GCSE-readyInternational GCSE Accounting: common mistakes
The wrong answers students pick most often in our Accounting questions, and why they are wrong. Read these before a test, then open the lesson for anything that surprises you.
Topic 1: The accounting environment
- Business organisations and stakeholders
- Not “A sole trader's bakery”. A sole trader is privately owned, so it is in the private sector.
- Not “A partnership of solicitors”. A partnership is owned by its partners, so it is in the private sector.
- Not “A private limited company”. A private limited company is owned by private shareholders.
- Accounting concepts
- Not “Prudence”. Prudence is about not overstating profits or assets, not using the same method each year.
- Not “Materiality”. Materiality is about whether an item is big enough to matter.
- Not “Business entity”. Business entity keeps the owner's affairs separate from the business.
- Technology in accounting
- Not “It removes the need for any checking”. Software still needs checking because data can be entered wrongly.
- Not “It cannot be hacked”. Any connected software can be hacked, so it needs protection.
- Not “It needs no training”. Staff need training to use accounting software properly.
- Professional ethics
- Not “Objectivity”. Objectivity means not letting bias or conflicts of interest affect judgement.
- Not “Confidentiality”. Confidentiality means keeping client information private.
- Not “Competence”. Competence means having up-to-date skills and knowledge.
Topic 2: Introduction to bookkeeping
- Business documents
- Not “Invoice”. An invoice increases the amount owed, not reduces it.
- Not “Purchase order”. A purchase order is sent by the buyer to order goods.
- Not “Remittance advice”. A remittance advice is sent by the buyer with a payment.
- Books of original entry: day books and the journal
- Not “Sales returns book”. The sales returns book records goods returned by customers.
- Not “Sales day book”. The sales day book records invoices sent to credit customers.
- Not “Cash book”. The cash book records cash and bank receipts and payments.
- The three-column cash book
- Not “Debit side, in the discount column”. The debit discount column is for discount allowed to customers.
- Not “Debit side, in the bank column”. Discounts go in the discount column, not the bank column.
- Not “It is not entered”. Discount received must be entered, so it can be posted to the ledger.