Financial Statements Never Balance

Some tutors say don’t even add it up because if it’s correct, there are no additional marks and if it’s not correct you’ll then worry about it

Personally I always used to add it up. The reason? If the amount by which the two figures differed was, say, $10,000 exactly, then I knew it was most likely an addition mistake ($1, $100, $1,000, $100,000 the same principle applies)

If the error was for, say, $600 I would first of all look for that figure within the question or within my workings to see if it was an item that I had omitted

If that wasn’t the cause of the difference, I would divide the difference by 2 and looks the that smaller amount that I had treated as an expense and it should be an income (or treated as an asset and it should be a liability)

If that didn’t explain the out-of-balance, I would determine whether the difference divided exactly by 9 (difference 8,352 … Does it divide by 9? Let’s find out. 8 + 3 + 5 + 2 = 18 and 1 + 8 = 9. Therefore 8,352 DOES divide exactly by 9

Now transpose those same 4 numbers into any sequence that you choose … say 2,385

Does 2,385 divide by 9? Let’s find out. 2 + 3 + 8 + 5 = 18 and 1 + 8 = 9

So not only does 8,352 divide by 9. So too does 2,385

In fact, ANY transposition of the same numbers divides by 9

In the exam room, whenever my figures didn’t balance, I would:

1) check for the missing figure in the question or in my workings to see if I had omitted that figure

2) see if the difference were 1, 10, 100, 1,000 etc

3) look for half the amount to see if it was on the wrong side

4) see if the difference divided by 9 – possibly a transposition error

But I would do NONE of this if my time allocation was over

OK?