Bit confused, what is the role/purpose of accounting?
Is it that financial data refers to raw facts and figures, on which financial information will be based on, and that this data becomes financial information, that once sorted and process is more useable and understandable information?
Does anyone have a more clearer answer??
Thanks
Can anyone please explain what "shelving" means?
Thanks
xxkp
Goodwill will lead to future economic benefits for the business.
If the business has goodwill, customers will return thus increasing sales for the firm. Therefore it is of great value leading to future economic benefits.
I wouldn't think you would place it in the balance sheet though.
What do you think fellow VNer's?
Goodwill will lead to future economic benefits for the business.
If the business has goodwill, customers will return thus increasing sales for the firm. Therefore it is of great value leading to future economic benefits.
I wouldn't think you would place it in the balance sheet though.
What do you think fellow VNer's?
Goodwill will lead to future economic benefits for the business.
If the business has goodwill, customers will return thus increasing sales for the firm. Therefore it is of great value leading to future economic benefits.
I wouldn't think you would place it in the balance sheet though.
What do you think fellow VNer's?
I agree with that. From what I learnt this year in Accounting, goodwill is an intangible asset - so you wouldn't put it in the Balance Sheet.
huzzah I have a quick question regarding the Cambridge workbook Q3.4cIt is $17,800. Did you make sure you didn't DR/CR any credit related transactions or stock drawings in the bank account?
How did they get the figure ($17,800) for the Bank in the Trial Balance? I tried referring to the texbook but it didn't make sense? or is the book wrong? When I was footing the Bank Account I got $25900 so do I use that figure instead?
huzzah I have a quick question regarding the Cambridge workbook Q3.4cThese are my workings, from the ledgers:
How did they get the figure ($17,800) for the Bank in the Trial Balance? I tried referring to the texbook but it didn't make sense? or is the book wrong? When I was footing the Bank Account I got $25900 so do I use that figure instead?
However, I've got another question, if you could refer to the Capital account (which i've attached below) the solutions have omitted a DR of 1000, as the owner withdraws 1000 in the CPJ, is there any reason as to why this is?
Anyways, the next exercise has done the same thing, I thought Drawings reduced capital?
^ how much of exercises are you trying to cover before school starts? I was planning to finish off the first 7 chapters (almost finished chapter 5~ but its too bloody hot to keep on working atm)Yea i know, i got really lazy, i should ahve finished unit 3 before january started, but now i'll probably aim to finish it before the 11th. Then i'll jump straight into checkpoints, neap and practice exams when school starts
woah now you're making me feel like a bum :( I'm just worried that i'll end up using most resources way before the exam comes~ but I will have completed all Unit 3 exercises before term 1 endsWell, class time will be used to complete study guides, and re-enforce the stuff i was having difficulties with,
what would you do during class when everyone is doing the exercise? (if you get time)
PS. I wouldn't call not-finishing-12-chapters-worth-of-exercises-before-Jan "really lazy" :o
woah now you're making me feel like a bum :( I'm just worried that i'll end up using most resources way before the exam comes~ but I will have completed all Unit 3 exercises before term 1 endsWell, class time will be used to complete study guides, and re-enforce the stuff i was having difficulties with,
what would you do during class when everyone is doing the exercise? (if you get time)
PS. I wouldn't call not-finishing-12-chapters-worth-of-exercises-before-Jan "really lazy" :o
don't worry about the resources, there are like 50+ accounting exams on this forum lol
And damn, correcting entries is hard.
But yea, I was lazy in that I could have finished unit 3 a lot earlier if I worked on it properly..
EDIT: Could someone help me with ex 7.10?
It's so hard for me... I made the correct corrections, but in the answer they use 'cleaning expenses' in the details whilst I used 'cleaning supplies', as the book clearly states "$120 of equipment was incorrectly debited to cleaning supplies."
im on exercise 7.10 and I found this a little vague in Correcting Entries
Stock that Betty had used for advertising (worth $500) had been incorrectly recorded as Drawings
I originally thought "Stock Control" + "Drawings" but it was really "Advertising" + "Drawings" :(
If I remembered correctly, looking at this there should be 4 entries. Two for Reversing the mistake of incorrectly recording it as drawings and two more entries for correcting the entry as advertising. I haven't done any accounting for like 2 months so this might be wrong:I'm a little confused as to why there should be a correcting entry for stock control.
Stock Control 500
Drawings 500 (this is correcting the mistake)
Advertising 500
Stock Control 500 (correcting entry as advertising expense)
*raises hand* me too.What question? I want to look at it
I mainly get confused with the GST component since one exercise questioned why the GST didnt need to be accounted for then on the othe exercises they counted the GST in *rips out hair* but on 7.12 and I can have a "rest" on Stock Cards
That is what I did last year but I'm not sure if you can just debit advertising expense and credit drawings.If I remembered correctly, looking at this there should be 4 entries. Two for Reversing the mistake of incorrectly recording it as drawings and two more entries for correcting the entry as advertising. I haven't done any accounting for like 2 months so this might be wrong:I'm a little confused as to why there should be a correcting entry for stock control.
Stock Control 500
Drawings 500 (this is correcting the mistake)
Advertising 500
Stock Control 500 (correcting entry as advertising expense)
It wasn't incorrectly debited in the first place and seeing that they both cancel each other out, isn't this a bit redundant?
Sigh..I hate correcting entries.. O_O
im on exercise 7.10 and I found this a little vague in Correcting Entries
Stock that Betty had used for advertising (worth $500) had been incorrectly recorded as Drawings
I originally thought "Stock Control" + "Drawings" but it was really "Advertising" + "Drawings" :(
If I remembered correctly, looking at this there should be 4 entries. Two for Reversing the mistake of incorrectly recording it as drawings and two more entries for correcting the entry as advertising. I haven't done any accounting for like 2 months so this might be wrong:
Stock Control 500
Drawings 500 (this is correcting the mistake)
Advertising 500
Stock Control 500 (correcting entry as advertising expense)
That is what I did last year but I'm not sure if you can just debit advertising expense and credit drawings.If I remembered correctly, looking at this there should be 4 entries. Two for Reversing the mistake of incorrectly recording it as drawings and two more entries for correcting the entry as advertising. I haven't done any accounting for like 2 months so this might be wrong:I'm a little confused as to why there should be a correcting entry for stock control.
Stock Control 500
Drawings 500 (this is correcting the mistake)
Advertising 500
Stock Control 500 (correcting entry as advertising expense)
It wasn't incorrectly debited in the first place and seeing that they both cancel each other out, isn't this a bit redundant?
Sigh..I hate correcting entries.. O_O
I did Stock Control twice so that my General Ledger for stock control would look correct.
If I just did:
General Journal
Advertising 500
Drawings 500
In my Stock Control general ledger it will still appear as drawings: (I just added random numbers)
Stock Control
Debit Credit
1/1 Balance 3700 31/1 Stock Loss 450
31/1 Bank 12500 31/1 Drawings 500
Notice that if I just debited advertising and credit Drawings it has no effect on Stock Control and still appears as drawings.
If I did this however in the General Journal it would remove the drawings of 500 in the stock control ledger and replace it with Advertising instead.
General Journal
Stock Control 500
Drawings 500
Advertising 500
Stock Control 500
Stock Control
Debit Credit
1/1 Balance 3700 31/1 Stock Loss 450
31/1 Bank 12500 31/1 Advertising 500
I'm not sure if just doing two entries (debiting Advertising and crediting Drawings) is correct, but this is how my teacher taught me so if the solutions has two entries and it probably is correct as well.
GST and stock control are usually omitted because their correcting entries cancel each other out.
Take note of this example, for instance:im on exercise 7.10 and I found this a little vague in Correcting Entries
Stock that Betty had used for advertising (worth $500) had been incorrectly recorded as Drawings
I originally thought "Stock Control" + "Drawings" but it was really "Advertising" + "Drawings" :(
If I remembered correctly, looking at this there should be 4 entries. Two for Reversing the mistake of incorrectly recording it as drawings and two more entries for correcting the entry as advertising. I haven't done any accounting for like 2 months so this might be wrong:
Stock Control 500
Drawings 500 (this is correcting the mistake)
Advertising 500
Stock Control 500 (correcting entry as advertising expense)
There is an identical DR and CR for stock control.
You could do this:Stock Control 500
Drawings 500
Advertising 500
Stock Control 500
|
|
V
Drawings 500
Advertising 500
...and you'll still get the same overall result.
Do you guys sort of get that now?
Like I said before, GST entries usually cancel themselves out too.
There is an identical DR and CR for stock control.YAY!!
You could do this:Stock Control 500
Drawings 500
Advertising 500
Stock Control 500
|
|
V
Drawings 500
Advertising 500
...and you'll still get the same overall result.
Do you guys sort of get that now?
Like I said before, GST entries usually cancel themselves out too.
Not to go off-topic, but, if you want a "fun" exercise related to Accounting, try putting down all DEBIT and CREDIT entries that you can think of, that go in the Stock Control account. I found 16. We spent one whole class doing this, debating the entries.my god, is that really your idea of fun, hopefully i don't have to be like that to get a 45+ lol.. accounting will ruin all of us..
... and yes, that's what our class did for fun. :p
my god, is that really your idea of fun, hopefully i don't have to be like that to get a 45+ lol.. accounting will ruin all of us..
Oh that's nice.. Except i tend to make a lot of silly mistakes (i think i've managed to correctly balance a balance sheet like twice out of all the ones i've attempted since last year.. lol)my god, is that really your idea of fun, hopefully i don't have to be like that to get a 45+ lol.. accounting will ruin all of us..
What's there not to like about Accounting? :p
I thoroughly enjoyed Accounting and although at times tedious, it was a good subject. If you're aiming for 45+ in Accounting, be sure to score well on SACs and the exams. You don't need to ace SACs to get 45+. My friend last year got 50 for Accounting and he rarely got 100% on any SAC. It's about constant practice and minimising your mistakes.
A school like mine, with a really crap cohort, do you think i'd need to maintain very high SAC scores and probably rank 1?
Not to go off-topic, but, if you want a "fun" exercise related to Accounting, try putting down all DEBIT and CREDIT entries that you can think of, that go in the Stock Control account. I found 16. We spent one whole class doing this, debating the entries.haha you beat me
... and yes, that's what our class did for fun. :p
Start on the Cambridge textbook. It doesn't matter what textbook you use, just start. Then, when you get the Neville Box textbook use that in conjunction with the Cambridge one. I suggest using the Neville Box textbook mainly, since it's the one prescribed by your school and use the Cambridge textbook to supplement it. If you don't understand a concept in the Neville Box textbook, then read through the other one and vice versa. I don't think there is any point in doing all the exercises from both textbooks.Sounds fair enough :)
I'll be doing physics over the next few days just to get questions and a few prac write-ups done, so it may not even be worth starting in Cambridge.. :/
I'm sure I'll figure out a compromise, even if that means seeing/emailing my teacher and see what he thinks :)
Will do, Accounting and Further should be my best scores since I actually enjoy studying for them, it's going to make it that much easier :)I'll be doing physics over the next few days just to get questions and a few prac write-ups done, so it may not even be worth starting in Cambridge.. :/
I'm sure I'll figure out a compromise, even if that means seeing/emailing my teacher and see what he thinks :)
That's probably the best thing to do; email your teacher if you have any concerns/questions. Good luck for Accounting this year; work hard and put in the effort and anything is possible.
Hey Guys, I have some really silly questions that I just need some clarification on :/
1. Referring to one Accounting principle, explain why owner’s equity is said to be what the ‘business owes the owner’. Is it the Entity Principle? Because the owner and the business are two separate accounting entities?
2. Explain the difference between liabilities and owner’s equity.
Liabilities are what the business owes to external parties and owner's equity is what the business owes the owner?
3. Referring to the definition of owner’s equity, explain why the Accounting equation must always balance.??
4. Role of Balance Sheet?
Details a firm’s financial position at a particular point in time by listing its assets and liabilities and the owner’s equity
5. Explain the relationship between the Balance Sheet and the Accounting equation.
The elements of the Accounting equation – assets, liabilities and owner’s equity provide the headings within the Balance Sheet
Explain why the implementation of the Going concern principle requires the adoption of the reporting period principle
Question:
What's the difference between 'Buying Expenses' and 'Selling Expenses'... like the definitions. Buying Expenses go under COGS right? and Selling Expenses go under 'Other Expenses'? [in the P/L Statement.]
Yeah, I would assume buying expenses relate to all the costs required to prepare stock, and selling expenses is everything else such as freight out, delivery.
on Cambridge exercise 9.5... with the Profit and Loss Statement why was "buying expenses" listed under COGS?I remember that exercise, the only reason I put buying expenses under COGS was because i'd never seen it before as a regular expense.
I know COGS are expenses incurred in order to get stock in condition and position ready for sale but what exactly are "buying expenses" ? :o
on Cambridge exercise 9.5... with the Profit and Loss Statement why was "buying expenses" listed under COGS?I remember that exercise, the only reason I put buying expenses under COGS was because i'd never seen it before as a regular expense.
I know COGS are expenses incurred in order to get stock in condition and position ready for sale but what exactly are "buying expenses" ? :o
But I'm also assuming, that if you must pay an extra amount to purchase that stock ( a buying expense ), then it is techincally an expense which is necessary to get the stock ready for sale.
I know I can't provide a definitive answer, so sorry, the logical one will have to do!
Could anyone clarify what the role of a ledger account is?roughly, the role of a ledger account is to create an accounting system which allows you to make changes to the accounting equation, without having to re-write it every time.
Is it that it shows all the transactions that affect a particular item??
