Odisha CHSE +2 Vocational Accounting and Auditing common mistakes
Odisha CHSE +2 Vocational Accounting and Auditing · Understand the traps and how to avoid them.
When preparing the final accounts of a sole proprietor, the candidate records adjustments such as outstanding expenses, prepaid expenses, accrued income, depreciation and closing stock only in the Trading and Profit & Loss Account, and omits the corresponding effect in the Balance Sheet (or vice versa), so the two statements do not reconcile.
Adjustments are taught as a list to be 'given effect to', and candidates memorise the double entry for one statement only; they also run out of time at the end of the paper and stop after the Profit & Loss Account. The habit is reinforced because closing stock appears in two places and only one is usually practised.
What to do instead
Adopt a fixed two-column working sheet: for every adjustment write the P&L/Trading effect in one column and the Balance Sheet effect in the other before transferring any figure into the answer. Treat each adjustment as a pair of entries and tick both columns. Practise at least ten full problems where the adjusted trial balance is prepared first, so the pairing becomes automatic.
In the accounting equation and journal questions, the candidate records a transaction with only one effect (for example, cash sale entered as a debit to Cash only, or goods withdrawn by the proprietor debited to Drawings without crediting Purchases), producing an unbalanced equation.
Candidates read the narrative of the transaction and identify the obvious account, then stop; they have not internalised that every transaction has two named accounts with a direction. Under exam pressure the second, less obvious account (stock, capital, discount) is skipped.
What to do instead
Before writing any entry, force out the sentence 'X account is debited because ... and Y account is credited because ...' in the margin. For equation questions, rewrite the full equation A = L + C after each transaction and check the totals agree. Drill twenty mixed transactions covering drawings of goods, bad debts, discount allowed and received, and depreciation until the second leg is never missed.
In the Bank Reconciliation Statement the candidate starts from the cash book balance and adds/subtracts items in the wrong direction, and includes items that do not belong to the reconciliation at all (such as bank charges already recorded in the cash book, or direct deposits not yet entered).
The add/subtract rules are memorised as a table rather than derived, and candidates do not distinguish between items already in the cash book and items only in the pass book. Confusion between debit balance and credit balance of the cash book compounds the error.
What to do instead
Derive the rule each time from one question: 'Would the pass book balance be higher or lower if this item were recorded?' Then apply the same logic to the cash book. Write the cash book balance as a positive or negative figure explicitly (overdraft negative) and prepare a small reconciliation table listing items under two headings: 'in cash book only' and 'in pass book only'.
While preparing the final accounts of a company, the candidate treats the balance of the Share Forfeiture Account, calls-in-arrears, or the securities premium as revenue items and transfers them to the Statement of Profit and Loss, and misclassifies between share capital, reserves and surplus on the Balance Sheet.
The formats prescribed for company final accounts are learned as templates without understanding which items are capital in nature. Candidates also confuse the treatment of shares issued at a premium or forfeited and reissued, because the sequence of entries is long.
What to do instead
Write a one-page classification sheet: capital receipts (share capital, premium, forfeiture) versus revenue items (calls in arrears shown as a deduction from called-up capital, discount on issue shown as an asset or written off). Work through the full journal sequence for forfeiture and reissue on a simple example (issue at par, calls unpaid, forfeiture, reissue at a discount) and reproduce it from memory before attempting the format.
In partnership admission, retirement and death problems, the candidate forgets one or more of the adjustments: revaluation of assets and liabilities, distribution of the revaluation profit or loss among old partners only, treatment of goodwill through the sacrificing ratio, or transfer of the retiring or deceased partner's share of goodwill to the continuing partners.
The number of simultaneous adjustments is large and each has a different ratio (old ratio, new ratio, gaining ratio, sacrificing ratio). Candidates work through the capital accounts first and treat goodwill and revaluation as afterthoughts, by which time the answer is already written.
