Error of principle correction

DannyT90
DannyT90 Registered Posts: 158
Am I right in saying that if an error of principle has occurred then as the bank transaction is correct, you don't have to remove that part of the problem?
For example if an Asset account is used instead of an expense account, then you only change them two accounts? I don't have to remove the bank part aswell.

Comments

  • Bertie
    Bertie Registered Posts: 376
    If you have; Dr Insurance 100 Cr Bank 100 in the books, yet the expense should have landed into the Electricity a/c.

    Dr Electricity 100 Cr Insurance 100.


  • DannyT90
    DannyT90 Registered Posts: 158
    That's what I thought but in the AAT study support section, there's real life scenarios tutorial and when they correct this sort of issue they remove the bank transaction too, which I thought was unnecessary.
  • Mike Webster
    Mike Webster Registered, Tutor Posts: 203 Dedicated contributor 🦉
    It may be 'unnecessary' but you should reverse the original error and then post the correct entries. This provide a much clearer audit trail should any queries arise later on.
    Michael JH Webster AATQB FMAAT
  • DannyT90
    DannyT90 Registered Posts: 158
    Even if half of the original error wasn't wrong?
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