Thanks :D
Okay, well put simply - it fits the definiton of the conservatism principle - which is: "Losses should be reported when ever there is a chance [or as the book says, "when probable"] and gains only when certain..."
- Erica Carr's business has been sued for false advertising, and her solicitor has indicated that she is likely to lose the forthcoming court case. Damages have been estimated at $55 000, but Erica has not reported the damages in the Profit and Loss statement.
a) Referring to one accounting principle, explain why Erica should disclose the damages in the Profit and Loss Statement..
Again its Conservatism but why??
Thanks!
so do you all recommend me just to always include the 'LOsses should be reported when probable and gains when certain, so that libailities and expenses are not understated, and assets and revenues are not overstated?'You only include the section that relates to the question; meaning, either "Losses should be reported when probable so that liabilities and expenses etc. etc." or "Gains should be recorded only when certain so that assets etc. etc.".
and the if possible incorporate what the question is asking??
Also, How do I avoid from 'rote-learning'???Not that I have any experience with Accounting or anything but what's wrong with it? - as long as you have the time and understand what your memorising.
As ATAR says, if you have already understood the concepts, there is nothing wrong with rote-learning. In fact, it will be beneficial if you can memorise/rote-learn the accounting course as well as understand it.Also, How do I avoid from 'rote-learning'???Not that I have any experience with Accounting or anything but what's wrong with it? - as long as you have the time and understand what your memorising.
Thanks!This is the kind of response I think they are after:
I've been finding Cash Sales and Credit Sales a bit difficult! I'm unsure on how to answer the Review questions:
1. Show the and credit entries necessary to record:
- A Cash Sale (of stock)
- A credit sale (of stock)
- a receipt from a debtor
- cash drawings
2. Explain why a receipt from a debtor does not increase profit.
THanks!
Thanks!Hey, okay for question one.
I've been finding Cash Sales and Credit Sales a bit difficult! I'm unsure on how to answer the Review questions:
1. Show the and credit entries necessary to record:
- A Cash Sale (of stock)
- A credit sale (of stock)
- a receipt from a debtor
- cash drawings
2. Explain why a receipt from a debtor does not increase profit.
THanks!
Also, How do I avoid from 'rote-learning'???And lol.
What is the difference between Cash and Profit???
Could anyone help me with this:
- Explain why the entries required to balance a ledger account are shown with different dates.
Thanks! Hello_kitty :D
Oh okay. And also, for GST (ch 4 in cambridge book), I don't understand why when you purchase things and pay GST, the ATO refunds you the GST. Isn't it just neutral? You pay GST to the supplier to give to the ATO so why would the ATO give you back what you paid to them. I understand how it becomes a liability but how an asset?
Oh I get that.. so does that mean the business overall doesn't actually pay GST at all? They just literally act as a collector?In a way, but not exactly.
Does anyone have a detailed definition of depreciation? All I can get out of both textbooks (neville box + cambridge) is 'the allocation of the cost of a non-current asset over its effective (or useful) working life'.(Refer below to sammy's post)
Can anyone top that or is that just about it?
Thanks
GENERAL JOURNALS! D;yep they are a bit confusing.
okay so for the most part general journals are easy as pie but i do tend to sometimes get stuck on the entries that involve more than two accounts or the ones that aren't your standard 'withdrawal of stock', 'donation/advertising expense' or recording error i.e. 248 recorded as 284
for example: a receipt of $800 from a debtor - B. Billiten had been incorrectly recorded as a payment to a creditor - B. Bolton (memo19)
so i was just wondering if anyone can help me with making sure i have a strategy in taking these on? any tips or tricks that anyone can dish out that would cut the time i spend on these sort of problems would be much appreciated :D
Thanks for your help _avO!!I'm unsure of the answer as the only thing the business is losing is 'time' which can't really be valued. What I would do is just recognise the event as irrelevant to the business' entity. The business loses productivity but you don't record that in your statements.
Sorry I wrote the wrong thing for question 1, it's actually supposed to be:
"In a small local business, the 4 business owners have decided to donate a day's work to help a local charity. They usually earn $100 a day which will be deducted from their week's pay".
Is it still the same principle/solution even though they are not giving money and the business is actually saving $400? (If that makes sense?)
The second question I understand although I'm unsure as to what amount to enter as the cost was $0. If I use cost price then the transaction would have no effect on accounts at all would they? Or do I use the selling price but wouldn't this go against the historical cost principle? I'm really not sure what to do with this one.Yeah since there is no monetary effect then I wouldn't record it
- If there is damage to a non current asset that makes it unusable, what is the name of this account? Ie. for stock it is called stock loss but what do you call the account if it does not involve stock?Under the AASB 136 - Impairment of Assets, when an asset is damaged it is recognised as depreciation, it is then deducted from the initial value of the asset. In this case if an asset is damaged to the extent that it is unusable, then the Recoverable amount is $0, and the useful life is 0 years.
- Do you happen to know how to account for a 'lease' of a non current asset?No idea ><
Sorry for the impairment of assets question, do you create an 'impairment of asset' account so that it would be:It's the bolded one, 'Impairment of Assets' is just the category in which damaged assets are classified under the Australian Accounting Standards Board (the standards and guidelines to which financial reports are to be prepared). Other impairments include obsolete goods and worse than expected economic performance.
Debit: 'Impairment of -insert asset name here-' (E)
Credit: Non current asset
or is it:
Debit: Depreciation of -insert asset name here-(E)
Credit: Non current asset
Question
A motor vehicle is bought on credit for $30,000.
Explain with reference to the motor vehilce the following parts of the asset definition:
(A) Controlled by the entity as a result of past transactions:
Motor Vehicle
(B) Future economic benefits are expected to flow:
Transporting persons/goods
Explain with reference to this transaction the following parts of the liability definition:
(C) A present obligation arising from past events
Sundry Creditors $30000 payable
(D) Outflow of resources embodying economic benefits.
Decrease in cash ($30000)
thanks!
http://vce.atarnotes.com/forum/index.php/topic,38980.0.htmlthat hello_kitty used 'we' a fair bit. I generally find myself doing this, but i try to avoid it, do the examiners dislike this style in answering questions?
I have two questions...1. We owe the ATO so much less money, now in fact, they end up owing us. Remember that an asset is a resource that will bring about an inflow of economic benefits in the future. In this case, we are entitled to received a GST REFUND from the ATO as we have paid or incurred more GST than we have received or charged.
1. If the GST clearing account balance thing at the end of the reporting period is a debit... what does that mean? Is it that we owe the government more/less money, or something?
2. In the general journal we just put the extra things that don't fit into the other journals , yeah? And then in the general journal, what is the difference between the general ledger and subsidiary ledger? What do we put in them :S
(i hope that makes sense)
Thanks!
couldn't an expense also be defined as a decrease in inflow or increase in outflow of assets??
for example a debt written of as irrecoverable will result in a reduction of inflow of cash from debtors.
i may be wrong so please correct me before i commit this to long term memory haha
but using this logic, since they aren't working for payment this could be a 'reduction in inflow' thus this expense could be entered into the general journal as a debit to advertising/donations and credit to ______ im actually blank here on the other side of the double entry.
i have a feeling that i'm totally wrong but now i'm curious, someone help :)
Oh okay, fair enough.
One question oustanding though: Explain how using a system of control accounts and subsidiary ledgers assists in the preparation of reports
Oh okay, fair enough.
One question oustanding though: Explain how using a system of control accounts and subsidiary ledgers assists in the preparation of reports
Control accounts and subsidiary ledgers assist in the preparation of reports in that only one figure has to be transferred to the reports. It simplifies and makes it easier. For example, once you balance the Stock Control account, you're left with one figure; which is generally on the debit side. That figure can then be transferred to the Balance Sheet under "Current Assets", assisting in the preparation of reports.
This question is doing my head in...
- $120 of equipment was incorrectly debited to cleaning supplies (please note that it is cleaning supplies)
A payment of $100 interest was incorrectly debited to Loan - HBM
Question. Explain the effect on the Net Profit of Blue Lines for June 2010 if the error regarding equipment had not been corrected.
My answer - There is no effect, as there is still an overall increase in assets by $120.
The book's answer - " Cleaning expenses would be overstated by $120, meaning Net profit would be understated by $120.
(Equipment is an asset, not an expense.)"
____
How did it even become an expense..
Q2. State the effect on owner's equity of the entries to correct the error regarding stock.
Oh okay, fair enough.
One question oustanding though: Explain how using a system of control accounts and subsidiary ledgers assists in the preparation of reports
Control accounts and subsidiary ledgers assist in the preparation of reports in that only one figure has to be transferred to the reports. It simplifies and makes it easier. For example, once you balance the Stock Control account, you're left with one figure; which is generally on the debit side. That figure can then be transferred to the Balance Sheet under "Current Assets", assisting in the preparation of reports.
Another method used by mainly by small sole trader businesses is "cash accounting." This is basically when you record revenues when you receive that cash, and expenses when you pay them. In contrast, accrual accounting involves recording revenues when earned, and expenses when incurred.
1. Explain why in some situations errors may be corrected in the appropriate special journal, but in others a General Journal entry is required.
I thought that errors were always corrected in the general journal?
Also, what are three types of errors which are corrected in the general journal
1. Explain why expense and revenue accounts are not included in the general journal when we recorded a commencing entry.
sounds good.1. Explain why expense and revenue accounts are not included in the general journal when we recorded a commencing entry.
I know the answer - but its hard to explain (as are most theory questions in accounting lol). Can someone confirm if this is correct?
A commencing entry takes place only during the start of a reporting period. Revenue and expense accounts exist only during the Reporting Period when they are respectively earned/incurred. Therefore, as they do not have a balance at the start of the reporting period, they should not be recorded as a commencing entry.
Hey! Could anyone help me with this question?
"Explain with reference to a QC the reason for preparing Memo 8 (it is a memo of a physical stockstake where a stock loss occured"
Thanks :)
Hey! Could anyone help me with this question?
"Explain with reference to a QC the reason for preparing Memo 8 (it is a memo of a physical stockstake where a stock loss occured"
Thanks :)
This would be my answer to the question:
Relevance - All information relevant to decision-making should be included in accounting reports. The preparation of memo 8, including the stock take, is conducted to detect any stock losses in the reporting period, so that an accurate profit figure can be calculated, which would be more useful for decision-making.
The reason I didn't say Reliability was because it wasn't asking for why we need to have a memo, but why it is prepared. I'm not 100% sure of my answer, and there is a chance my answer could be wrong.
Tell me if I was right. Hope I helped.
I did a VCAA accounting exam and I came across a certain question (to which I disagree with the VCAA solutions):
- I know my answer is wrong, I just don't understand why its wrong.
So the question is:
"With reference to a qualitative characteristic, explain why Assets and Liabilities are classified in the Balance Sheet."
Anyone got any thoughts on this question?
I did a VCAA accounting exam and I came across a certain question (to which I disagree with the VCAA solutions):
- I know my answer is wrong, I just don't understand why its wrong.
So the question is:
"With reference to a qualitative characteristic, explain why Assets and Liabilities are classified in the Balance Sheet."
Anyone got any thoughts on this question?
I came across this question last year, it's understandability from what I remember.
Both answers are correct, I agree with you. It's an ambiguous question. My teacher told me last year that at a meeting of VCAA markers, this particular question was debated at length. The "more" correct answer according to Neville Box was understandability. I don't know why it's understandability, just is. If anything, it should be relevance. Understandability is the characteristic VCAA will only accept. I realise what I've said doesn't answer your question; it's more-so a grey area in VCE Accounting.
Details would include:im kind of unsure if this is the answer the book requires.
- Source Documents
- Location in the store
- Details of particular lines of stock
- Common Suppliers
- Individual transaction dates (i.e. I like to look at stock cards, as if they are subsidiary ledger accounts, while stock control is the respective general ledger account)
There are probably more details - my brain just isn't functioning.
Details would include:im kind of unsure if this is the answer the book requires.
- Source Documents
- Location in the store
- Details of particular lines of stock
- Common Suppliers
- Individual transaction dates (i.e. I like to look at stock cards, as if they are subsidiary ledger accounts, while stock control is the respective general ledger account)
There are probably more details - my brain just isn't functioning.
the previous question was "What is in the top section of the stock cards which isnt in the stock control account" or something along htose lines..
for which i putwhat you just said
All i could get was the Individual transactions..
I did a VCAA accounting exam and I came across a certain question (to which I disagree with the VCAA solutions):I probably would have said relevance, but looking at the definitions I can see where VCAA was going with this question.
- I know my answer is wrong, I just don't understand why its wrong.
So the question is:
"With reference to a qualitative characteristic, explain why Assets and Liabilities are classified in the Balance Sheet."
Anyone got any thoughts on this question?
Yes, it is understandability. But why? How does classifying information make it more understandable? The asset is still an asset; you have just informed the owner that it is current/non-current, making it more useful for decision-making, which would be Relevance.yea, you've made it easier for the user to comprehend the meaning. i dont think the real reason is to aid in decision making, for the exact same reason as to why we exclude the individual debtors and creditors (its' irrelevant to decision making). int heory we shouldnt classify, because it doesnt effect decision making, so therefore, we classify to increase understandability
- Tell me if I'm wrong, but by classifying the Balance Sheet, we are allowing for the calculation of statistics, such as Working Capital Ratio, and Quick Asset Ratio, making it more useful for decision-making.
- I don't understand you. How does the Accounting Equation relate to this?
- In their respective current/non-current groupings, how does it make us see how it balances? All the individual assets/liabilities are still there, if we don't classify them, the only addition is they are categorized.
- However, I am starting to see where VCAA is coming from.... so Thank you for your post!
Also, i had a question.
