Why this is mistaken
Interest is the opening principal times the periodic rate. Principal reduction is the remainder of the total payment. Reconcile every row and confirm that the sum of principal reductions equals the opening principal within the declared rounding policy.
Where to watch
When this mistake may appear
- A level-payment schedule asks for the first row or remaining balance.
- This mistake records the full cash payment as interest expense or principal reduction.
Check your work
Your work may contain this mistake if:
- Computes closing balance as opening balance minus total payment without adding periodic interest.
- Keeps the interest amount constant while principal declines.