Tamil Nadu HSE First Year Accountancy common mistakes
Tamil Nadu HSE First Year Accountancy · Understand the traps and how to avoid them.
When asked to explain why accounting information must be reliable, candidates write only that it should be 'correct' or 'accurate' without linking it to verifiable source documents, freedom from bias, and faithful representation of transactions.
The textbook definition of reliability is memorised as a single word, so candidates never unpack the three elements (verifiability, neutrality, faithful representation) that the marking scheme expects. They also confuse reliability with relevance.
What to do instead
Build a two-column table for each qualitative characteristic: name, one-line definition, and one concrete example from a Tamil Nadu sole-trader context (e.g., a credit sale supported by an invoice is verifiable; an estimated sales figure is not). Practise writing a four-sentence answer that names the characteristic, defines it, gives the example, and states the consequence of ignoring it.
Candidates record a transaction in the journal with the correct accounts but reverse the debit and credit, especially for expenses paid in cash, drawings of goods, and discount allowed versus discount received.
The golden rule being applied is chosen by the name of the account rather than by the effect on the business. Students also treat 'the business paid' as a credit because money left the business, forgetting that cash is an asset and therefore credited when it decreases.
What to do instead
Before writing each entry, state aloud the two accounts, their classification (asset, liability, capital, income, expense), and the rule applied. Then write the entry. Drill ten mixed transactions daily using a three-column worksheet: accounts affected, classification, increase or decrease. Only after that column is complete should the debit and credit be written.
In the accounting equation, candidates treat drawings as an expense and subtract it twice, or add fresh capital to the asset side instead of the capital side, so the two sides no longer agree.
Drawings and expenses both reduce the owner's claim, and candidates collapse the two ideas. Fresh capital is mentally linked to the cash received, so it is entered where the cash appears rather than as an increase in capital.
What to do instead
Use a fixed layout every time: Assets = Capital + Liabilities, with a working column on the right showing Capital opening, add additional capital, add net profit, less drawings. Work through a sequence of eight transactions on the same business and verify the totals after each one, writing the arithmetic proof line beneath the equation.
When posting from the journal or subsidiary books to the ledger, candidates post the total of a subsidiary book to the wrong side, or post individual items from the sales book to the credit of the customer instead of the debit.
The rule 'debit the receiver' is applied to the customer's account but the corresponding entry in the sales account is treated as a mirror of the customer entry rather than as an income account that is always credited.
What to do instead
Adopt a ledger-posting checklist: identify the book of original entry, identify whether the posting is an individual item or a total, then apply the account's normal balance. For the sales book specifically, memorise the pair: individual customers debited, sales account credited with the period total. Post one week of transactions and then trace each ledger figure back to its source line.
In the cash book, candidates enter a cheque received on the date it is deposited in the bank rather than the date it is received, and they enter bank charges or interest directly in the cash column.
The two-column cash book is confused with the bank account in the ledger, and the distinction between cash and bank columns as two separate asset records is not secure. Contra entries are also not recognised as such.
What to do instead
Write the rule at the top of every practice sheet: cash column records cash receipts and payments only; bank column records bank receipts and payments only; a contra entry affects both columns and is marked with 'C'. Practise ten entries where cash is deposited into bank and cash is withdrawn for office use until the contra marking becomes automatic.
In the bank reconciliation statement, candidates start with the cash book balance when the question gives the pass book balance, or they add cheques deposited but not yet credited when starting from the pass book balance.
The direction of every adjustment depends on the starting point, and candidates memorise a single list of additions and subtractions without conditioning it on which balance is given.
What to do instead
Always write the starting balance and its source in the first line of the answer. Then for each item ask: has the other book already recorded this? If yes, the item causes a difference and must be adjusted in the direction opposite to the starting book. Prepare a table with columns for item, effect on cash book balance, effect on pass book balance, and fill both columns before choosing one.
Candidates classify the purchase of a machine as revenue expenditure because it was paid in cash during the year, or classify a major repair that extends the life of an asset as revenue expenditure.
The test applied is the mode of payment or the amount involved rather than the nature and effect of the expenditure. The distinction between capital and revenue is treated as a memory list rather than a decision rule.
What to do instead
Apply two questions to every item: does it create a new asset or increase the earning capacity or life of an existing asset, and will the benefit extend beyond the current accounting year? If both answers are yes, it is capital. Practise with a list of fifteen borderline items including carriage on machinery, wages paid for installation, whitewashing, and legal fees on purchase of land.
In depreciation problems, candidates calculate depreciation on the closing book value when the question specifies the straight-line method, or forget to charge depreciation for the full year on an asset purchased mid-year when the question says a full year's depreciation is to be charged.
The two methods are memorised as formulas without the underlying idea that straight-line uses original cost while written-down value uses the opening balance each year. The instruction about part-year depreciation is read but not carried into the working.
What to do instead
Before computing, write the method name, the base (original cost or opening book value), the rate, and the period, as four labelled lines. Then compute. For asset purchases and sales, prepare a separate asset account showing date of purchase and date of sale so the period is visible. Do three full problems, one for each method and one with an asset sold mid-year.
In the final accounts of a sole proprietor, candidates place carriage inward in the profit and loss account instead of adding it to purchases, and place discount received in the trading account instead of the profit and loss account.
The trading account and profit and loss account are treated as two halves of one statement without a clear rule for which items belong to gross profit and which to net profit. Carriage and discount are the classic items where this shows.
What to do instead
Memorise the boundary: the trading account contains only items directly connected with goods bought and sold, plus direct expenses needed to bring goods to saleable condition. Everything else is profit and loss. Build a sorting exercise with twenty account names and place each in trading, profit and loss, or balance sheet before attempting a full problem.
In bills of exchange problems, candidates record the noting charges paid by the holder as an expense of the holder and do not add them to the amount recoverable from the drawee, and they treat the discount on discounting a bill as a liability of the drawer's customer.
The legal flow of obligation is not traced. Noting charges are incurred because the acceptor dishonoured the bill, so they are recoverable from the acceptor, and discount charged by the bank is a cost to the party who discounts the bill.
What to do instead
For every bill, draw a three-party diagram (drawer, drawee, payee) and write the amount owed at each stage. Then write the journal entry and check that the party who caused the cost bears it. Practise the four situations: bill retained, bill discounted, bill sent for collection, and bill dishonoured with noting charges.