In the balance sheet, do we write "Stock control" or simply "stock" ?
Sames goes for debtors and creditors.
Also, if the business has undertaken two seperate loans, both with <12months repayments (eg quarterly, every semester etc), do would you just write two seperate entires in the non-current and current liabilities?
Eg:
Current Liabilties:
Loan - Goku $9001
Loan - SS Vegeta $9000
Non-current Liabilities:
Loan - Goku $ 100,000
Loan - Vegeta $ 99,999
Also, in the general journal, is it acceptable to abbreviate "profit and loss summary account" to "P&L Summary account" ?
The textbook does this, but my teacher warned me not to abbreviate - ever.
1. Explain why you are unlikely to find "Commission revenue" under the "Other Revenue" heading in the Profit and Loss statement for a business.
1. Explain why you are unlikely to find "Commission revenue" under the "Other Revenue" heading in the Profit and Loss statement for a business.
Where did you get that question from? It doesn't make sense to me lol. Commission Revenue is meant to go under the Other Revenue column....
1. Explain why you are unlikely to find "Commission revenue" under the "Other Revenue" heading in the Profit and Loss statement for a business.
Where did you get that question from? It doesn't make sense to me lol. Commission Revenue is meant to go under the Other Revenue column....
Actually I made it up. The question just says "Unlikely" not "why it doesn't..." I didn't think it was likely that one would ever see "commission revenue". My own answer would be that the business itself does not earn commission (unless working under another entity, in that case, i'm not sure what this type of business would be called), rather its' employees do.
Furthermore, would commission owed to employees be listed under wages, or would it be a seperate expense? Seeing that commission is only incurred upon sales, whereas employees need not necessarily have to sell something to be paid. I'm probably completely forgetting something or steering off-track though lol..
I didn't want to state that i made this question up so as to not introduce bias into your thinking and to maintain reliability in your answer which would be a direct result of you wondering as to why "commision revenue" is rarely seen in a business' profit and loss statement, rather than holding the knowledge that by definition "Commission revenue" will be listed under "Other revenue"
Don't lose me here, but i understand there if there is a category for which a business working under another business is listed, then one cannot say that "these businesses rarely exist and thus it is rare to see "Commission revenue". Is there honestly another way in which commission revenue can be earned, have i completely missed something? My own answer is based on the basis that business generally don't work under other businesses..
Also, in light of the 2007 VCAA Question you asked,
i was wondering, if a question ever asked
2. "Explain why that although the profit and loss summary account shows net profit earned, it is still essential to have a profit and loss statement."
I know that the profit and loss statement allows us to see gross profit earned and thus assess the adequacy of our mark-up applied, but, techincally, using the same reasoning as I did before, you don't need the profit and loss statement to evaluate the gross profit, or the other goodies, such as how we earned our profit
you can do it just through ledgers, except it would be harder.
So therefore this could also relate to understandability?
sorry if my logic doesn't make sense, i've been doing too much accounting today and slowly becoming a freak.
Also, in the general journal, is it acceptable to abbreviate "profit and loss summary account" to "P&L Summary account" ?
The textbook does this, but my teacher warned me not to abbreviate - ever.
Write it out in full as what your teacher said. In the chance that there isn't enough room to write the whole thing out, then yes, you can abbreviate. In most cases, VCAA and the commercial companies will give enough room to write "Profit and Loss Summary account" in the General Journal.
Thanks, would someone mind checking these for me?
1. Referring to one qualitive characteristic, explain why the advertisiing owning shold be included in the Advertising expense for 2010.
(For reference, page 202 exercise 10.6 question b for the cambrdige textbook)
My answer:
Relevance.
All information useful for decision making should be included in our reports. As the expense was incurred in 2010, it needs to be recorded as such, despite the fact that it was not paid for, so that we can accurately calculate our profit for this reporting period.
book answer:
Balance day adjustments ensure that all information that is useful for decision-making is included in the reports. The advertising has been incurred/consumed in the period ending 31 December 2010,, and so should be included as an expense in this reporting period.
Do you think i'd still get full marks, even though I did not mention Balance day adjustments?
wouldnt it also ensure that all the information FROM THE CURRENT REPORTING PERIOD are included to calculate an accurate profit and hence be useful for the decision making. :PThanks, would someone mind checking these for me?
1. Referring to one qualitive characteristic, explain why the advertisiing owning shold be included in the Advertising expense for 2010.
(For reference, page 202 exercise 10.6 question b for the cambrdige textbook)
My answer:
Relevance.
All information useful for decision making should be included in our reports. As the expense was incurred in 2010, it needs to be recorded as such, despite the fact that it was not paid for, so that we can accurately calculate our profit for this reporting period.
book answer:
Balance day adjustments ensure that all information that is useful for decision-making is included in the reports. The advertising has been incurred/consumed in the period ending 31 December 2010,, and so should be included as an expense in this reporting period.
Do you think i'd still get full marks, even though I did not mention Balance day adjustments?
All of the following is subject to my opinion and could be wrong:
I think your answer would be given full marks. You have covered all the "key words" that are in the solution... so should be fine. However, you probably should incorporate the questions in your definition, during the I.D.L process....
Relevance:
Balance Day Adjustments ensure all information is useful for decision-making is useful in the reports.
- I think this is a very good sentence and could be used for any Balance Day Adjustment - Relevance question, which are quite common :P
wouldnt it also ensure that all the information FROM THE CURRENT REPORTING PERIOD are included to calculate an accurate profit and hence be useful for the decision making. :PYea, that's what i put didn't I?
ANOTHER QUESTION on formalities...
I know when recording in ledgers, it's acceptable to split the payments for something which includes GST, and you can also have them merged
eg. Jan. 31 Stock control/GST clearing $4400
Or you could put
Jan. 31 Stock control $4000
Jan. 31 GST Clearing $400
(According to my teacher anyway)
But in cases of recording a payment, for a prepaid expense and an accrued expense,
is it acceptable to do the same thing?
I've noticed in the examples in the book, they've split them,
yet in the answers provided, they've joined them.
And, in the case of the split ones, it just seemed as if they did it on two lines, because they ran out of room? (see reference)
But i thought another possible reason was that they split it too show the individual payments, rather than running out of room.
Also, for the Wages example they've provided, in the Ch. No column, are we expected to put "BS" (Bank statement?)
And is it also a possibility that they did not split the payments, because they can show the different payments in just one column?
(the idea of splitting to show different columns seems more appropriate now, but im going to ask just for the sake of it anyway. Would we ever get penalised if we split the payments into two different rows, bar the fact that they used different columns anyway? Eg. if we split the wage/accr wages payment)
wouldnt it also ensure that all the information FROM THE CURRENT REPORTING PERIOD are included to calculate an accurate profit and hence be useful for the decision making. :PYea, that's what i put didn't I?
Also, could someone have a look at this spark of curiosity:QuoteANOTHER QUESTION on formalities...
I know when recording in ledgers, it's acceptable to split the payments for something which includes GST, and you can also have them merged
eg. Jan. 31 Stock control/GST clearing $4400
Or you could put
Jan. 31 Stock control $4000
Jan. 31 GST Clearing $400
(According to my teacher anyway)
But in cases of recording a payment, for a prepaid expense and an accrued expense,
is it acceptable to do the same thing?
I've noticed in the examples in the book, they've split them,
yet in the answers provided, they've joined them.
And, in the case of the split ones, it just seemed as if they did it on two lines, because they ran out of room? (see reference)
But i thought another possible reason was that they split it too show the individual payments, rather than running out of room.
Also, for the Wages example they've provided, in the Ch. No column, are we expected to put "BS" (Bank statement?)
And is it also a possibility that they did not split the payments, because they can show the different payments in just one column?
(the idea of splitting to show different columns seems more appropriate now, but im going to ask just for the sake of it anyway. Would we ever get penalised if we split the payments into two different rows, bar the fact that they used different columns anyway? Eg. if we split the wage/accr wages payment)
Lastly,
i'm somewhat pissed with the VCAA.
I've read so many times to answer with dot points and that only include as many things as the question asks..
Reading the examiners report, I see comments like "Students are reminded that one sentence is often not enough detail to gain full marks"
and also for questions like:
"Explain the purpose of subsidiary records in the recording process." (2 marks)
the comments are "Students and teachers are reminded that a two-mark question usually requires two separate points as part of the explanation."
That is just dodgy and annoying... :@
The point of an 'explain' question is that you state/identify the answer (1 mark?) and then elaborate on it, no?
What qualitative characteristic applies and why when we talk about classifications in the cash flow statement (or the balance sheet for that matter)?
Just wondering because my teacher told us to prepare for a question like this for our next sac. I think I remember a while ago that someone answered with relevance, but another said that neville box argued the answer was understandability? Either way, I figure both could be acceptable with the appropriate explanation.
Thanks guys!
Reading through the assessor's report now, understandability makes a lot more sense than relevance.What qualitative characteristic applies and why when we talk about classifications in the cash flow statement (or the balance sheet for that matter)?
Just wondering because my teacher told us to prepare for a question like this for our next sac. I think I remember a while ago that someone answered with relevance, but another said that neville box argued the answer was understandability? Either way, I figure both could be acceptable with the appropriate explanation.
Thanks guys!
After a huge dispute between examiners, they actually concluded that in order to gain the entire marks of the question, you needed to state understandability because it was the most appropriate answer. (Refer to VCAA 2007 mid-year exam).
Therefore, for any questions about classification, it makes it easier to comprehend the meaning of the reports, and thus is associated with understandability.
Yes but from 1/1/2011 - 1/3/2011 is the depreciation calculated at $416.67 per month and then from 1/3/2011 onwards it becomes $500? Therefore would the answer be:A certain god of accounting says that because of 'relevance', you would not do this
Jan: $416.66
Feb: $416.66
Mar: $500
Apr: $500
May: $500
Jun: $500
= $2,833.32
Reading through the assessor's report now, understandability makes a lot more sense than relevance.What qualitative characteristic applies and why when we talk about classifications in the cash flow statement (or the balance sheet for that matter)?
Just wondering because my teacher told us to prepare for a question like this for our next sac. I think I remember a while ago that someone answered with relevance, but another said that neville box argued the answer was understandability? Either way, I figure both could be acceptable with the appropriate explanation.
Thanks guys!
After a huge dispute between examiners, they actually concluded that in order to gain the entire marks of the question, you needed to state understandability because it was the most appropriate answer. (Refer to VCAA 2007 mid-year exam).
Therefore, for any questions about classification, it makes it easier to comprehend the meaning of the reports, and thus is associated with understandability.
I'm doing a prac exam, and there's a question:Can i just ask, by element, do you mean like assets, liabilities, OE, revenue and expenses???
According to one Accounting Element, why are Balance Sheets classified?
For that question I also had another advantage which is that the business can utilise its cash resources when they are readily accessible so management will not have to worry about providing an outflow of cash in the coming periods.
i'm thinking of going but i'm kind of reluctant that like other lectures it'll spend a majority of the time addressing things that we already know and not the important and more challenging thingThis is the reason we started. Simply put, I wasted too much time in lectures that were useless last year. We want to make sure that you guys get the most out of the limited amount of time. You've been learning the course for the last 6 months. You don't need me to explain it. However, I can hopefully provide you with tips on scoring well in the exam. :)
also,
"If non-current assets are depreciated to reflect all expenses incurred in a reporting period, referring to a principle, explain why current assets are not depreciated."
and
Same question as above, but with a qualitative characteristic.
i have a question??? in the pre-adjustment trial balance at 30 june 2010 the loan was 50000 credit. the question is The interest on the loan is 9% per annum payable at 31 dec each yearWhats the reporting period? I'm assuming 6 months so
i have a question??? in the pre-adjustment trial balance at 30 june 2010 the loan was 50000 credit. the question is The interest on the loan is 9% per annum payable at 31 dec each yearIf this is the question from the VCAA 2010 exam, then the reporting period was only 5 months (as trading only began February 1).
@ nacho, they are yet to pay rent for January, so the GST is not included (i think thats what it is?). And for 2.1.1 my teacher penalised me for putting in memo. 29can you upload neap 2011? I have no 2011 exams.
annnd, @ anyone who has done neap 2011 practice exam, how did they calculate cash at bank for 1.1.1? It doesn't make sense :(
It says "During January 2011, Jessica opened a business bank account in the name of Rae’s Camping and deposited $45 000 cash. At this time she also transferred ownership of her personal Vehicle, purchased in 2009 for $47 000 (plus $4 700 GST), which has an agreed value of $32 000, to the business. Jessica borrowed $18 000 to purchase the Vehicle and currently owes $12 000 to ZNA Finance which the business will take over, paying $500 per month.
Jessica agreed to purchase the stock of an existing business, which had an agreed value of $42 000
plus $4 200 GST as of 29 January 2011. The stock was paid for on 1 February 2011 – Cheque No.001. On 31 January 2011 the business arranged a $10 000 overdraft with the bank. The business commenced trading on 1 February 2011." -- Then you have to do a balance sheet as at 1 Feb...
In the answers it says there is a bank overdraft of $1200. But i don't understand :(
D:
For the bank balance, the owner has contributed $45000 cash, then it says that the business has purchased stock valued at $42000 plus $4200 GST.
So you have: 45000-42000-4200= -1200
That's the bank balance as at feb 1
Arranging an overdraft of 10,000 means that the business can be in overdraft up until $10,000 before they incur any interest expenses to the amount owing (could be 5% interest or 20% interest etc. depending on the contract)For the bank balance, the owner has contributed $45000 cash, then it says that the business has purchased stock valued at $42000 plus $4200 GST.
