Hey Accounting Students,
Hope your study is going well! This week I thought I would share some of the mistakes that I made in my Accounting revision and how I addressed them. Maybe you will identify with some of these errors and hopefully my tips and tricks as to how I overcame them will be helpful!
1. Balancing theory and practical
Okay so, most students (including myself) choose Accounting because we are passionate about numbers, Microsoft Excel and can’t help but get excited when we see a well formatted Income Statement. However, nearly every year, about half of the marks in the VCAA final exam are allocated to theory questions.
I was living in denial for the longest time in Year 12, thinking that practical is objectively more important than theory. It was only towards the end of the year, when I was marking my papers, that I realized how many marks I was losing on theory questions. I decided to completely re-think my study and started investing hours upon hours revising theory, including qualitative characteristics, accounting assumptions and practiced applying these concepts to any exam questions I could get my hands on. Immediately, I saw my marks on my practice exams significantly improve.
If you have been putting off studying accounting theory or you don’t remember your qualitative characteristics or assumptions, I would suggest doing some revision of those concepts. Even though I still love T-ledgers and accounting reports way more than writing about why discount revenue meets the definition of revenue, I found that the time that I spent actively revising these concepts improved my final mark on practice exams by a significant amount.
2. Reading the question properly
In Accounting, the materials provided can be very long and wordy. They can give paragraphs and source documents, excerpts from reports that take up full pages. It can be tricky to decipher all of this information when you are doing practice exams. Add the pressure of the actual exam, it can be quite easy to mis-read something or misinterpret a question.
I found that even in my practice exams I was making a bunch of silly reading errors. Below I have a list of some of the errors that I made.
Misreading the reporting period – e.g. prepare the report for the year ending 30th June rather than 6 months period ending 30th June. The reporting period will always be given to you in the question. I would recommend highlighting this information.
Giving a qualitative characteristic instead of an accounting assumption (or vice versa)
Interpreting a source document (e.g. credit note) from the perspective of the wrong business. Highlight the name of the business so that you realize who you are in the question. This will impact whether the transaction is a purchase/sale or purchase return/sales return.
In order to avoid making these reading errors I would highlight the question. I would highlight only small pieces of information (only one or two words at a time) so that the highlighted information really stood out. I would also try to be aware of these mistakes that I had made in practice exams and highlight specific things (e.g. the business’ name and reporting period) knowing that I was prone to making these mistakes.
3. Thinking about easier accounts first
In relation to the practical component of the exam, sometimes I would forget how to work with some of the more complicated accounts (e.g. allowance for doubtful debts, unearned revenues). A strategy that I found super helpful for this was to think about the easier account first. For example, when recording a payment for electricity expense, part of which has been accrued in previous periods. Instead of thinking ‘an accrued expense is a current liability which has increases on the credit side so when this accrued electricity liability falls because our obligation to our electricity company is decreasing because we are settling this payment we need to debit this account’, just think ‘we are making a payment. We need to credit Cash at Bank (A). Therefore, we need to debit something else. The ‘something else’ is going to be the accrued electricity (L) account’. Because of the nature of the double entry accounting system, debits are going to equal credits. If you know the two accounts being impacted and you know the amount, in order to decide which account will be debited or credited, make life easy for yourself and think about the easier account first (such as Cash at Bank because you work with it all the time)!
That’s all for this week’s blog! I hope you found this helpful and hopefully you can learn from some of the mistakes that I made.
Have a great week! See you soon!
Have a question?
In the final weeks before exams Lauren will be hosting 2 Live Q&A sessions to help everyone get fully prepared for exams. If you have a question on how to best get prepared, have been stuck on an exam question or want to clarify an area of content send it through here, and Lauren might answer it live!