CB Bookkeeper common mistakes
CB Bookkeeper · Understand the traps and how to avoid them.
Records a year-end accrued expense, then in the new year enters the supplier's actual invoice as a fresh expense while leaving the accrual sitting on the books, so the expense is counted twice and the liability is overstated.
The accrual and the later invoice look like two unrelated transactions on two different dates, so the candidate never links them and never clears the accrued liability account.
What to do instead
Pick one method and stay consistent: either reverse the accrual on the first day of the new period so the invoice naturally clears it, or (with no reversing entries) debit the accrued liability rather than the expense account when the invoice is recorded. Then confirm the accrual account nets to zero once the invoice is posted.
Makes a one-sided adjusting entry - for example debits Insurance Expense for the expired portion but never credits Prepaid Insurance - leaving the balance sheet account untouched.
The candidate works backwards from the income statement ('the profit figure looks wrong') and stops as soon as the expense line is corrected, without asking which balance sheet account gave up the amount.
What to do instead
Before writing any adjusting entry, identify the original transaction and which account is still misstated. Every adjusting entry must hit at least one income statement account and one balance sheet account; after posting, re-total the adjusted trial balance to confirm it still balances and that the related asset or liability moved by the same amount.
Treats every error found in the prior year's books as requiring a correction entry or prior-period adjustment in the current year, including errors that have already reversed themselves (such as a misstated accrued expense that was paid and cleared in the following period).
'Correct the error' sounds like 'restate the error,' so the candidate never tests whether the misstatement still exists at the current balance sheet date.
What to do instead
Test whether the error counterbalances. If it touched only temporary accounts (or a payable/expense pair), it self-corrects by the end of the next period and no current-year entry is needed. If it touched a permanent account (inventory, equipment, retained earnings) the misstatement is still there and must be corrected. State the closing balance of the misstated account before deciding.
Records the payroll entry at net pay - debiting Salaries Expense for the amount that left the bank account - and never sets up liabilities for income tax withheld and other employee deductions.
The bank statement is the visible evidence, and net pay is the only cash movement the candidate can see. Withholdings never appear as a separate cash outflow, so they get skipped.
What to do instead
Build the entry from gross: debit Salaries Expense for gross wages; credit a separate payable for each employee withholding (income tax, social insurance, pension, garnishments); credit Cash for net pay only. Gross wages must equal net pay plus all employee deductions, and total payables must equal what is remitted to the authorities afterwards.
Treats employer payroll taxes and contributions as if they were employee deductions - netting them out of gross pay - or leaves them out of the payroll entry entirely.
Employer contributions appear on the same payroll report and are labelled with the same tax names, so they get lumped in with the amounts withheld from the employee.
What to do instead
Employer taxes are an additional cost and do not change the employee's net pay: debit Payroll Tax Expense and credit the matching payable. Total cash outflow equals net pay plus employee withholdings plus employer taxes. Check the entry by confirming that employee net pay is unaffected by the employer portion.
Charges a full year of depreciation in the year an asset is bought and again in the year it is sold, instead of prorating, and records the sale without removing the asset's cost and accumulated depreciation.
The candidate memorizes the annual depreciation formula and applies it mechanically, and partial-year conventions feel like arbitrary complications rather than part of the policy.
What to do instead
Apply the entity's stated convention (nearest-month, half-year, or exact months) and depreciate only up to the disposal date. The disposal entry must remove both original cost and accumulated depreciation, record proceeds, and recognize the gain or loss - then check that the asset no longer appears on the books.
When the physical count differs from the perpetual records, edits the count sheet or the book balance so the two agree instead of recording the difference.
The count feels like the objective truth and the ledger feels like the record that must be right, so the gap is treated as a counting mistake rather than a real shrinkage loss.
What to do instead
Record the difference as its own entry - debit Inventory Shortage (or Cost of Goods Sold) and credit Inventory - so the books reflect the count. Then investigate: shortages concentrated in one product, location, or shift are a control red flag pointing at receiving, custody, or waste. Never adjust a count sheet to match a ledger.
Includes goods in transit in the count because the company paid the freight, and includes goods held on consignment because they are physically in the warehouse.
Physical location and who pays the carrier feel like ownership signals, and the candidate does not go back to the purchase terms or the consignment agreement.
What to do instead
Ownership follows the terms, not the truck: FOB shipping point means the buyer owns goods in transit, FOB destination means the seller does. Consigned goods stay on the consignor's books. Run a cutoff test on shipping and receiving documents dated around period end to confirm which side owns each in-transit shipment.
Answers a control-design question with generic advice - 'train staff better', 'increase supervision', 'hire trustworthy people' - without naming the specific procedure or the incompatible duties being separated.
These are the intuitive answers in everyday life, and the candidate has not learned to translate a fraud opportunity into the functions of custody, recording, authorization, and reconciliation.
What to do instead
Name the asset at risk and the incompatible functions first, then state the control that separates them. For example: 'the employee who opens the mail does not post to the receivables ledger, and a second person prepares the bank reconciliation' - not 'improve oversight.' A specific, testable procedure earns the mark; an exhortation does not.
Misclassifies controls - calling a bank reconciliation a preventive control, or treating segregation of duties as a detective control - or claims a control exists simply because a policy manual describes it.
The candidate memorizes a list of control names without the preventive/detective distinction, and confuses a written policy with evidence that the control actually operated.
What to do instead
Sort by timing: a control that stops the problem before it happens (approvals, segregation of duties, physical safeguards, pre-numbered documents, system access limits) is preventive; one that finds the problem after the fact (reconciliations, surprise counts, exception reports, internal audits) is detective. For 'does the control exist' questions, ask for evidence of operation - a signed reconciliation, an approval stamp, a matched three-way package - not a policy document.