So you have: 45000-42000-4200= -1200
That's the bank balance as at feb 1
Yeah, thats what i'm thinking now too. thanks. But when it says " On 31 January 2011 the business arranged a $10 000 overdraft with the bank." that confuses me?
What does that mean?
anyone done neap 2011?For the Bank Balance.
i disagree with solutions on first question, can someone help me out?
i put my bank overdraft as 1700,
rather than 1200
because it says that the business will pay the ZNA finance loan, $500 per month.
the business commenced on january 1, so that means during january, they paid 500.
therefore the overdraft should be 1200 + 500 = 1700?
what have i done wrong?
also, for q1.4.2
i closed the wages account, because it said 'show how the wages expense account would appear at 30 june, 2011 after all entries had been posted'.
did i misinterpret it, because it only said 'after all entries had been posted'? at teh start of the question, it said 'reports are prepared anually'.
doesnt that mean that we need to close the ledger now?
woo, 84/90 on 2011 neap :D
POSSIBLE 86/90 if answers are wrong :D !!
What items in a Balance Sheet would best show the Going Concern and conservatism principles?Going Concern would be a non-current asset, as it shows that the life of the business is assumed to continue indefinitely, because by reporting it as non-current it shows it will provide economic benefit to the entity as it is consumed in future reporting periods.
Apparently for conservatism, its stock control, but i cant work out why
haha thanks man :)
yeah im not sure about the conservatism thing
there doesnt seem to anything that shows conservatism
oh how about for conservatism, stock control shows stock at cost prices, and not selling prices, because gains from sales are not certainnope, you are correct.
but thats kinda historical cost too
also, vcaa 2009 exam, i just did it.It's not necessarily saying that it created a stock gain, rather that the stock gain will be understated; not as high, without the recording of the credit sale.
i dont quite understand one of the question i got wrong.
1.7
A credit sale that occurred in june has not been recorded.
State the effect of this omission on the profit and loss statement.
they say
Revenues:
Credit sales understated
stock gain understated
how is there a stock gain, if a credit sale goes unrecorded?
shouldnt there be a stock loss, because u have fewer stock on hand, and when u take a stock take, it will show up as 1 less stock than what our stock cards say?
Do correcting entries ensure Reliability or Relevance?
Guys... when the business pays a loan repayment, what is the details for that in the cash payments journal?? is it just loan repayment ?? or something else ?
just a bunch of last minute questions:
- explain the role of stock cards in an accounting system
^Stock cards can help a business to identify fast and slow moving lines of stock, which can then help the business to create a better stock mixThis would be an advantage of using stock cards, it's not necessarily the role that they play in the recording process. But definitely tag it onto the end of the role if required.
would this be ok?
Do correcting entries ensure Reliability or Relevance?
Relevance.Guys... when the business pays a loan repayment, what is the details for that in the cash payments journal?? is it just loan repayment ?? or something else ?
It's just "Loan repayment".just a bunch of last minute questions:
- explain the role of stock cards in an accounting system
Stock cards detail the movement of stock coming in-and-out of the business. It shows which stocks sell the best, which ones don't. It can also show when levels of stock are low; re-ordering points.
I think in the journals, you must strictly write ledger account names. Hence, you would have to write "Loan - <name> "
Hi , wondering if you could explain this to me.
During times of rising prices, explain the effect that it has on net profit.
i was thinking that even though the stock will be more expensive, your net profit won't be affected as your old stock is still being sold.
seeing as it is your old stock that was being sold before rising prices, your net profit shouldn't actually change in relativity to your old
net profit as you are still selling the old stock and not the new, cheaper stock.
however, the answers still seem to point towards your net profit decreasing as the expensive stock is being sold and it doesn't seem very realistic to me.
Can someone explain? or would vcaa accept different responses as long as they are justified well?
sorry EPL, but why are correcting entries for Relevance?
i always thought it was Reliability
Someone check this for me:
Q: Explain the relationship between the going concern principle and balance day adjustments
A: The business life is assumed to be continuous and the records are kept on this basis. Balance day adjustments adjusts for revenues earned and expenses incurred. After these adjustments are made, asset and liability accounts can be closed off in preparation for the next period as they represent a future inflow and outflow of economic benefit further on in the business' indefinite life.
in a post adjusted trial balance, does capital already have net profit closed to it?
'If stock turnover ratio has increased, it means the business has sold more goods.' Do you agree? Explain you answer fully.Just because there is a faster stock turnover rate does not mean the business has sold more goods.It only means stock has been turned into sales faster. For example, what if the average level of stock held was decreased due to a lower investment in inventory? This would lead to a higher stock turnover ratio but the amount of goods sold would be the same as it was before.
another question,
reffering to a qualitative characteristic, explain why recording the prepaid revenue as revenue received is inccorect
Another question,
for exercise 14.6 and the calculation of cost of stock, i added the insurance payment.
Solutions disagree with me, but my reasoning was that it is a cost incurred on bringing the stock to a condition ready for sale, and furthermore, it is a benefit that will last throughout the life of the asset.
I agree it is a weak argument, however, i'm thinking there's at least a 2% chance im right
question d from exercise 13.6
the answers have put the sales figure as 52000, but i have 56000
could anyone verify this? I do not see how it is 52000
You don't need to worry about term deposits until you do balance day adjustments for revenues. It's basically just:
also, i just came across 'term deposit'
is that something i should have learned previously?
Explain why it is important to have an accurate budgeted sales figure?
wow hodgy, you've practically finished the course? Im not upto that chapter yet (still on budgeting :(, damn umat) but, from my limited knowledge of what STO is,I'm using neville box, controlling stock/debtors/creditors is the 3rd(?) chapter of unit 4 in this book. But yes, I'm almost finished :P I'm up to the last chapter which is something about evaluating performance I think...
I would agree because of the definition of STO? Not much help, i know, sorry..
Anyways, another question, and also, can someone please help with my previous questions?
Explain why it is important to have an accurate budgeted sales figure?
Could someone please explain how to record this in the Cash Payments1. record all the disposals as per usual
VS Vehicles agreed on a $12000 trade-in value for the old vehicle, and a $2000 cash deposit was paid to VS Vehicles on the day of purchase (Cheque 425)
How would you explain why the carrying value is used to calculate profit or loss on disposal of a nca, instead of the Historical Cost? (3marks)the carrying value represents the most accurate cost of the NCA at the time of its disposal based on the calculation of depreciation therefore it is more relevant to use it to calculate the profit of loss on the disposal so profit will be more accurate.
What are the ways of reducing sales return?buy better quality stock from suppliers
Can someone guide me on Disposals and trade-ins? can you go through it step by step for the general journal entries please?Disposal of a NCA is three steps:
When trading in a non-current asset but purchasing the new asset with cash, how is the trade-in value recorded in the general journal?
It says in the Cambridge book that a debit is made to the new asset's account (rather than the sundry account) but I don't get why this is done. Why would a debit entry be made to the asset's account?
Could someone please outline a typical example of this, I can't find one anywhere..
for insight 2010, how did you guys figure out the cost of the billiard table? For 1.1.7 i got 225 per stock table, whereas insight got 700
Has anyone done CSE 2010 Q1.1.1?If you look carefully at the cheque butt, the account is 'Kathy Song' which indicates the owner is paying from her personal bank account, hence the reference to capital in the GJ.
Why is Capital included in the General Journal?
Since it was paid by cheque, why is it in the GJ?
Has anyone done CSE 2010 Q1.1.1?If you look carefully at the cheque butt, the account is 'Kathy Song' which indicates the owner is paying from her personal bank account, hence the reference to capital in the GJ.
Why is Capital included in the General Journal?
Since it was paid by cheque, why is it in the GJ?
Also my own question (probably a silly one), are disposals of assets recorded on the date of the disposal or on balance day? Thanks!
Hi can someone give me like an A+ answer to the difference between profit and profitability please?
Also when referring to profitiability do we need to incorporate the Profit ability ratio in the answer? Giving the question is theory based.
Hi can someone give me like an A+ answer to the difference between profit and profitability please?
Also when referring to profitiability do we need to incorporate the Profit ability ratio in the answer? Giving the question is theory based.
The reason why I ask is that I did a practice exam and the solutions had it at balance day, I understand that it's recorded in the general ledger so it would make sense to be on balance day, but I'd still appreciate anyone else's feedback if possibleHas anyone done CSE 2010 Q1.1.1?If you look carefully at the cheque butt, the account is 'Kathy Song' which indicates the owner is paying from her personal bank account, hence the reference to capital in the GJ.
Why is Capital included in the General Journal?
Since it was paid by cheque, why is it in the GJ?
Also my own question (probably a silly one), are disposals of assets recorded on the date of the disposal or on balance day? Thanks!
not silly, interesting
I'm quite sure date of disposal
The reason why I ask is that I did a practice exam and the solutions had it at balance day, I understand that it's recorded in the general ledger so it would make sense to be on balance day, but I'd still appreciate anyone else's feedback if possibleHas anyone done CSE 2010 Q1.1.1?If you look carefully at the cheque butt, the account is 'Kathy Song' which indicates the owner is paying from her personal bank account, hence the reference to capital in the GJ.
Why is Capital included in the General Journal?
Since it was paid by cheque, why is it in the GJ?
Also my own question (probably a silly one), are disposals of assets recorded on the date of the disposal or on balance day? Thanks!
not silly, interesting
I'm quite sure date of disposal
Haha I hope not.The reason why I ask is that I did a practice exam and the solutions had it at balance day, I understand that it's recorded in the general ledger so it would make sense to be on balance day, but I'd still appreciate anyone else's feedback if possibleHas anyone done CSE 2010 Q1.1.1?If you look carefully at the cheque butt, the account is 'Kathy Song' which indicates the owner is paying from her personal bank account, hence the reference to capital in the GJ.
Why is Capital included in the General Journal?
Since it was paid by cheque, why is it in the GJ?
Also my own question (probably a silly one), are disposals of assets recorded on the date of the disposal or on balance day? Thanks!
not silly, interesting
I'm quite sure date of disposal
Yeah I agree, I've seen it as both balance day and also the date of disposal
therefore I don't reckon you would lose marks for getting the date wrong haha?
from CSE 2011
Q 2.2.1 - Explain why ROI is a more important indicator than ROA
is it because that ROI assess profitability from an investor's point of view rather than a managers point of view (ROA)? or is it because of what ROI measures? (how effectively a business had used its owners captial to earn profit)
Q 2.2.2 - (probably a simple question) Explain how ROA can increase while ATO has decreased
has to be that either NP>Sales (which doesnt make sense...?) or something about the proportional movement in the Avg Total Assets? :S
hmm... for 2.2.2 all im given isYeah so to answer that a decrease in ATO will be 1 of 2 things, a decrease in sales or an increase in the level of assets. Since the level of assets isn't exactly relevant to the NPR (ignore ROI, focus on the formula ROA = ATO x NPR), you would say that there has been a decrease in sales (resulting in a decrease in ATO). But for ROA to increase, NPR must increase more than the decrease in ATO which means NPR will have to grow with a decrease in sales. That will be done by an improvement in expense control through decreased wages, rent, etc
2010 2011 2012
ROI 6% 7.5% 8%
ROA 4% 4.2% 4.8%
ATO 1.9 1.6 1.4
Hi can someone give me like an A+ answer to the difference between profit and profitability please?
Also when referring to profitiability do we need to incorporate the Profit ability ratio in the answer? Giving the question is theory based.
Profit is revenue less expenses determined through accrual accounting for a reporting period whereas profitability is the ability of a firm to turn/generate a profit through the use of its resources by measuring profit with a base figure. Profitability indicators may include ROI, ROA, GPR, ATO, NPR ect
Hi can someone give me like an A+ answer to the difference between profit and profitability please?
Also when referring to profitiability do we need to incorporate the Profit ability ratio in the answer? Giving the question is theory based.
Profit is revenue earned less expenses incurred, and is expressed as a dollar figure. On the other hand, profitability is the ability of a firm to generate profit as compared to a base such as Assets or Sales.
Hey guys;
has anyone cone across a situation where insurance is treated as a product cost?
Hey guys;examples? From which exams?
has anyone cone across a situation where insurance is treated as a product cost?
yep i have a number of times
Hey guys;On most exams it's treated as a period cost because the business might order say, 3 lines of stock, but if they only order 1 type of stock and get insurance on that I don't see why it can't be a product cost.
has anyone cone across a situation where insurance is treated as a product cost?
Hey guys;On most exams it's treated as a period cost because the business might order say, 3 lines of stock, but if they only order 1 type of stock and get insurance on that I don't see why it can't be a product cost.
has anyone cone across a situation where insurance is treated as a product cost?
hey guys, i asked this in a different thread and then i saw this one...
i dont quite understand this question.
(http://img811.imageshack.us/img811/1661/93741547.png)
these are the answers.
(http://img341.imageshack.us/img341/7234/14739292.png)
i dont understand where all the values (3300, 5500, 2000, 1200) come from.
could anybody explain? thanks.
Something about product costs, if you purchase stock from a supplier and get it delivered from another business. If this is returned to the supplier, only the amount purchased would be returned, however would the delivery( which is now stock) be written-down? Also ive got a question where the delivery was done by the same supplier and the whole amount was returned, so they must given credit for the delivery, which it unusual as this doesnt happen.mm that's odd
the answer is $3075
hey guys, i asked this in a different thread and then i saw this one...
i dont quite understand this question.
(http://img811.imageshack.us/img811/1661/93741547.png)
these are the answers.
(http://img341.imageshack.us/img341/7234/14739292.png)
i dont understand where all the values (3300, 5500, 2000, 1200) come from.
could anybody explain? thanks.
what exam was this again?
Work backwards.