What to do instead
Use a fixed checklist before writing any account: (1) new profit-sharing ratio, (2) sacrificing or gaining ratio, (3) revaluation account and its distribution to old partners, (4) goodwill raised and written off, (5) reserves and accumulated profits distributed to old partners, (6) capital adjustment. Tick each item as it is posted, and always show the working for the ratio at the top of the answer.
When asked to distinguish internal check from internal control, or to state the objectives and types of audit, the candidate gives vague definitions ('checking by another person', 'audit is checking of accounts') instead of precise, examinable statements covering the essential elements such as segregation of duties, continuous nature, and the distinction between detection and prevention of fraud.
These theory questions are perceived as easy and are revised from memory of headings only; candidates never practise writing full sentences, so under time pressure they produce one-line answers that do not earn marks for the required points.
What to do instead
Prepare short, written model answers of four to six points for each standard theory question (internal check vs internal control, types of audit, objectives of audit, advantages and limitations of audit) and write them out from memory weekly. Use the structure 'definition - key features - example - limitation' so each answer has substance rather than a slogan.
In vouching questions the candidate states only that the vouchers were checked, without identifying the specific documentary evidence required for each type of transaction (for example, goods purchased: purchase order, goods received note, supplier's invoice, entries in the purchases book and stock records; wages paid: wage sheet, time records, attendance register, payee acknowledgements).
Vouching is studied as a definition rather than as a procedure, and candidates do not connect it to the actual documents they have seen in subsidiary book questions. They therefore write general statements that attract few marks.
What to do instead
Build a table with one row per transaction type (cash purchases, credit purchases, sales, wages, rent, insurance, travelling expenses, sale of fixed assets, legal charges) and one column per document to be inspected, including the book of entry. Learn the table by writing it out, then practise the standard phrasing: 'vouched with ... , checked with ... , traced to ... , and confirmed that ...'.
In depreciation questions the candidate applies the wrong method or the wrong date convention: charging a full year's depreciation on an asset purchased during the year, applying the reducing balance rate to the original cost, or omitting depreciation on the asset sold during the year up to the date of sale.
The formula is remembered but the time factor and the treatment of additions and disposals are not, because most practice is on assets held for the whole year. Candidates also confuse the rate applied to cost with the rate applied to written-down value.
What to do instead
Always draw a timeline of the asset's life showing the date of purchase, the date of sale and the year-end. Compute depreciation only for the months held (or per the question's stated convention), and prepare the asset account and the depreciation account together so the written-down value is visible each year. Solve at least three problems involving mid-year purchase and mid-year sale.
In bills of exchange problems the candidate records the acceptance, discounting, endorsement and dishonour without the noting charges, without the rebate on early payment, and without reversing the entries correctly when the bill is dishonoured after being discounted, so the drawer's and drawee's accounts do not agree.
Each stage of a bill generates a different set of entries and candidates learn them in isolation rather than as a sequence. Noting charges and rebate are treated as minor items, and the reversal on dishonour is the step most often skipped.
What to do instead
Draw a flow diagram of the bill's life (drawing, acceptance, discounting/endorsement/retirement, payment or dishonour) and write the journal entries at each node for both parties side by side. Include noting charges in the dishonour entry and calculate rebate as interest for the unexpired period. Reconcile the drawer's and drawee's accounts at the end of every practice problem.
In auditing questions on the appointment, qualifications, powers, duties and liabilities of an auditor, the candidate mixes the provisions applicable to a company auditor with those applicable to a sole proprietor's auditor, and gives generic duties ('check the accounts honestly') without reference to the statutory duties, the disqualifications, or the distinction between civil and criminal liability.
The topic is statutory and provision-specific, but candidates revise it as a list of headings and never learn which Act or section governs which rule; without the statutory anchor the answer drifts into generalities.
What to do instead
Prepare a comparison chart with rows for appointment, qualifications, disqualifications, remuneration, removal, powers, duties and liabilities, and columns for company auditor and sole-proprietor auditor. For each row, note the statutory source in one phrase and one concrete example of the duty (for example, the duty to report on the adequacy of internal controls and on the maintenance of proper books). Practise writing two full answers of about 150 words each from memory.