10 Common Book Keeping Mistakes - Form Two Students

10 Common Book Keeping Mistakes

Form Two Students in National Examinations - How to Correct Them

Book keeping requires accuracy, attention to detail, and understanding of accounting principles. Many Form Two students struggle with similar concepts in national examinations. This guide identifies the most frequent errors in book keeping and provides effective strategies to overcome them, helping students develop stronger accounting skills and improve their examination performance.

1

Double Entry Principle Errors

❌ Common Mistake

Failing to apply the double entry principle correctly - either recording only one entry or recording both entries on the same side.

Wrong: Cash sale of TZS 10,000 recorded only as debit Cash TZS 10,000

Correct: Debit Cash TZS 10,000, Credit Sales TZS 10,000

✅ Correction Strategy

Remember: For every debit, there must be a corresponding credit. Use the DEAD CLIC mnemonic: Debit Expenses, Assets, Drawings | Credit Liabilities, Income, Capital. Always ask "What is the other side of this transaction?"

2

Account Classification Errors

❌ Common Mistake

Misclassifying accounts - treating expenses as assets or liabilities as income. For example, classifying purchase of machinery as an expense.

Wrong: Machinery purchase recorded in Expenses account

Correct: Machinery purchase recorded as Fixed Asset

✅ Correction Strategy

Learn the characteristics: Assets (long-term value), Liabilities (what you owe), Income (revenue), Expenses (costs). Create a classification chart and practice categorizing different transactions.

3

Trial Balance Imbalance

❌ Common Mistake

Failing to identify and correct errors when trial balance doesn't balance, or making incorrect adjustments to force balance.

Wrong: Adding random figures to make totals equal

Correct: Checking for transposition errors, omitted entries, or wrong postings

✅ Correction Strategy

Systematic checking: Verify arithmetic, check if difference is divisible by 9 (transposition error), review all postings from journals to ledger. Practice with unbalanced trial balances and identify errors.

4

Bank Reconciliation Errors

❌ Common Mistake

Confusing items to add or deduct in bank reconciliation, or treating unpresented cheques and uncredited deposits incorrectly.

Wrong: Adding unpresented cheques to cash book balance

Correct: Adding unpresented cheques to bank statement balance

✅ Correction Strategy

Use the MEMORY method: Missing items from cash book? Add to bank statement. Extra items in cash book? Deduct from bank statement. Create flowcharts for different reconciliation scenarios.

5

Depreciation Calculation Mistakes

❌ Common Mistake

Using wrong depreciation methods, incorrect rates, or failing to account for residual value. Calculating on wrong cost base.

Wrong: Depreciating asset without deducting residual value

Correct: (Cost - Residual value) ÷ Useful life

✅ Correction Strategy

Learn formulas: Straight-line = (Cost - Residual) ÷ Years. Reducing balance = Rate × Book value. Practice with different scenarios and always show working for partial marks.

6

Control Account Imbalances

❌ Common Mistake

Failing to reconcile control accounts with subsidiary ledgers, or incorrect treatment of contra entries and bad debts.

Wrong: Recording bad debts in sales ledger but not in control account

Correct: Recording bad debts in both sales ledger and control account

✅ Correction Strategy

Remember control account is summary of individual accounts. Any entry in subsidiary ledger must reflect in control account. Practice preparing control accounts from given transactions.

7

Accruals and Prepayments Confusion

❌ Common Mistake

Mixing up accruals (expenses incurred but not paid) and prepayments (payments made for future periods).

Wrong: Treating rent paid in advance as an accrual

Correct: Rent paid in advance is prepayment (current asset)

✅ Correction Strategy

Use timeline: Accruals = services received but not paid (liability). Prepayments = payments made for future services (asset). Create decision trees for different scenarios.

8

Suspense Account Errors

❌ Common Mistake

Incorrectly using suspense account to hide errors rather than temporarily balance trial balance, or wrong correction entries.

Wrong: Making random entries to suspense account without identifying error

Correct: Using suspense account only for specific identified errors

✅ Correction Strategy

Suspense account is temporary. Identify error first, then make correction entry that clears suspense account. Practice error identification and correction exercises.

9

Partnership Accounting Mistakes

❌ Common Mistake

Incorrect allocation of profits, interest on capital, or partners' salaries. Confusing capital and current accounts.

Wrong: Recording partners' salaries as drawings

Correct: Partners' salaries are appropriation of profit (not expense)

✅ Correction Strategy

Follow appropriation account format: Profit → Interest on capital → Salaries → Residual profit sharing. Practice preparing partnership financial statements with different profit-sharing ratios.

10

Final Accounts Preparation

❌ Common Mistake

Incorrect transfer of balances to trading, profit and loss account, or balance sheet. Wrong classification in financial statements.

Wrong: Including drawings in profit and loss account

Correct: Drawings deducted from capital in balance sheet

✅ Correction Strategy

Learn the flow: Trading account (gross profit) → Profit and loss account (net profit) → Balance sheet (financial position). Use templates and practice with different sets of trial balance figures.

Effective Book Keeping Study Strategies

Practice Double Entry: Regular practice of double entry for various transactions builds strong foundation.

Understand Concepts: Focus on understanding why accounting principles work rather than memorizing.

Use Templates: Create standard formats for different accounts and financial statements.

Check Work Systematically: Develop a checking routine for trial balance and financial statements.

Learn from Errors: Maintain an error log to identify patterns in mistakes.

Time Management: Practice completing exercises within exam time limits.

Contact MITIHANI POPOTE

📱 WhatsApp: +255 716 655 236

📢 WhatsApp Channel

🌐 Website 📷 Instagram 👥 Facebook

© 2025 MITIHANI POPOTE - Book Keeping Examination Guide

Master accounting principles and avoid common mistakes to excel in your examinations!