BGCSE Bookkeeping & Accounts common mistakes
BGCSE Bookkeeping & Accounts · Understand the traps and how to avoid them.
When asked to state the effect of a transaction on the accounting equation, the candidate writes only the account names (for example "Debit motor vehicle, credit cash") and never shows the movement in assets, liabilities or capital, or shows only one side of the equation changing.
Candidates memorise debit and credit rules as a mechanical routine and treat the equation as a separate topic. They do not realise the equation is simply the double entry expressed in totals, so every transaction must keep A = C + L intact.
What to do instead
For every transaction, write three lines before any debit/credit entry: the asset effect (+ or −), the liability effect, and the capital effect, then check the totals still balance. Practise with a table of columns A, C, L and an 'A = C + L' check row, doing ten mixed transactions (cash sales, credit purchase, owner drawings, loan received) until the check is automatic.
The candidate records a credit sale in the cash book or records a cash sale in the sales day book, and cannot explain why a transaction belongs in one book of original entry rather than another.
Candidates learn each book in isolation and match on keywords: they see the word 'sale' and pick the sales book, ignoring whether the sale was for cash or on credit. They have not built the rule that the book used depends on the nature of the transaction, not the name of the account.
What to do instead
Build a decision table with two questions: (1) is cash moving now or later? (2) is the other party a debtor, creditor or the owner? Map each answer combination to exactly one book (cash book, sales day book, purchases day book, sales returns book, purchases returns book, general journal). Apply the table to twenty short scenarios and justify each placement in one sentence.
In the trial balance the candidate enters debit balances in the credit column or vice versa, or omits accounts with nil balances and then reports a difference that is actually an addition error.
Candidates copy ledger balances without classifying them first, and they do not know the normal balance of each account type. They also add columns vertically without re-adding across, so a transposition inside one column looks like a genuine imbalance.
What to do instead
Before writing any figure, label each ledger account as asset, liability, capital, income or expense and write its normal side beside it. Then total each column twice and also total both columns together to confirm debits equal credits. When a difference appears, apply the standard checks in order: re-add both columns, halve the difference, divide by nine, and look for a missing or duplicated entry of that amount.
When correcting an error, the candidate posts a single entry to the account that was wrong, or uses the journal to correct an error of principle by simply reversing the two accounts without stating the correct treatment.
Candidates conflate 'fixing the figure' with 'completing the double entry'. They also treat all errors the same and do not distinguish errors that affect the trial balance (one-sided, transposition, addition) from those that do not (omission, commission, principle, original entry, compensating).
What to do instead
For every correction, write a journal with two named accounts, the amounts, and a narration stating what was wrong and what is now correct. First classify the error: does it affect the trial balance or not? If not, remember two entries are still needed. Work through one example of each of the six error types, stating the correcting double entry and whether a suspense account is involved.
On a bank reconciliation, the candidate adjusts the cash book for items that belong only on the bank statement (unpresented cheques, deposits not yet credited) and adjusts the bank statement balance for items that belong only in the cash book (bank charges, standing orders, dishonoured cheques).
Candidates see two lists of items and apply them to whichever balance is nearest, without asking who has already recorded the item. They do not grasp that the cash book is the business's record and the statement is the bank's record, and each side must be brought up to date with what the other already knows.
What to do instead
Use a two-column working: 'items the business has not yet recorded' (these go to the cash book) and 'items the bank has not yet recorded' (these go to the reconciliation statement). For each item, ask 'has the business written this down yet?' and place it accordingly. Finish by proving the two adjusted balances agree, and always update the cash book balance before reconciling.
The candidate calculates depreciation for a full year on an asset bought partway through the year, or applies the reducing balance rate to the original cost each year instead of to the carrying amount.
Candidates learn one formula and apply it mechanically. They forget that depreciation is an estimate of use over time, so a part-year purchase needs a time apportionment, and they confuse the straight-line base (cost) with the reducing balance base (carrying amount).
What to do instead
Write the base of the calculation at the top of every working: 'straight line: cost ÷ useful life' or 'reducing balance: rate × carrying amount brought forward'. For part-year purchases, show months owned as a fraction of twelve. Keep a disposal account and an accumulated depreciation account for each asset class, and check that cost minus accumulated depreciation equals the carrying amount shown in the statement of financial position.
When preparing the income statement, the candidate records an accrual or prepayment as an expense of the current year without adjusting for the amount already paid or owed, or forgets to carry the adjustment into the statement of financial position.
Candidates treat the trial balance figure as final and see adjustments as optional extras. They do not understand the matching principle: the expense for the period is the amount used, not the amount paid, and every adjustment has a second effect on a receivable or payable.
What to do instead
For each adjustment, write the double entry first: accrual means debit expense, credit accruals (a current liability); prepayment means debit prepayments (a current asset), credit expense. Then compute the charge for the year as amount paid plus closing accrual minus opening accrual, or amount paid plus opening prepayment minus closing prepayment. Show the working in the margin so the figure in the income statement can be traced.
The candidate prepares a statement of financial position that omits the year's profit (or loss), or includes drawings as an expense in the income statement rather than as a deduction from capital.
Candidates build the statement of financial position from the trial balance alone and forget that profit is the link between the two statements. They also treat drawings as a business cost because it is money leaving the business, missing the concept of the owner as a separate accounting entity.
What to do instead
Always start the capital section with opening capital, add net profit (or deduct net loss), deduct drawings, and label the result 'closing capital'. Prove it by checking that total assets minus total liabilities equals closing capital. Practise three full sets of final accounts from a trial balance plus adjustments, ticking each figure back to its source.
In a partnership, the candidate credits the whole profit to the partners' current accounts in the profit-sharing ratio without first deducting interest on capital, partners' salaries and interest on drawings, or posts these appropriations to the capital accounts.
Candidates treat the appropriation account as a simple profit split and do not see that interest on capital and salaries are rewards for the partners' contributions and are charged before the residual profit is shared. They also confuse capital accounts (fixed, permanent) with current accounts (fluctuating, for appropriations and drawings).
What to do instead
Lay out the appropriation account in a fixed order: net profit, less interest on capital, less partners' salaries, add interest on drawings, then share the residual in the agreed ratio. Keep a separate current account for each partner showing opening balance, share of profit, salary, interest on capital, drawings and interest on drawings. Verify that the total of all current accounts equals total partners' funds.
When calculating a ratio such as return on capital employed or gross profit margin, the candidate uses the wrong figure (for example profit before interest and tax versus net profit, or sales versus cost of sales) and then interprets the ratio without comparing it to a prior year or a benchmark.
Candidates memorise ratio names without the definition of each component, and they treat interpretation as describing whether a number is high or low rather than explaining the cause and consequence in the business context.
What to do instead
Write the formula in words beside every calculation and state the units (times or per cent). Use a consistent definition: ROCE = operating profit ÷ capital employed, gross margin = gross profit ÷ revenue. For each ratio, give a one-line cause, a one-line consequence and a comparison with the previous year or a rival. Build a summary table of ratios for two years before writing any commentary.