Balance sheet is a statement which is prepared at the end of the year on a specific date. It help managers in disclosing company’s performance in front of competitors with help of its assets, liabilities and capital.
Despite of having knowledge about balance sheet students cannot prepare a sound balance sheet for their financial accounting assignment.
This situation occurs, because they are not aware about the errors which occur due to their careless attitude. Another reason for these small mistakes is, they do not have a habit of doing revision after completion of work.
More than knowing what they must do in their finance accounting assignment, students should know what not to do. Once, students know what not to do in their balance sheet they would stick to only the to-do list.
1. Improper Placing of Data: This is the most common error that appears in balance sheet because students do wrong classification between assets and liabilities.
For example: When in question the transaction is related to data like prepaid expenses, accrued income, unearned income, outstanding expenses then students get confused and place wrong data.
Suggestion: So for preparing a perfect balance sheet they should remember:
Assets are company’s profit
Liabilities are losses for company
2. Wrong Data Entry: Students when prepare balance sheet do wrong data entry which means they place wrong quantitative data and give chance to professors to mention poor remarks.
For example: In question,
Machinery was purchased for $2450 but due their mistake they place $2540.
Prepaid expenses were $874 but they show $784 by mistake.
As a result it becomes error for balance sheet.
Suggestion: While preparing a balance sheet students should be careful at the time of placing quantitative figures because such kind of mistakes will lead to losing of grades in financial accounting assignment. Double-check the figure to ensure correct figures are used.
3. Omission Errors: This is a type of error which occurs when the transactions are not recorded properly as given in the question. This situation appears when students do not read the questions properly. Because of their careless attitude they miss one or two entries.
For example: Two plant and machinery were purchased but due to their negligence they record only one.
Suggestion: This error is very small and can easily be ignored if students attempt every question of their assignment sincerely.
4. Preventing Errors: Students don’t re-check their work after its completion. This happens because they have to attempt other questions which consumes a lot of time. Due to this, there is a chance of occurrence of errors in work which automatically results in low grades.
Suggestion: These errors can be prevented if students spend less time on easy questions and save more time for difficult questions as well as for revision. One more thing on which they should do is, developing a habit of doing revision after completion of work. As a result, it leads to accomplishment of their goals on time without any obstacle.
By getting knowledge about these errors students can easily avoid presence of mistakes in balance sheet and can make their financial accounting assignment strong in eyes of readers.