I was watching the United States Open recently when the commentator announced that the winner Pat Rafter had made only five unforced errors in achieving his great victory. It would be very pleasing if accounting students managed to minimise their errors in the forthcoming CAT 3 examination. Most students think in terms of gaining marks rather than losing marks. The first is recognition.
Most students are able to reconcile the above problem but they use the wrong amounts in the reports.
This error is reversed in the profit and loss statement. The second skill is selection. The cash flow statement, along with the profit and loss statement and the balance sheet are like exclusive clubs. This is an accounting term and is not regarded in accounting circles as being appropriate. Unwelcome items in the cash flow statement include depreciation, discounts, bad and doubtful debts, profit or loss on disposal, stock loss and stock writedown, along with stocks of goods and supplies.