B2: 4.04 Errors of principle

What is an error of principle?

An error of principle occurs when a part of a transaction is recorded in the wrong General Ledger account.

When an error of principle has been found, it can be corrected using a journal to move the incorrect entry to the correct ledger account.


On 12th May, a bookkeeper noticed that the total of the net column of the Sales Returns Day Book for the week ended 7th May was posted to the debit side of the Purchases Returns account in the General Ledger rather than the Sales Returns account. The total posted to the account was £1,400. The other columns of the day book were posted to the right ledger accounts.

To correct this error of principle the bookkeeper should record a credit to the Purchases Returns account in order to cancel the effect of the incorrect posting. The corresponding debit can will be posted to the correct Sales Returns account. This can be seen in the following journal.

The above journal would then be recorded in the General Ledger as follows:

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