Accounting for IGCSE & O level - Accounting Procedures (Section 12 - No. 28)
What impact does the error where the payment of £500 to an employee was credited to the wages account and debited to the bank account have on the draft profit?
No impact
Expenses are understated by £500
Expenses are overstated by £500
No information is available
Explanation
Error of principle doesn't affect the expenses of the company, it affect the balance sheet.