Ok firstly, he received a deposit of 20%
so 20% of $10000 (500x20) is $2000
This is 'prepaid sales revenue'
Next you have to determine how much he actually purchased with this $2000
$2000/500 (selling price) is 4
therefore he purchased 4, so 4x300 (cost price) is $1200
NEXT
deduct these figures to determine ones in the sales journal
he purchased 15 bed (15x500) which has a total selling price of $7500
minus $2000 from this figure and you get your $5500
then do the same for cost price
15x300=4500
4500-1200=3300
Hope that helped... badly worded but meh, tricky question
the answer is $3075
First you have to calculate from the start of july 2004 to end of september 2004
23,000 - 10,000
= 13,000
x 0.15
/12
x 3
= 487.5
next, the period of 9 months that the equipment is worth 23,000
23,000 x 0.15 /12 x 9 = 2587.5
487.5 + 2587.5 = 3075
hey guys, i asked this in a different thread and then i saw this one...
i dont quite understand this question.
(http://img811.imageshack.us/img811/1661/93741547.png)
these are the answers.
(http://img341.imageshack.us/img341/7234/14739292.png)
i dont understand where all the values (3300, 5500, 2000, 1200) come from.
could anybody explain? thanks.
what exam was this again?
Work backwards.
Ok firstly, he received a deposit of 20%
so 20% of $10000 (500x20) is $2000
This is 'prepaid sales revenue'
Next you have to determine how much he actually purchased with this $2000
$2000/500 (selling price) is 4
therefore he purchased 4, so 4x300 (cost price) is $1200
NEXT
deduct these figures to determine ones in the sales journal
he purchased 15 bed (15x500) which has a total selling price of $7500
minus $2000 from this figure and you get your $5500
then do the same for cost price
15x300=4500
4500-1200=3300
Hope that helped... badly worded but meh, tricky question
Is the disposal of a non current asset recorded on the date of disposal, or balance day/end of the period?Looking at past assessment reports it's safe to say that the disposal is recorded on the date that it is disposed.
I've seen it done both ways, so which ones right?
Is the disposal of a non current asset recorded on the date of disposal, or balance day/end of the period?Looking at past assessment reports it's safe to say that the disposal is recorded on the date that it is disposed.
I've seen it done both ways, so which ones right?
Yeah i meant in the general ledger
In VCAA 2010, its recorded at the end of the period, but I've seen at least 2 other exams (cant remember which ones) where its on the date of disposal
VCAA 2008 1.4.2Is the disposal of a non current asset recorded on the date of disposal, or balance day/end of the period?Looking at past assessment reports it's safe to say that the disposal is recorded on the date that it is disposed.
I've seen it done both ways, so which ones right?
You record in the general journal on the date it was disposed. (or once the invoice is issued)
You record in the general ledger on balance day.
Yeah hopefully..Nope, just record the accumulated depreciation up until the asset is disposed of
on that topic, say we dispose of an asset on the 30 April, and the reporting period ends 31 December
Would we have to record the extra 4 months depreciation in the GJ when disposing of the asset?
if depreciation has not yet been updated
NEW QUESTION
Hey guys, I'm doing some holiday homework and am having trouble with analysing charts...I get that debit has to equal credit but I'm not completely sure how to do it.
On the link below, is my exercise, feel free to make comments/changes where I have gone wrong etc. Thanks!
Red = Not sure
Green = Pretty sure
Here are the transactions:
Kim Swood just opened her own spare parts shop called Monaro Motors. Transactions for
August 2010 showed the following:
Aug. 1 Capital contribution of $10 000 stock and $30 000 cash
2 Purchased premises worth $150 000 paying a $10 000 cash deposit with
the balance funded by a mortgage from QV Bank
3 Cash sale of parts for $400 (cost price $200)
4 Paid $2500 cash to Wilson Fittings for shelving
5 Purchased stock on credit from HolFord Parts for $2600
6 Sold parts on credit to Lemon Rentals for $900 (cost price $450)
7 Paid wages of apprentice $600
8 Kim Swood took home stock worth $1500
9 Received $500 cash from Lemon Rentals
https://docs.google.com/spreadsheet/ccc?key=0AqiRxK896d4gdENaOFZacXNKbVZvXzgzLVV1bkdXNXc
Wow, thanks Avo. Didn't expect you to do all of that :OYea you can use bank, cash at bank, cash or whatever is accepted for SACs. I think the only accepted one for the exams are Cash at Bank, as are Creditors Control and Debtors Control (you should be able to write just debtors/creditors for SACs, but make sure you check with your teacher, it's always good to write the proper way as practice)
Instead of bank do we put cash? Our class exercises just put bank down for cash...and if it was credit etc it would be creditors or debtors.
Thanks again!
Okay, so the business prepares reports monthly, meaning that it's already accounted for the indurance for 3 months (jan,feb,mar)Ahhhh thank you!
therefore, the 1800 remaining represents the insurance for the next 9 months (12-3). So, the expense for any given month, for example april, is 1800 / 9 = 200
So i've done my first practice exam (2007) and came across a question we covered in class about, why assets and liabilities are classified in balance sheet with reference to one qualitative characteristic.not the best answer as liquidity isnt studied until unit 4..
I understand that understandability is a relevant answer because "it helps readers with little knowledge to understand the basics of the report." (as stated in the examiners report http://www.vcaa.vic.edu.au/vce/studies/account/assessreports/2007/accounting1_assessrep_07.pdf question 1.1.3) The examiners report also stated that the question was poorly answered as a lot of student gave relevance with the explanation of how it helps classify the owner's equity.
My answer consisted of 'relevance' but for a different reason: "Classifying assets and liabilities as current and non-current allows the business to calculate its short term liquidity"
This links in with the fact that relevance states that all useful information that is useful for decision making should be included in reports.
Right or wrong?
So i've done my first practice exam (2007) and came across a question we covered in class about, why assets and liabilities are classified in balance sheet with reference to one qualitative characteristic.not the best answer as liquidity isnt studied until unit 4..
I understand that understandability is a relevant answer because "it helps readers with little knowledge to understand the basics of the report." (as stated in the examiners report http://www.vcaa.vic.edu.au/vce/studies/account/assessreports/2007/accounting1_assessrep_07.pdf question 1.1.3) The examiners report also stated that the question was poorly answered as a lot of student gave relevance with the explanation of how it helps classify the owner's equity.
My answer consisted of 'relevance' but for a different reason: "Classifying assets and liabilities as current and non-current allows the business to calculate its short term liquidity"
This links in with the fact that relevance states that all useful information that is useful for decision making should be included in reports.
Right or wrong?
i would stick with understandability
Currently doing a practice exam..What exam is it in?
the question says...
1. Complete the general journal entry to close the revenues and expenses to the P/L summary.
additional information :
equipment of 12000 is depreciated at 10% per annum using the straight line method.
the business prepares reports monthly.
I worked out the depreciation of the equipment to be $100, however the solutions say $90.
I did:
12000 x 0.1 = 1200 per year.
1200/12 = $100
am i missing something?
im a tad confused with the following in relation to the study design...
1. Changes to GST: will they still identify if gst has been included/ not included? or they wont mention gst at all and we have to remember to include it?
2. posting to general ledgers in terms of months instead of reporting periods
thanks again
Hi all, i was wondering if someones could help me with the following two questions:
1. on 21 September 2011, the business paid $3300 (including $300 GST) to renew the annual insurance policy due to expire on 30 September 2011 (chq. 538). The payment was correctly recorded in the Prepaid insurance account. On June 30 2012, before any adjusting entries, the balance of the Prepaid insurance was $3720. Prepare the necessary journal entries to record the balance day adjustment for the year ending 30 June 2012
- the answers have debited insurance expense by $2970, and credited the profit/loss summary
- i understand the credit and debits, just not how they got to that figure
2. Discuss how using the FIFO method of stock recoring will impactGross Profit suring a period when cost prices of stock are falling i got the first part of the answer right, but the next part confused me. They said:
- if a set $ amount or fixed % is added to cost price, then as cost price falls, selling price will also fall. This means the margins will remain unchanged and the $ figure of gross profit per unit will fall
- if the business maintains a set selling price regardless of cost price then as cost falls the margin on sales will increase, leading to higher gross profit
so if someone could explain that, that would be really helpfull haha :)
sorry for all the questions :/
just wondering, how much theory will there approximately be, compared to previous years exams?Previous years' the split was about 70% practical, 30% theory. This year, I would be guessing at least 40% theory, if not more.
just wondering, how much theory will there approximately be, compared to previous years exams?Previous years' the split was about 70% practical, 30% theory. This year, I would be guessing at least 40% theory, if not more.
im a tad confused with the following in relation to the study design...
1. Changes to GST: will they still identify if gst has been included/ not included? or they wont mention gst at all and we have to remember to include it?
2. posting to general ledgers in terms of months instead of reporting periods
thanks again
had a similar discussion in class with my teacher! what they're saying about the gst is pretty much what you're saying. students will be expected to work out gst without being prompted.
transactions that DONT include gst are: wages, drawings, interest expense/revenue, gst settlement,capital contribution, loan repayment, loan received, payments to creditors (as its already included from the credit purchase) and receipts from debtors (same applies for payments to creditors)
as for the posting journals, they'll give you a journal thats has the totals from three separate months. i.e
Date Details Rec No. Bank Discount Rev Debtors Control
1-31 Jan Totals 43,000 18000
1-28 Feb Totals 37,000 500 12000
1-31 Mar Totals 50,000 24000
Then you have to post them to the one ledger using separate entries
Debtors Control
Date Cross Ref $ Date Cross Ref $
1/1 Balance 15,000 31/1 Bank 18000
28/2 Bank/ discount revenue 12000
31/3 Bank 24000
^(didnt include the credit sales but i hope you get the point)
i hope that clears a bit up splash.of.colour! :)
Everyone I've talked to doesn't seem to have a set format - hell Neville Box (chief assessor) said they aren't sure how they'll mark them yet. Another lecturer said to talk bout everything you know.
I'd start by explaining what the question asks (e.g discuss control accounts and subsidiary ledgers, explain what these are) followed by advantages/pros of what needs to be discussed, and then negatives/cons.
My approach, not sure if it's the best way, hope someone else can reply with their preferred way of tackling discussion questions.
6 units @ 10
6 units @ 15
Stock gains are recorded at the lowest cost price of stock currently on hand to satisfy Conservatism - prevent overstating assets.
Edit: There is no need to separate them - the balance must be shown for each cost price collectively.
6 units @ 10
6 units @ 15
Stock gains are recorded at the lowest cost price of stock currently on hand to satisfy Conservatism - prevent overstating assets.
Edit: There is no need to separate them - the balance must be shown for each cost price collectively.
Are you 100% sure? When my teacher marked my practise exam (one of the Engage ones) it had 3 different cost prices
e.g.
5 units @ $22
4 units @ $28
7 units @ $25
Stock gain of 2 units
My response was (same method as yours):
7 units @ $22
4 units @ $28
7 units @ $25
However, I was told it was:
5 units @ $22
4 units @ $28
7 units @ $25
2 units @ $22
Quick question about special journalsYep, Cash Receipts Journal.
Where exactly are loans you receive recorded? Should they be recorded under cash receipts journal?
Yep, Cash Receipts Journal.
Yep. Unless there is a separate classification column for them (which there usually isn't).Yep, Cash Receipts Journal.
Under sundries yeah?
i hope this thread is still alive..The reducing balance method is based on the assumption that certain assets contribute more to the business at the start of it's useful life compared to later on in it's life. This is especially true of assets with moving parts (vehicles) as these are subject to wear and tear over time. However, other assets which are less active (shelving) may not deteriorate as much over time, therefore it is better to use the straight line method of depreciation.
in regards to distinguishing which depreciation method should be applied, my text book says that NCA that move (vehicle, equipment) should use reducing while non-moving (shelving) should use straight line.
i agree with this but if i was asked in a sac, i dont reckon an explanation like that would be too strong. How should i define which method should be applied in a theory question?
Do you mean why you have to total both sides so that the amount is equal?Yes, why can't you leave both sides of a ledger account unbalanced at the end of a reporting period?
Eh.. I'm a bit rusty but I'll try:Actually its cause the agreed value is more RELEVANT to the business and therefore its decision making
The vehicle is valued at its agreed value at the time of the vehicle's contribution at $20k. Although Historical Cost demands the vehicle to be valued at its original cost to ensure it is free from bias and error, the economic benefit represented by the vehicle has been partially consumed, and hence the future economic benefit provided by the vehicle is no longer indicated by its cost price. Therefore, the historical cost of the vehicle is no longer relevant to the firm. Instead, the vehicle should be valued at its 'agreed value' of 20k, as this amount is more useful for management decision-making by offering a more accurate reflection of the vehicle's future economic benefit to the firm.
Hey, does anyone know the effect of drawings and capital contribution on the accounting equation?drawings decrease assets (cash or stock) and decrease OE
So one question that has been haunting me (not really...):Well it kinda groups all the accounts together really neatly rather than having to search through your records (ie journals) which may have 100 entries and then make reports out of them.
The general ledger are very frequently used in this course, but what is its purpose? Aren't the other records/reports enough?
Well it kinda groups all the accounts together really neatly rather than having to search through your records (ie journals) which may have 100 entries and then make reports out of them.
The agreed value is more RELEVANT to the business and therefore its decision making
So what's the difference between single entry & double entry accounting? Can someome give me an example of how each of these accounting methods operate? Plus, why are the existing assets & equities of the business recorded into the general journal, when the owner decidea to switch to double entry accounting?
Having trouble with following question:
-State whether source docs take place at the input/processing/output stage of the accounting process.
