Accountancy
Core concepts
A candidate must be fluent in the accounting equation (Assets = Liabilities + Capital), the double-entry rule, and the accounting cycle from source document to trial balance and final statements. Know the distinction between capital and revenue expenditure, the treatment of accruals and prepayments, depreciation methods (straight-line and reducing balance), and the preparation of the statement of financial position and statement of profit or loss. Understand control accounts, bank reconciliation, and the correction of errors through suspense accounts.
Common traps
Questions often test whether you post to the correct side of an account. Remember: debit the receiver, credit the giver. A frequent trap is confusing a trial balance that balances with one that is error-free - errors of principle, omission, commission, and compensating errors do not disturb the trial balance. Another trap is treating drawings as an expense rather than a reduction of capital. Watch for questions on the distinction between provision for doubtful debts and bad debts written off.
Worked example / rule of thumb
A machine costs 500,000 with a residual value of 50,000 and a useful life of 5 years. Straight-line depreciation = (500,000 − 50,000) ÷ 5 = 90,000 per annum. Under reducing balance at 20%, year one = 500,000 × 20% = 100,000; year two = (500,000 − 100,000) × 20% = 80,000. Rule of thumb: reducing balance never reaches zero, so always check whether residual value is stated.
Exam technique
Show workings; markers award method marks. State assumptions where figures are ambiguous.