Solution:- When some fundamental principle of Accountancy is violated while recording a transaction, the error is termed as error of principle.
Two examples of error of principle:-
1• If the purchase of furniture is treated as an ordinary purchase and is thus debited to purchase account instead of furniture account, it will be an error of principle. Similarly, if amount spent on the extension of building is debited to repairs account instead of building account, it is also an error of principle.
2• If the amount spent on the repair of an old machinery is debited to machinery account instead of repairs account.