Derp, had a brain freeze when doing that question :P
Hey everyone, this will be my first of many questions regarding 3&4 accounting! There is a question about a proprietor borrowing a computer from his sister for free, this should be recorded as an asset at the agreed value correct?
hey i asked this same question on here last week the answer i got told it was agreed value.Yeah.. probably should of read up. Thanks! :D
The agreed value is more RELEVANT to the business and therefore its decision making.
so yeah you're correct
If the computer has been used then it should be valued at its agreed valueyea it is, thanks :)
One more:hizt0ric4l c057
"Narre Warren Pizza have just revalued their non-current assets upwards by 4% to reflect the rate of inflation. Referring to one accounting principle, explain why the non-current assets should not be revalued"
Is this something to do with the Consistency principle??
consistency refers to accounting methods, recording things at historical cost isn't a method, it's a principle. if you interpreted consistency in this way, it could be used for literally every theory answer. so i doubt you would get any marks for stating consistencyI think that both should be accepted - consitency is still regarded as a principle. HC is a safer answer.
In the accounting exam, will the more specific accounting principle (HC in this case) always be correct, regardless of how well you explain other accounting principlesthere are instances where more than one answer in correct, in which case you will receive marks for stating either.
interesting, i think it could be either historical cost or consistency:
(I)Consistency:
(D)Accounting methods should be applied in a consistent manner to ensure that reports are comparable between periods.
(L)As the non-current assets were previously valued at their historical cost, only this value may be applied so as to maintain consistent records.
I've actually always sucked at linking, so anyone feel free to correct me.
Also a good exercise for these theory q's is to see if you can answer them with a Qualitative characteristic instead of principle (you'll find many of them link)
Try it in this case, see if you can tell me which qualitative char would apply to this question :)
One more:
"Narre Warren Pizza have just revalued their non-current assets upwards by 4% to reflect the rate of inflation. Referring to one accounting principle, explain why the non-current assets should not be revalued"
Is this something to do with the Consistency principle??
Why is stock used for advertising classified as an expense whereas drawings isnt? Is it because advertising is fo business purposes or?
Hey guys I'm a bit confused, can taking stock out for advertising be regarded as drawings?
Omg im so sorry, I didnt even realised i made the same mistake as another question a few days ago. Thanks for clarifying again!!
Thanks :)
One more question: the Cash Receipts Journal record cash inflows but lets say I go to the shops and purchase something, I will usually receive a receipt for my purchase/payment, then how come the journal that records cash inflows is called Cash Receipts Journal as opposed to something else?
Do we have to record something in the general ledgers when a business submits a quote to supply their stock (sale)?
And how do we formally balance revenue/expense/OE accounts in the general ledger? (Do we use the same process of balancing Assets/Liability accounts?)
Thanks abcd!oi that's me
why do you two have similiar usernames? lol
Where is the contribution of an asset reported in the balance sheet?
So lets say im preparing a balance sheet, i must add the value of the asset to the Capital under Owners Equity as well as record the value and name of asset under assets?yes
yes
In a Cash Flow Statement, which transactions come under the categories of financing & investing activities? I know that the operating activities deals with the business' day to day transactions
2012 scaling report says no scaling at 35 but scaling +1 if 40 or above
Do you think that would be Same or very similar for this year?yeah its the same pretty much every year
Conservatism states that losses must be recognised when probably and gains recorded only when certain. This is done to avoid overstating assets and owner's equity. This is linked to the Lower of cost/NRV rule.
It doesn't have anything to do with estimations to the best of my knowledge. But you could probably link 'no estimates' to Reliability - all transactions must be verifiable by source documents to ensure it is free from error and bias (and I guess free from estimations as a result).
Hope this helps
2012 scaling report says no scaling at 35 but scaling +1 if 40 or above
I thought scaling affects you the most at 30 and less as you move away from the mean? o.Oaccounting and biology are weird, probably has something to do with the large number of year 11s doing those subjects
Shouldn't scaling decrease as your SS increases, did you mean it scales up by 1 at 35 and there's no scaling at 40? 0.ono http://www.vtac.edu.au/pdf/scaling_report.pdf
no http://www.vtac.edu.au/pdf/scaling_report.pdfThis could mean that it is harder to differentiate higher scores (40+) compared to lower scores (~30). This happens if a lot of people get around the same high mark.
Can someone please explain why there needs to be a column for 'Stock Control' in Cash Payments Journals?
If you buy stock with cash, then it would increase your stock control balance, so you use that column, as well as the bank and GST columns.Most importantly, the reason why one account has its own column in a particular journal is because there's regular activity involving that account in the reporting period. If one item only has a rare transaction here and there, then it would be unnecessary to have a separate column and would just be recorded under the Sundries column.
Yea, I meant General Ledger. Wait so since every transaction must be included in a journal, does that mean that Stock gains/losses are also recorded in the General Journal, or only in Stock cards?they are recorded in the general journal as well because they can't be recorded in any special journal
When a business establishes a double-recording system and it already owns a number of assets, do these assets need to be recorded as capital? (When recording the opening balance in the General Journal)
Ahh alright thanks guys, that makes sense. So that means we have to record every source of finance (loan aswell) in the GJ?
Main reason is to make sure that records are accurate, because with general ledgers you're recording twice, before financial info. is reported.yeah, thanks mate
Main reason is to make sure that records are accurate, because with general ledgers you're recording twice, before financial info. is reported.
What does it mean when it says 'Stock Control' and 'Cost of Sales'?
Why is Loan recorded in the General Journal, not the Cash Receipts Journal? I mean, aren't you getting cash when the Loan is received?where do they record loans in the general journal? i'm pretty sure it goes in the cash receipts journal.
Also, I would appreciate any general tips for AOS 1 of Unit 3 (pretty much recording + principles/characteristics), as I have a SAC on this tomorrow :S
Why is Loan recorded in the General Journal, not the Cash Receipts Journal? I mean, aren't you getting cash when the Loan is received?It is the cash receipts journal
Also, I would appreciate any general tips for AOS 1 of Unit 3 (pretty much recording + principles/characteristics), as I have a SAC on this tomorrow :S
So this transaction works in a same way as Drawings, as it's also negative OE?sort of, the difference is that the owner isn't taking assets directly out of the business, but instead increasing its liabilities.
the details are "GST clearing" as that is the name of the ledger account that you cross-reference the transaction with
Only got 80% for my first SAC.. am I doomed for a good SS haha? Rank 3 atm
There's 11 people and the top 4-5 are quite strong I believe
"A business owner has collected GST of $500 during the month. As the business has experienced an inflow of resources, the owner intends to report the $500 as revenue for the month. Is this correct accounting treatment? Explain your answer fully"
No accounting for a week and my minds got blank... help?
Why is rent paid in advance an asset?There is a future economic benefit in the form that the business can use the premises in the future without having to pay more rent.
Quick question
Sort of made it up from the question above. And realised I don't know if I can answer it myself. XD
On jan 1 A business pays for advertising of 1500 dollars plus gst using a personal cheque. The business consumes advertising at the end of every month at 100 dollars. What is the effect on the acc eq.
The answer I got was 1500 in pre adv and decrease gst by 150 and increase oe by 1650.
Is that right ?
Just a quick question:
What do people find most difficult about Accounting (be specific - I'm writing a few new exercises and worksheets and wanted to make them as relevant as possible)?
I have "discuss" questions at the top of my list.
Just a quick question:I find budgeting reports the hardest part of accounting for me. I just don't like them. Other then that bdas and the hardest report for me is the cash flow statement.
What do people find most difficult about Accounting (be specific - I'm writing a few new exercises and worksheets and wanted to make them as relevant as possible)?
I have "discuss" questions at the top of my list.
When depreciation expense is recorded to the general ledger, why is a credit entry made to the account-'accumulated depreciation', instead of just crediting the account of the asset (i.e.Van)I don't think I can answer ur question particularly well but ill try.
I don't think I can answer ur question particularly well but ill try.Same subjects!
Accumulated depreciation is a negative asset. And in the balance sheet the asset for example van is shown at is agreed value then it says less acc dep then shows the carrying value.
Doing that shows the going concern principle and improves understandability and it shows the relevant negative asset of depreciation.
Same subjects!Had my answer all written out then abc steals it lol.
Hmm, but even when you credit, let's say, the Van's account in the GL, the balance would still reflect the carrying value of this asset plus this way is kinda simpler too. But i think showing acc. Dep.Expenseon the Balance sheet might be more relevant, maybe thats why
Had my answer all written out then abc steals it lol.
Sorry!relax its all good !
Hi everyone,
Can I ask why you cannot say that a discount expense is an expense that is in the form of a decrease in Bank? Why is it a decrease in Debtors Control? i.e. when we receive less money from our debtors (due to the discount), aren't we receiving less cash and thus Bank should decrease? What's the concept behind understanding why this cannot be the case and that the correct answer is Debtors Control.
It’s just a little perplexing to understand because when a receipt from a debtor (who has been entitled to a discount for early payment) is recorded in the CRJ, the Debtors Control column amount stays the same (because you have to clear the total amount), but it is the Bank column amount that decreases (as less cash is received by the business). Any comments on this to further expand my insight onto this would be greatly appreciated, thanks.
Bank may be affected in the long term, but discount expense has no IMMEDIATE impact on bank, but it does have an immediate impact on debtors control (your debtors owe you less). But yes, I fully understand where you are coming from :P
GST is not a future economic benefit to the entity
think about it this way:
value of stock control - represents future economic benefit expected from selling the stock within 12 months etc.etc.
however, the GST figure does not represent a future economic benefit to the firm hence must not be included in the valuation of stock
Any tips for balance day adjustments?
They're so confusing :o
Draw a timeline of what is occurring. Trust me it helps :)
Can someone please complete this question?Assuming when it says 32,300 in wages it means wages in general including accrued. So shouldn't it be 32,300 - 450(previous periods accrued wages) and + 600(wages incurred not paid)? So altogether 32,450. This is just the way I interpreted the question I could be (probably) wrong.
During the year ended 30 June 2012 ,Black's electronics paid $32,300 in wages . At 30 June 2012, $600 were still owing (memo 19). The balance sheet at 30 June 2011 showed accrued wages of $450. The next date for payment of wages is 7 July 2012 when $2000 will be paid to employees (chq 721)
1. calculate wages expense for year ended 30 June 2012
The business purchased their vehicle in 2013 for $30,000. However the owner went to the shop in 2014 and seen they were selling the same model for $28,000.
The answer said to record the vehicle $28,000, is this correct?
Do I just look at it like an agreed value?
The business purchased their vehicle in 2013 for $30,000. However the owner went to the shop in 2014 and seen they were selling the same model for $28,000.just to add to what abcdqdxd was saying. You record it at 30,000 in 2013 maybe in the next year thru depreciation or outdated model etc it went down to 28k. But since you bought it in 2013 for 30k you record it at 30k.
The answer said to record the vehicle $28,000, is this correct?
Do I just look at it like an agreed value?
Discuss the importance of classifications in accounting reports. With reference to one qualitative characteristic and one accounting principle. (6 marks)Understanability Becuase classifying assets and liabilities makes reports easier to understand for the users for decision making for example which assets provide economic benefit for 12 months and which ones provide economic benefit for more than 12 months.
I'm having trouble with this question as the answer is apparently understandability and consistency, although i cant see why?
Understanability Becuase classifying assets and liabilities makes reports easier to understand for the users for decision making for example which assets provide economic benefit for 12 months and which ones provide economic benefit for more than 12 months.
Answer: Reports should be prepared in a manner that makes it easy for the user to comprehend their meaning.
Classifying Assets and Liabilities in the Balance Sheet allows users with little accounting knowledge to understand the basics of the report.
(VCAA 2007)
I'm not really sure about the consistency sorry.
Discuss the importance of classifications in accounting reports. With reference to one qualitative characteristic and one accounting principle. (6 marks)
I'm having trouble with this question as the answer is apparently understandability and consistency, although i cant see why?
When you're allocating the value of stock, why don't we record the expense of cartage in separately to the cost of sales? Don't we need to report 'Cartage In' seperately on the Income Statement? o.0
Cartage in is reported separate of cost of sales under the heading "cost of goods sold" if treated as a period cost. If it is a product cost then it is included in cost of sales if I remember correctly.it seems right. In unit 3 I think we assume everything is a period cost.
But yeah, I'm real rusty on this so I may not be 100% correct.
Hi
Are there any tips on balance day adjustments for revenues and disposal of non-current assets?
I have my sac this tuesday and I'm struggling with BDA
thanks
When we have to record the entries for the cash sale of a NCA in the General Journal, supposing it results in a profit, why do we have to debit 'Disposal of NCA' & credit 'Profit on Disposal of NCA' accounts, isn't the entry in the Cash Receipt Journal enough?The business might recieve a cash receipt of 20000 for the NCA. However not all of it is revenue. The entry in the GJ is to record the revenue not the cash received that has already been done. Sorry for the rushed response. Hope it helps
Might be a stupid question but I haven't done Accounting in a while, so I'm forgetting basics :/
Cheers
Thanks guys!
Another question- What is the use of the 'Disposal of NCA' ledger account? I'm confused at why the proceedings from the sale of a NCA are credited from this ledger account in a trade-in of a NCA... any particular reason why you can't debit this?
Is the Disposal of NCA account an Asset, a Liability or an Owner's Equity legdger account? It's balance is not carried forward to the next reporting period, so I guess we can rule out A or L...I think its the same as a P+L summary account, just there to close off accounts.
need help with vcaa exam 2 2012 the first question about stock control. and 1c as well can anyone help plz
Have a few exam questions:Thanks!
