2. The experts have pointed out the common mistakes which students usually commit while attempting the paper. In the further part of this presentation, you are going to come across these common mistakes from each of the chapters that have been repeatedly committed by various students during the course of examination.

3.  While calculating interest, rate as “% age with the word “per annum” and the rate “%” without the word per annum must be read very carefully. If the words like ‘irrespective of months’ or average period’ have been used, number of months/days will be ignored.  The word “Appropriation and Charge” must be differentiated and give the treatment of expenses accordingly.

4.  I Interest on Partner’s Loan advanced to the firm is always charge against the profit whereas interest on capital may be charge against the profits or appropriation out of profits depending upon the nature of information given in the question i.e. as per partnership agreement. However, in the absence of any information about treatment of IOC, it is always treated as appropriation of profits IInterest on Partner’s Loan is always credited to Partner’s Loan Account and is never credited to partner’s Current Account or Capital Account. SShort cut methods involving use of average time period for calculating Interest on Drawings are applied when the drawings are of constant amount made at regular intervals.

5.  While calculating opening capitals if closing capitals are given, drawings and profit or loss appearing in the balance sheet are not readjusted as such amount represent amounts not adjusted earlier.  In case of Past adjustments, always check if capitals are Fixed or fluctuating as in case of fixed capital, entry has to be passed using current account. Same has to be taken care of while preparing Profit and Loss Appropriation account. In appropriation account do specify Partner’s current account in case capitals are fixed.  Guaranteed partner will get his guaranteed amount even in case of insufficient profits or if the firm runs into losses.

6.  While calculating the value of goodwill, abnormal losses or gains already adjusted are reversed but any normal expense or income not adjusted earlier has to be deducted or added respectively in the amount of profits given.  while calculating sacrificing shares, attention should be given to the words ‘of’ and ‘from’

7.  While calculating sacrificing shares, if share of an existing partner comes negative it should be dealt with carefully while adjusting share of goodwill. Negative sacrifice is gain and negative gain is sacrifice. Gaining partner has to be debited with his gaining share in goodwill of the firm.

8.  Expenses on realization borne by a partner is never debited to Realisation account but when only paid by partner it is debited to Realisation account & credited to partner’s capital. When expenses borne by partner then for actual expenses paid by such partner out of his pocket, no entry is passed by the firm. However if actual expenses in such case (borne by partner) are paid by firm, it must be debited to such partner’s capital account and credited to cash or bank account similar to drawings.

9. WWhile attempting questions on Share Capital, share applied and allotted must be differentiated while calculating excess money of the defaulter. AAt the time of reissue of forfeited shares, paid up value on forfeited shares to be reissued cannot be less than called up value. It can also not be more than full value (face value or par value or nominal value) of the shares. In the absence of information about paid up value for reissue of forfeited shares, called up value at the time of forfeiture is taken as paid up value i.e. the amount to be credited to share capital account on reissue.

10.  After the forfeited shares have been reissued, excess of price received over the paid up value on reissue is always credited to Securities Premium Reserve and deficit is always debited to share Forfeited Account. Share capital is shown at Face value or called up value. Face value never includes premium. Share forfeited is also shown at Face value, never includes premium or discount.

11.  In case of question on issue of shares, always check if it is normal or under or oversubscription. In case of under subscription make sure that minimum subscription condition of 90% has been observed. Remotest possibility that shares applied in question are less than 90% of the issue, do solve the question and give a suitable note about minimum subscription.