of Principle only when a genuine accounting RULE (most commonly capital vs. revenue) has been violated — posting to the wrong personal account of the same class, or a wrong amount/total, remains an Error of Commission.