- When we are reporting Wages expense in the income statement/cash flow statement, should we break it up into Wages expense/Accrued Wages expense/Prepaid Wages expense or will a single figure for Wages suffice?
- Q3 of Practice Exam 1 from the ATARNotes study guide: I understand why the labelling cost is immaterial and thus, a period cost. But why isn't the Prepaid Insurance included as a product cost? The transaction is only for one line of stock, so I thought it can be assigned to each unit
- For Q4 of this exam, the answers have only reffered to profitability from the owner's perspective, but is it also valid to mention that the business might not be earning discount revenue from its creditors, so it's less profitable in this sense. Also the question asks for the 'movement of Debt Ratio', I've just mentioned the scenario where it increases, do I have to also talk about it decreasing?
- For Q8c, when explaining how Prepaid expenses are current assets, is it acceptable to say that economic benefits inflows are expected in the form of 'reduction in the expense payable'?
I need help on question 3b of the 2012 Unit 4 exam.
Can someone explain to me how to calculate the cost of: Depreciation of Equipment, Office expenses and Interest Expense(Where did it come from?)
However, this is irrelevant to the original question, but I don't agree with the Wages Expense answer. I know how it was calculated, but I don't agree with it. Obviously I don't have the power to do anything about it, but do you disagree with the answer for Wages Expense as well?
Which part don't you agree with? I think it makes sense (though they do seem to have gone out of their way to confuse people in that question).
Well the Accrued Expense at the end the 2012 Year and the 2013 Budget are two different figures. I think the difference off the two should be accounted for in the calculation of the Wages Expense for the Budget.
How so? That was indeed a tricky thing for them to include (since they already gave you all the information to calculate the expense incurred in the Income Statement section), but it wouldn't affect the calculation; it just means that the business paid less in wages during the period than they incurred ($163,250 paid vs. $164,750 incurred, which is why the balance of Accrued Wages increased by the difference of $1,500). Hope that makes sense.
I'm starting VCAA papers today. Which ones are relevant/similar to the current study design?Only the 2012 exam will have GST in budgeting and also reducing balance method of depreciation
I've seen a few that don't have GST and a few with different templates etc.
Hi guys!
What transactions do NOT attract GST?
I agree that it usually does state in the question, but theoretically, VCAA expects us to know where GST is applicable in the current study design. I'm not entirely sure if this is true, can someone confirm?
Loan Repayments, Interest Expense, Drawings.
It will usually tell you though. :)
I agree that it usually does state in the question, but theoretically, VCAA expects us to know where GST is applicable in the current study design. I'm not entirely sure if this is true, can someone confirm?
Also to add to Damoz's list wages doesn't have gst and so doesn't the SALE of a non current asset.
But the Purchase of a non-current asset does include GST, right?Yep!
But the Purchase of a non-current asset does include GST, right?
But the Purchase of a non-current asset does include GST, right?
On the topic of GST, make sure you can calculate backwards if they give you the total price (GST inclusive). I'm sure many of you already know how to do that though :P
Always look out for whether GST is inclusive or exclusive to the figure given
I'm sure many of you already know how to do that though :P
Am I allowed to take in two scientific calculators and put one under my desk just in case one of them stops working ?
I'm just a little paranoid about something like that happening in the middle of the exam...
not in the constraints of the VCAA study design but was just wondering anyway.Record a normal sale. Then the free thing as advertising expense, that what I would do.
You know those buy one get one free sales, how would they record the sale?
Would they write down stock by 50%? or treat all the stock lost as stock loss? or leave it and record the price of the stock leaving as cost of sales, i'm presuming the mark up is definitely more than 100% if the business owner is sane.
Also, if certain stock is returned, and it was incurred with delivery charge from a different entity to those whom the goods are being returned to, how do we record the stock flow in the stock card. I'm presuming the stock card is unreliable and inaccurate if we record the outflow as the whole figure. Maybe a memo for the adjusting entry? or is this a PARADOX in the study design?There's too many of them!!
There's too many of them!!
Like what if we pay a sundry creditor in credit terms and received discount revenue in the disc rev column in payments journal. Then when we construct a cash flow statement for payments to creditors do we deduct the whole disc rev or just the amount actually discounted from trade creditors?
I think you deduct the whole amount because its discount revenue so its not cash hence shouldnt be in the CFS? :)
Thanks
But I was thinking like when we find payments to creditors for the CFS
We do the creditors total less discount revenue total.
But some of that discount revenue is not actually from trade creditors.
So if we deduct the whole amount payments to creditors will actually be less than it should be.
Get what I mean?
Correct me if I'm wrong, but I've attached an example to make sure I understand what you mean.thanks
If my example is correct, then I would say when reducing Creditors Control, you would have to DEDUCT any Discount Revenue from Payments to Sundry Creditors. So instead of saying to reduce Creditors Control of $400+60=$460, you would have to take out any Discount Revenue from Payments to Sundry Creditors. Therefore, it would actually be $400+40 = $440
But if there is a question where you are required to prepare an Income Statement, BE CAREFUL not to state Discount Revenue as $40.
Hope this helps! :)
thanks
So should payments to creditors in the CFS be 360 or 340?
No worries. :)ok sweet
So, in the CFS:
Operating Cash Outflow: "Payments to Creditors" would be $360
and don't forget...:
Investing Cash Outflow: "Sundry Creditor - ATAR Notes" would be $480
ok sweet
And shouldn't it be "payment to sundry creditor...." ?
Or it doesn't matter
For the Analysis theory questions that ask you to 'explain what's shown by the trend in an indicator', do you actually need to explicitly define what the indicator is? Or can you say something like: 'Debt ratio is shown to have increased, indicating that the proportion of the business' assets financed by external sources has increased' (So like a 'blended in' definition)You might want to say about deteriorating liquidity. As the increase in DR is most likely taking out loans. The business will have to repay the loan back and additional interest, which will decrease cash flow and liquidity.
For reference, I've attached the question I'm talking about; can someone check if my points were sufficient for 5 marks:
-Identify trend, explain significance (what I wrote above)
-Business has greater access to its personal cash, therefore improving their ability to meet short-term debts as they fall due, and improving liquidity
-Business is more likely to incur a greater amount of interest expense, as it's repaying more external sources, decreasing its ability to earn profit by controlling expenses, hence worsening its Profitability
Can someone please explain to me the standard, step by step approach to recording the trade-in and purchase of a NCA? I just can't seem to understand it :-\
Have you memorised the General Journal Entries yet?
Here's a question from CPAP 2013:
On 30th Sep, owner decided to replace a business Vehicle. This Vehicle had an historical cost of $30,000 and a carrying value of $8000. The Vehicle was sold for $5000 cash (Rec X82).
A new vehicle was purchased on credit from Keilor Motos (Inv KM5). The details of this purchase were as follows:
[GST is applied where appropriate]
- Invoice price: $42000
- Delivery: $500
- Modification: $2,500
- Annual Rego and Insurace: $1000
- Credit terms 1/90, n/180
a) Record: Receipt X82 and Invoice KM5 in appropriate journals
b) Show how the following General Ledger accounts would appear after the transaction: Disposal of Motor Vehicle and GST Clearing
(I don't know the General Journal entries)
Thanks heaps!
Here it is. I've uploaded it as a Word Document.
I stated it at the beginning, but I'll say it here as well, this question is not a trade in, because we received $5000 cash for the Sale of the NCA. If its a Trade-In, then this would not happen, instead we would simply reduce the balance owed to the Sundry Creditor.
I tried to explain as much as I could, but I'm happy to explain something in more detail. Just ask. :)
Enjoy!
Pwoaah! Exactly what I needed, makes more sense now. Thanks dude.
If mark-up is 200%, how do you calculate cost of sales? I divided it by 4 ???
This question created the confusion; where total sales are 277,200 and stock is marked up by 200%, the answer said cost of sales was 88,400.
This was a Compak unit 3+4 exam. ;)
If mark-up is 200%, how do you calculate cost of sales? I divided it by 4 ???
This question created the confusion; where total sales are 277,200 and stock is marked up by 200%, the answer said cost of sales was 88,400.
This was a Compak unit 3+4 exam. ;)
It seems they've made a mistake and haven't added the 10% extra to sales as this was a budgeting question...
Sales were initially 252,000/3=84000. But first you had to add 10% to sales, so 277200/3=92,400
Thanks for the formula :D
Roger plans to accept an offer from an online business to display and sell their gym clothing on a commission
basis. A commission of 5% of sales will be paid for all sales orders taken by Roger. The commission will be
paid the month after the sales have occurred. Commission estimated to be received during the year is $5 000.
Actual sales December 2013 5000$ plus GST
Estimated Sales December 2014 $8000 plus GST
Show how the Commission Revenue account is expected to appear after closing the General
Ledger accounts at the year ended 31 December 2014.
How is the opening balance calculated to 4750? Why do you take 250(5000*5%) from 5000? I had 250 as the opening balance, and then added the 400.
Thank you in advance ;D
Roger plans to accept an offer from an online business to display and sell their gym clothing on a commissionCommission revenue account would just have the credit entry of 400 with the cross reference to accrued revenue. This is where the account will be settled when the commission is received. As this is a revenue account, under accrual accounting, we record the revenue earned, not the cash received so we just have to calculate the commission revenue earned in the period( which i am assuming is the whole year). It would be debited with a p and l summary cross reference and closed to calculate net profit, blah blah..
basis. A commission of 5% of sales will be paid for all sales orders taken by Roger. The commission will be
paid the month after the sales have occurred. Commission estimated to be received during the year is $5 000.
Actual sales December 2013 5000$ plus GST
Estimated Sales December 2014 $8000 plus GST
Show how the Commission Revenue account is expected to appear after closing the General
Ledger accounts at the year ended 31 December 2014.
How is the opening balance calculated to 4750? Why do you take 250(5000*5%) from 5000? I had 250 as the opening balance, and then added the 400.
Thank you in advance ;D
It's a Neap 2013 exam -Practice exam 3.
yeah i copied and pasted it...
It's all apart of a 16 mark budgeting question though, with a reporting period of 1 year.
Can someone help clarify a confusing point for me?
Why is it that when accrued liability is incurred or accrued revenue is earnt, sometimes in the General ledger for that revenue or expense item it will either be split up or added on top of the original amount.
For example, in an engage trial exam; they presented you with a pre-adjustment trial balance that said wages was 10,000 and the extra info down the bottom said that 2,000 was outstanding and not paid at the end of the period. When preparing the Wages ledger, the added the 10,000 and 2,000 and closed wages expense of to the p & l summary for 12,000.
In the same exam, another question said that John earnt 6,000 interest revenue and 2,000 was accrued. Now this time the interest revenue was closed to the p&l summary as 6,000 (with cross references bank and accrued interest rev.)
My question is why is it that we split up the amount in some cases and add to the original amount in others ? I'd really appreciate some clarification. :-\
Can someone help clarify a confusing point for me?
Why is it that when accrued liability is incurred or accrued revenue is earnt, sometimes in the General ledger for that revenue or expense item it will either be split up or added on top of the original amount.
For example, in an engage trial exam; they presented you with a pre-adjustment trial balance that said wages was 10,000 and the extra info down the bottom said that 2,000 was outstanding and not paid at the end of the period. When preparing the Wages ledger, the added the 10,000 and 2,000 and closed wages expense of to the p & l summary for 12,000.
In the same exam, another question said that John earnt 6,000 interest revenue and 2,000 was accrued. Now this time the interest revenue was closed to the p&l summary as 6,000 (with cross references bank and accrued interest rev.)
My question is why is it that we split up the amount in some cases and add to the original amount in others ? I'd really appreciate some clarification. :-\
Can someone help clarify a confusing point for me?Alright so you have to distinguish between pre adjustment and post adjustment. Pre adjusted is b4 any balance day adjustments to record any revenue earned but not received and any expenses incurred but not paid.
Why is it that when accrued liability is incurred or accrued revenue is earnt, sometimes in the General ledger for that revenue or expense item it will either be split up or added on top of the original amount.
For example, in an engage trial exam; they presented you with a pre-adjustment trial balance that said wages was 10,000 and the extra info down the bottom said that 2,000 was outstanding and not paid at the end of the period. When preparing the Wages ledger, the added the 10,000 and 2,000 and closed wages expense of to the p & l summary for 12,000.
In the same exam, another question said that John earnt 6,000 interest revenue and 2,000 was accrued. Now this time the interest revenue was closed to the p&l summary as 6,000 (with cross references bank and accrued interest rev.)
My question is why is it that we split up the amount in some cases and add to the original amount in others ? I'd really appreciate some clarification. :-\
Thank you all, I've re-read it and now understand why one was split up and the other was not. Very slight wording changes, sneaky.
What effect does the FIFO method of cost allocation have on assets, cost of sales, net profit and owner's equity? (4 marks)
The FIFO method of cost allocation operates under the assumption that the first stock bought is the first stock sold. In times of rising stock prices, it assumes that the older and cheaper stock is sold first. This overstates assets (stock control) in the balance sheet as we are holding onto the more expensive stock purchased last. This then means that the cost of sales figure is understated, leading to the overstating of net profit in the income statement and Owner's equity.
Would that suffice?
The first sentence is good, but after that sentence, it went downhill for me. Plus, the first sentence is probably good to demonstrate understanding, but I don't think it is one of the four marks allocated.Solutions:
No business can know which cost price of a Stock item is sold, so yes it is the assumption, but FIFO helps to improve the accuracy of Stock movements. So it doesn't actually overstate Assets, instead it helps to determine an accurate value of Stock on hand.
In fact, what's the Solutions say for this Question? Does it link to any information like Accounting Reports or something, or is it a stand alone question?
