VCE Accounting common mistakes
VCE Accounting · Understand the traps and how to avoid them.
When recording a credit sale in the sales journal, the student debits Accounts Receivable and credits Sales but then also enters the transaction in the cash receipts journal because money is expected later.
The student confuses 'value received eventually' with 'cash received now' and has not internalised that journals are classified by the nature of the transaction (credit vs cash), not by the ultimate outcome.
What to do instead
Before writing any entry, classify the transaction by asking 'is cash moving today?' If no cash moves, it belongs in the sales or purchases journal; if cash moves, it belongs in cash receipts or cash payments. Practise sorting a mixed list of 20 transactions into journals before doing any double entry.
When preparing a bank reconciliation, the student adjusts the firm's cash ledger balance for an unpresented cheque or an outstanding deposit.
The student treats all reconciling items as errors to be corrected in the ledger, rather than distinguishing timing differences (which affect only the bank statement) from items the firm has recorded incorrectly or not at all.
What to do instead
Apply the rule 'the ledger is only adjusted for things the firm got wrong or has not yet recorded - bank errors, direct credits, direct debits, dishonoured cheques, interest and bank charges'. Unpresented cheques and outstanding deposits are noted only in the reconciliation statement. Build a two-column table headed 'Adjust ledger' and 'Adjust bank statement' and place every item before writing numbers.
When calculating depreciation with the reducing balance method, the student applies the rate to the original cost every year instead of to the carrying amount.
The student has memorised a single formula and does not connect the method name to its meaning, and often does not lay out a schedule showing the opening carrying amount for each year.
What to do instead
Always draw a year-by-year schedule with columns for opening carrying amount, depreciation expense, accumulated depreciation and closing carrying amount, and write the rate calculation on the line for each year. Check the pattern: reducing balance produces a declining expense, straight line produces a constant one.
When asked to explain why a business should or should not adopt a particular accounting treatment, the student describes the procedure (for example, how to record a bad debt) instead of evaluating the effect on the reports and on decision-making.
The student reads the command word as 'describe' or 'explain how' and defaults to procedural recall, because evaluation requires linking qualitative characteristics and reporting consequences, which is a separate skill.
What to do instead
Underline the command word and the 'why/effect' element before writing. Structure evaluation answers as: effect on a named report element (for example, profit, assets, owner's equity), then effect on a qualitative characteristic such as relevance or faithful representation, then consequence for a user's decision. Two or three sentences in that order earn the marks.
When preparing a balance sheet, the student lists accounts in the order they appear in the trial balance rather than classifying them as current or non-current assets, current or non-current liabilities, and owner's equity.
The student treats the balance sheet as a rearranged trial balance and has not practised applying the classification criteria (timing of benefit or obligation, typically within or beyond 12 months).
What to do instead
Before writing the balance sheet, annotate the trial balance with C, NC, CL, NCL or OE next to each account. Then write the report using the standard classifications and subtotals. Practise with a trial balance that deliberately contains borderline items such as a loan repayable in three years and a vehicle.
When preparing an income statement, the student includes capital contributions, drawings, loan repayments or GST collected as revenue or expense items.
The student conflates all cash inflows and outflows with revenues and expenses, and does not distinguish transactions with the owner or with lenders from transactions with customers and suppliers.
What to do instead
Before preparing the report, cross out every account that is not an income or expense and note where it belongs instead (owner's equity, liability, asset). Use the test 'does this arise from ordinary operations in the current period?' and keep a personal list of common exclusions: capital, drawings, loan principal, GST, purchase of non-current assets.
When recording a transaction in the general journal, the student writes the narration and accounts but omits the posting references, or records the debit and credit on the same line without indenting the credit.
The student focuses on getting the accounts and amounts correct and treats formatting as optional, having not seen the marks allocated to format and cross-referencing.
What to do instead
Use a fixed template for every general journal entry: date, account debited, posting reference, debit amount, indented account credited, posting reference, credit amount, then narration. Rehearse the template until it is automatic, and check the debit and credit totals balance before moving on.
When answering a question about the effect of a transaction on the accounting equation, the student gives the new totals of assets, liabilities and owner's equity without stating the change to each element.
The student answers the question they expected ('what is the balance?') rather than the question asked, and does not systematically work through each element of the equation.
What to do instead
Write the equation A = L + OE at the top of the answer space and, for each transaction, record the effect on each element as +, − or no change with the amount. Then state the conclusion in words. This habit also provides a built-in check that the equation still balances.
When analysing a business's performance, the student calculates ratios correctly but then comments only that a ratio 'increased' or 'decreased' without interpreting what the movement means for the business.
The student stops at the arithmetic because interpreting requires linking the ratio to the underlying cause and to a stakeholder decision, which takes more thought and more writing.
What to do instead
For every ratio, use a three-part sentence: state the movement, state a plausible cause drawn from the scenario, and state the consequence for a named user. For example, 'The receivables turnover fell from 8 to 5 times, suggesting slower collection possibly due to relaxed credit terms; this reduces cash available to pay suppliers, which concerns the bank assessing the loan application.'
When asked to discuss the ethical or internal control implications of a scenario, the student identifies that something is 'wrong' or 'unethical' without naming the control that is missing or the principle that is breached.
The student treats ethics and control as general knowledge questions and does not connect them to specific elements such as segregation of duties, documentation, authorisation, physical control or the ethical principles of the accounting profession.
What to do instead
Keep a checklist of internal control elements and ethical principles and, for each scenario, name the specific element that failed and the specific risk it creates (for example, 'the same employee receives cash and records it, breaching segregation of duties, which allows cash to be misappropriated undetected'). Then state the control that should be introduced.