KASNEB CIFA Foundation common mistakes
KASNEB CIFA Foundation · Understand the traps and how to avoid them.
Journals a credit sale as 'Dr Bank / Cr Sales' simply because the goods have left the store, then wonders why the receivables ledger and bank balance are both wrong.
The candidate equates 'a sale happened' with 'cash came in' and skips the step of checking the settlement terms on the invoice.
What to do instead
Before writing any entry, state the settlement terms out loud: cash sale = Dr Bank, Cr Sales; credit sale = Dr Receivables, Cr Sales. Only record Dr Bank when the invoice is marked paid or a receipt is issued.
Calculates reducing-balance depreciation on original cost in years 2 and 3, so the depreciation charge stays the same every year.
The year-1 figure is mentally fixed as 'the rate times cost' and the same line is copied down the schedule without recomputing the base.
What to do instead
Build a three-column schedule (opening carrying amount, charge, closing carrying amount) and always multiply the rate by the opening carrying amount of that year, never by cost. Pro-rate for part-year ownership and for assets bought mid-period.
Values closing inventory at selling price, or at purchase price that excludes carriage inwards and import duties.
The candidate treats 'cost' as 'what the supplier invoiced' and treats the selling price as a safer, higher figure that improves profit.
What to do instead
Apply lower of cost and net realisable value item by item. Cost = purchase price + carriage inwards + non-recoverable duties + direct conversion costs, less trade discounts and returns. NRV = estimated selling price less costs to complete and sell.
Reconciles a bank statement by adding unpresented cheques to the bank statement balance, and deducts outstanding lodgements, producing a figure that moves further from the cash book instead of closer.
The candidate remembers 'adjust for items not on the statement' but not the direction of each adjustment, and mixes the two starting points in one column.
What to do instead
Fix the starting point first. From the bank statement balance: add deposits not yet credited, deduct unpresented cheques. From the cash book balance: deduct bank charges, standing orders and dishonoured cheques, add direct credits and interest received. Never mix both starting points in the same column.
Answers 'a fall in the price of the good' when asked to identify a factor that shifts the demand curve to the right.
Price is the most visible variable in the question, so the candidate reaches for it without checking whether the question asks about a movement along a curve or a shift of the curve.
What to do instead
Before answering, label the scenario: if price of the good itself changes, it is a movement along the existing curve; if income, tastes, price of related goods, population or expectations change, the whole curve shifts. Underline the variable named in the question and apply that test.
Treats a rise in nominal (money) GDP as a rise in real output and concludes living standards have improved by that percentage.
Both figures are labelled 'GDP' and the candidate does not check whether the question says 'at current prices' or 'at constant prices'.
What to do instead
Real GDP = (Nominal GDP / Price index) x 100. If the question gives nominal GDP and an inflation or deflator figure, deflate before drawing any conclusion about output or welfare; state explicitly which measure you used.
Computes price elasticity of demand as percentage change in price divided by percentage change in quantity, then classifies a clearly elastic good as inelastic.
The formula is memorised as a fraction of two percentages without anchoring which one is the numerator, and the negative sign is dropped inconsistently.
What to do instead
Write the formula as PED = (% change in quantity demanded) / (% change in price) before substituting. Quantity always sits on top. Ignore the negative sign when judging magnitude: |PED| > 1 elastic, = 1 unitary, < 1 inelastic.
Applies the quoted annual rate and the number of years directly to a compound interest or present value formula when compounding is monthly, quarterly or half-yearly.
The candidate sees '12% per annum' and substitutes 0.12 and n = years, missing that the compounding frequency changes both the rate and the number of periods.
What to do instead
Always convert to the compounding period first: i = annual rate / number of periods per year, n = years x number of periods per year. Write the conversion on the answer sheet before touching the formula, and use the same converted rate in the annuity and present value tables.
Reads the median of grouped data straight off the middle class midpoint, or divides cumulative frequency by two and stops there without interpolating within the class.
The candidate confuses 'find the class containing the median' with 'find the median', and the grouped formula feels longer than the ungrouped rule.
What to do instead
Use Median = L + [(N/2 - CFb)/fm] x c, where L is the lower class boundary, CFb the cumulative frequency before the median class, fm the median class frequency and c the class width. Show each of the four values explicitly so the marker sees the substitution.
Adds the probabilities of two independent events to get the probability that both occur, or multiplies the probabilities of two mutually exclusive events.
The two rules are learned as isolated formulas and the candidate never tests whether the events can happen together.
What to do instead
Ask the keyword question first: 'can both events occur at the same time?' If no (mutually exclusive), add. If the occurrence of one does not change the other's probability (independent), multiply. For 'either or' with overlap, use P(A or B) = P(A) + P(B) - P(A and B).