Maharashtra HSC Bookkeeping & Accountancy common mistakes
Maharashtra HSC Bookkeeping & Accountancy · Understand the traps and how to avoid them.
When a transaction has more than two accounts affected, the candidate records only one debit and one credit and drops the balancing account, so the journal entry does not balance and a suspense difference appears later.
Candidates learn the two-account pattern first and then apply it mechanically to every transaction; combined entries such as goods purchased and carriage paid together, or a bad debt written off with a discount allowed, are split mentally but only one pair is written.
What to do instead
Before writing any entry, list every account the transaction touches, mark the debit or credit nature on each, and count that total debits equal total credits in rupees before moving on. Practise compound entries where three or more accounts appear, and always write the narration so a missing account becomes visible.
The candidate records a credit sale of goods in the Sales Book but posts the customer's account to the credit side of the ledger, or posts the Sales Book total to the debit side of the Sales account.
The rule 'debit the receiver' is memorised as a phrase but not linked to the direction of posting from a subsidiary book; the candidate confuses the side of the original entry with the side of the ledger posting.
What to do instead
Build a fixed posting table for each subsidiary book: Sales Book means debit the customer, credit Sales; Purchases Book means credit the supplier, debit Purchases; Cash Book receipts mean debit Cash, credit the named account. Post one book at a time and tick each ledger account against the book total before starting the next.
The candidate treats a cheque deposited but not yet cleared as a receipt in the Bank Reconciliation Statement, or adds a dishonoured cheque to the pass book balance instead of deducting it.
The candidate does not first fix which balance is the starting point (cash book or pass book) and whose book the adjustment belongs to, so the sign of each adjustment is guessed rather than reasoned.
What to do instead
Write the starting balance at the top and label it 'as per cash book' or 'as per pass book'. For each item ask: in which book has it already been recorded, and in which book is it still missing? Then apply the opposite effect in the other book. Prepare a small two-column working of items already entered in each book before writing the statement.
The candidate charges depreciation on the original cost of an asset every year even though the question specifies the written-down value method, or forgets to charge depreciation for the part of the year when an asset is bought or sold mid-year.
Only one depreciation method is practised deeply, and the phrase 'at 10% p.a. on the diminishing balance' is read as 'at 10%' without noticing the method and the time factor.
What to do instead
Underline the method words and the date of purchase or sale in the question before calculating. Under the written-down value method, compute depreciation on the opening book value each year, not on cost. For mid-year acquisitions or disposals, prorate by months and show the working in a small table of year, opening value, depreciation and closing value.
While preparing the Trading and Profit and Loss Account, the candidate puts carriage inward in the Profit and Loss Account, or puts discount received in the Trading Account, and then wonders why the gross profit is wrong.
Both accounts are prepared in one flow and the candidate sorts items by habit rather than by asking whether the item relates to goods bought and sold or to general business expenses and incomes.
What to do instead
Use a sorting rule: items connected with purchase, sale, stock and direct expenses go to the Trading Account; items of general expense, income, gain or loss go to the Profit and Loss Account. Physically write the adjustment items in a separate list first, then place each one by asking 'does it change gross profit or net profit?'
The candidate corrects an error by simply reversing the wrong entry with an opposite entry, instead of passing the entry that is actually needed, so the corrected accounts show the wrong amount.
The candidate treats rectification as 'cancel and redo' without analysing what was actually written and what should have been written; the difference between the two is not computed.
What to do instead
For every error write two lines: what was actually recorded, and what ought to have been recorded. The rectifying entry is the difference between the two, not the full reversal. For errors of principle and errors of omission, first decide whether a suspense account is needed; only errors affecting the trial balance go through Suspense.
In a statement of affairs under the single entry system, the candidate includes drawings as a liability or omits closing capital adjustments, so the profit calculated from the opening and closing capital does not match the adjusted figure.
The formula 'profit equals closing capital plus drawings minus additional capital minus opening capital' is memorised as a string without understanding that drawings reduce capital and fresh capital increases it.
What to do instead
Prepare the statement of affairs first to find opening and closing capital, then apply the adjustment formula item by item, writing each item with its sign. Reconcile by asking: did drawings reduce the owner's stake, and did fresh capital increase it? If the two methods (statement of affairs and adjusted capital) disagree, find the missing item before writing the answer.
The candidate omits the notional profit or loss on the sale of a bill before maturity, or records the discounting charges in the wrong account when a bill is discounted with the bank.
The three ways of disposing of a bill (retaining, discounting, endorsing) are learnt as separate cases, and the candidate does not see that each produces a different set of entries and a different charge.
What to do instead
Write the three disposal routes side by side with their entries: on discounting, debit Bank and Discount and credit Bills Receivable; on endorsement, debit the endorsee and credit Bills Receivable; on sending for collection, debit Bills Sent for Collection. Learn the discount as an expense of the drawer and never as a reduction of the bill amount.
For a not-for-profit concern, the candidate treats the excess of income over expenditure as profit to be distributed, or records the subscription received in advance as income of the current year.
The commercial accounting habit of profit and capital is carried over, and the special terms of not-for-profit accounting (surplus, deficit, life membership fees, subscriptions outstanding and advance) are not distinguished.
What to do instead
Fix the vocabulary first: income and expenditure account gives surplus or deficit, which is added to or deducted from the capital fund, never distributed. Classify each subscription item as relating to the current year, earlier years (asset) or next year (liability) before writing the entry, and treat life membership fees as capital receipts unless the question says otherwise.
The candidate prepares the trial balance and, when it does not tally, forcibly inserts the difference in the Suspense account without searching for the error, then treats the trial balance as correct.
The candidate believes a tallied trial balance proves accuracy, and under time pressure the suspense figure becomes a shortcut instead of a diagnostic tool.
What to do instead
Remember that a tallied trial balance proves only arithmetical agreement, not absence of errors. When it does not tally, re-add both sides, check ledger balances carried forward, and look for one-sided postings, wrong totalling of subsidiary books and omitted accounts before using Suspense. Keep Suspense as a genuine account to be cleared by rectification, not as a balancing plug.