Bug - Wrong Number

Steps to Reproduce

Create a new blank doucment
Press Enter.
Insert the text "My heading"
Format this text with the built-in "Heading 1" style

Put your cursor at the end of "My heading" text.
On the Home tab, click on the "Multilevel List" drop-down and select the item under "Current List".
Your "My heading" text will now be displayed with a "1." field in front of it.

Press Enter twice,
On the References tab, click on "Cross-reference".
Change the reference type to "Numbered Item".
Change the insert reference to "Paragraph number".
Press Insert to insert a cross reference.
You will see a "1" inserted as your cross-reference. This is correct.

Put your cursor at the start of the heading (infront of the word "My").
Press Enter to add a new paragraph above the heading.
Insert the text "new paragraph".

On the Insert tab, click Bookmark.
Select the bookmark and press GoTo.
You can see that the bookmark includes this extra paragraph.

Right mouse click on the cross reference and press Update Field.
You will see that the cross reference still displays the number 1. This is wrong.

Solution - Insert Above the Heading

When you need to add text before text that has been used for cross referencing always add the text to the end of the paragraph above.
Press Enter on the line above and then type your text.
If there is a table directly above then you need to follow these steps:
Put the cursor in the last cell of the last row.
Press the Tab key to insert a new row.
On the Layout tab, click Split Table to insert a new line.
Delete the table below and then type your text.

Important

Word does not use a multi-level list for its "default" heading styles so we need to create a new multi-level list.
To fix an existing broken cross reference you will have to redefine the bookmark.