Sales Returns included in the General Journal when closing either the expenses/revenues at end of the R.P.?
My teacher said that they must be included when closing revenues to P & L Summary, as they're certainly not an expense. Just making sure I didn't mishear
Yeah it is a bit vague.
Since there is no extra writing space, how do you recommend staying withing the confines of the allocated box for a theory question as I always find it is not enough space?
I dont know either.
I personally close it off with expenses cuz it makes my general journal more clean.
In one exam i did it said like expenses were like 243733 and for some reason they included sales returns in that.. :/
Well I guess if you do Total Revenues less Total Expenses in the General Journal, it should match the actual Net Profit figure. Therefore, I guess it should be reported under Expenses, even though its a negative Revenue.Hmm I was thinking that since they're reported with in the Revenues section, they should also be closed with the revenues... just a thought
Well I guess if you do Total Revenues less Total Expenses in the General Journal, it should match the actual Net Profit figure. Therefore, I guess it should be reported under Expenses, even though its a negative Revenue.But if you credit the entry with the revenues in the general journal then you should get the same net profit figure if you have done the income statement properly plus the right total revenue and expense figure is achieved so it does match the net profit figure. Its sort of like drawings and accumulated depreciation, acc dep is not a liability but you could say it is a negative asset. Also with drawings, they are negative capital( if that makes sense) so the negative classification is very important.
I came across a question asking for ways to improve Working capital ratio, the solutions just detailed ways to improve debtors turnover like leaving remainders, this would mean that debtors pay sooner and debtors control and assets decrease, leading to a decrease in WKR.A WCR is a measure of a firms efficiency in the way of covering it's short term debt.
I dunno I guess I just thought an improvement in WKR was for it to increase. Sure we don't want it too high, doesn't a decreasing WKR also indicating a reduced ability to meet debts????????????
A WCR is a measure of a firms efficiency in the way of covering it's short term debt.I understand, But it was currently 1.5:1 and It was just tough to choose in which direction an improvement would occur.
Having a excessively high WCR (like >2) means that a firm is not investing it's excess cash, thus wasting opportunities to make greater profits or revenue. A good WCR is regarded as anywhere from 1-2
I'm stuck on a question. Okay, the PRE-adjustment trial balance as at 30 June 2013 says the Prepaid Rent Expense is 9000. Reports are prepared on a quarterly basis. The Prepaid Rent Expense was paid 12months in advance on 1 January 2013, Calculate the Prepaid Rent Expense balance as at 30 June 2013.
So the answer is 6000 but I dont know how they got that because in my eyes,
9000 represents 12 months so thats 750 per month and 2250 per quarter and after one quarter (Jan to March) the Prepaid Rent Expense would be 6750 so then after another quarter (Apr-June) it should be 6750-2250 which is 4500. What am I doing wrong? :/
Its from a PES Exam btw.
I came across a question asking for ways to improve Working capital ratio, the solutions just detailed ways to improve debtors turnover like leaving remainders, this would mean that debtors pay sooner and debtors control and assets decrease, leading to a decrease in WKR.
I dunno I guess I just thought an improvement in WKR was for it to increase. Sure we don't want it too high, doesn't a decreasing WKR also indicating a reduced ability to meet debts????????????
I don't know how to quote but
Damoz.,
THANK YOU THANK YOU THANK YOU!
That makes so much sense! you're a legend! :D
No worries at all. :)
Just make sure you read those damn dates! They are always out to get you and make sure that you are fooled. :P
Oh, and if you wanted to know how to Quote a Post, you just click the "Quote" box on the Post in the top left hand corner, and then type your message underneath. :)
Oh yes, those dates can be frustrating,
I'm totally blind haha I didn't even see the "Quote" box, thanks dude! :D
Yes the balance is 6000.
You gotta work backwards with this question, and it helps to draw up a timeline.
Okay, so with this Question, the first thing to note, is that Reports are prepared quarterly, and since we have been told that we are now on Balance Day at June 30 2013, it means that this Reporting Period is April-June. Why? Quarterly is three months, so counting backwards from June three months is April 1. It might help if I said these are the Reporting Periods:
* Jan, Feb, March
* April, May, June
* July, August, September
* October, November, December
Sometimes they may trick you and it won't be as simple as that for quarterly Reporting Periods, which is why you gotta work backwards from the date given.
So from this timeline, where are we?
* Jan, Feb, March
* April, May, June <----- HERE! We're on Balance Day for the end of the Reporting Period, so June 30.
* July, August, September
* October, November, December
Now look back at the Balance of the Prepaid Rent Expense and it was $9000. This was as at April 1, 2013 because the Reporting Period is April to June. Then, look at when the Prepaid Rent Expense was paid, and for how long. So we can see that it was paid on January 1 2013 for 12 months (annual). So, January, February and March have already been accounted for, and the Expense was allocated in the previous Reporting Period as at March 31, so cross them out:
*Jan, Feb, March
* April, May, June <----- HERE! We're on Balance Day for the end of the Reporting Period, so June 30.
* July, August, September
* October, November, December
After the last Reporting Period concluded, how many months were left on the Prepaid Rent Expense? 12 minus 3 (Jan, Feb, March) = 9. So as at April 1, 9 Months are left. So now, the balance was 9000, and divide this by 9 months remaining = $1000 per month is the Expense, so for a Reporting Period, its 3x$1000=$3000
So now, the question is asking, whats the balance as at June 30 2013. So now we need to take off another 3 months (April, May, June) because we have already consumed them.
*Jan, Feb, March
*April, May, June<----- HERE! We're on Balance Day for the end of the Reporting Period, so June 30.
* July, August, September
* October, November, December
How many months left on the Prepaid Rent Expense? 6 months. And just before, we calculated the amount for each month is $1000 per month. So 6 x $1000 = $6000 remaining for the Prepaid Rent Expense, as at June 30 2013.
Hope this helps! I tried to break it down as much as I could, but if you still don't get one of the steps, let me know. :)
The mistake you made was thinking that the whole Prepaid Rent Expense paid on January 1 2013, was $9,000, and missed the Balance Day date on March 31 2013, when the Expense for January to March was already accounted for and recognised as an Expense in the previous Reporting Period.
Damoz,
i really liked how you set this out, it was very easy to go through the steps for the BDA that occured
i should probably do a timeline so i dont get confused !! thanks also ! 8) :D ;D :D ;D
I have another question. How does an increase in Debtors Turnover and a decrease in Creditors Turnover affect the profitability of the business? ???
An increase in DTO means, on average, debtors are taking longer to repay the business for their initial credit purchase. This will increase the chance of bad debts, therefore potentially increasing expenses, impacting negatively upon profitability. Although, at the same time an increasing DTO will reduce the liklihood of debtors taking advantage of credit terms offered by the business, as such, reducing the chance of discount expenses, impacting upon profitability in a favourable manner.
A decrease in CTO means, on average, the business is repaying their creditors more promptly. If the creditor is offering credit terms (depends on the question), it means an increase in discount revenue is likely, therefore positively impacting upon profitability. Although it should be mentioned that the owner should weigh this up in terms of the financial situation of the firm, for example, paying creditors more quickly reduces the available cash on hand to meet other short term obligations as the fall due (hurting liquidity). Also, a decreasing CTO will reduce the chance of the firm repaying their creditor outside of the credit terms (in which a late repayment fee is likely), therefore also impacting favourably upon profitability due to the reduced chance of increased expenses. (<--- that last point is a bit far-fetched, add it/exclude it depending on the marks)
just a question if someone could answer if you have access to the "INSIGHT 2013 EXAM" , in relation to Q6C, where it says
"the prepaid insurance expense of $18,000 includes annual insurance of $15,000 (excluding GST) which was paid on 1st october 2012, for the next 12 months.
- show how the following ledger accounts would appear after this information has been posted:
prepaid insurance expense
insurance expense
** note for those who dont have the exam**- in the pre adjustment trial balance at 30th june 2013, prepaid insurance expensive is $18,000***
im not sure how to wor out the insurance expense amount where the answer is $14250
probably something easy that i completely overlooked, but thanks in advance :D
The timeline really does help :)
So From Oct 1 2012 to Sept 30 2013, the prepaid insurance expense is 15000, so that means it is 1250 per month so from Oct 1 2012 to 30 June 2013, the expense would be 1250*9 which gives you 11250.
Now the 18000 represents from July 1 2012 to June 30 2013, so the insurance expense from July 1 2012 to Sept 30 2012 is 18000-15000 which is $3000. So the total year (1July2012 to 30June2013) insurance expense would be 14250.
I'm not very good at explaining but i hope this helps :D
I don't think they'll specifically make us do this but I'm still gonna ask.
Here's an example:
The business purchased 20 units of a stock item at $10 each . They are individually repackaged and this costs $2 per stock item.
Record this transaction and balance accounts.
So, if this was a Credit purchase, how would you record the repackaging in the General Ledger? Would it simply be included in the Stock Control a/c as the DR entry with cross-reference 'Creditors Control'?
If this was a Cash purchase, would it be recorded in the Stock Control a/c as the DR entry with cross reference 'Cash at Bank'?
Would this repackaging be considered separate in the General Ledger or as part of the purchase?
Also, if the stock was purchased initially without the repackaging and then a month later, say, the stock was repackaged...how would you record the repackaging now?
Thanks!
Say you have a prepaid sales revenue being fulfilled on the 30th may but the balance day of the business is on the 30th june. would you record this in the general journal on the 30th of may or the balance day of the business?
Also do you only balance accounts on balance day between periods or are you meant to balance each month?
Last question: If a debtor pays back half of its debt within discount terms would they receive a discount?
Say you have a prepaid sales revenue being fulfilled on the 30th may but the balance day of the business is on the 30th june. would you record this in the general journal on the 30th of may or the balance day of the business?Not entirely sure about your first question, so I'll wait for others to answer.
Also do you only balance accounts on balance day between periods or are you meant to balance each month?
Last question: If a debtor pays back half of its debt within discount terms would they receive a discount?
Not entirely sure about your first question, so I'll wait for others to answer.
2nd question: No, you are only supposed to POST transactions to the ledger accounts monthly, but you only balance at the end of the reporting period/balance day
3rd: Yes, the discount will be applicable on ANY payment made by the debtor within the discount terms offered
May seem a bit noobish, but when establishing a double-entry accounting system, in the General Journal, do we put down the 'Bank' figure? On some exams/exercises, I've seen them put it in the general journal, on some it is done in the Cash Receipts journal.
Any clarification will help!
Thanks! :)
Only in the CRJ I believeI thought it's recorded in the General Journal when you change to a double-entry system, as this is not an inflow of cash, but just recording cash that's already there.
I thought it's recorded in the General Journal when you change to a double-entry system, as this is not an inflow of cash, but just recording cash that's already there.yes, sorry haha :p
Isn't it recorded in the CRJ only when you commence your business?
I think you are getting confused by the establishing of Double-Entry Accounting and the opening of a business with Double-Entry Accounting.
If a business is just switching from Single-Entry to Double-Entry Accounting, the Cash at Bank must be reported in the General Journal. But this Entry and correcting entries are the only 2 times that Bank is even mentioned in the General Journal.
So if they are about to commence the business, it should be recorded in the CRJ? And if it's an overdraft, it should be in the general journal, right?
EDIT: Instead of making a new post, I'll ask it on this one. Sorry to bombard you guys with questions, but Stock gains, what cost price if they are two items? The first item or the last one?
Well if your commencing a business, the Owner usually contributes some Cash, so yes the Capital Contribution of Cash is recorded in the Cash Receipts Journal. If the business is getting an overdraft, you don't record it in the General Journal unless its actually been used.
For Stock Gains, you use the lowest cost price of stock still on hand. Which cost price first and second is irrelevant. Just use the lower of the unit cost prices on hand. :)
Dude, you are saving me so many marks on the exam, thanks heaps mate!
So stock loss would be the highest cost, right?
If a business is just switching from Single-Entry to Double-Entry Accounting, the Cash at Bank must be reported in the General Journal. But this Entry and correcting entries are the only 2 times that Bank is even mentioned in the General Journal.
Well if your commencing a business, the Owner usually contributes some Cash, so yes the Capital Contribution of Cash is recorded in the Cash Receipts Journal. If the business is getting an overdraft, you don't record it in the General Journal unless its actually been used.
For Stock Gains, you use the lowest cost price of stock still on hand. Which cost price first and second is irrelevant. Just use the lower of the unit cost prices on hand. :)
No worries. :D
Yup, highest cost price of stock still on hand. Its to support Conservatism. :)
So if we were asked to explain using the Conservatism principle why the Stock Gain is recorded at the lowest cost price on hand would the explanation be...
Conservatism states that gains should only be recognised when certain so that assets are not understated (I.e. Stock Control) and revenues are not understated (Stock Gain) ?
Could you please tell me how exactly this switch between the methods is reported in the general journal?
Also, how many types of 'Other revenue' (Income Statement) are there? I can only think of:
- discount revenue
- rent revenue
- interest revenue
- revenue on disposal of asset
Anything I'm missing?
So if we were asked to explain using the Conservatism principle why the Stock Gain is recorded at the lowest cost price on hand would the explanation be...
Conservatism states that gains should only be recognised when certain so that assets are notunderstatedoverstated (I.e. Stock Control) and revenues are notunderstatedoverstated (Stock Gain) ?
I'm pretty sure it's so they are not overstated, but Damoz will clear it up!
Yeah, everything in your explanation is correct, except as noone said its overstated for both Assets and Revenues, not understated. :)Oh right yes that makes sense my bad. So you value stock gains at lowest cost price so assets and revenues are not overstated. Thanks guys! :D
Oh right yes that makes sense my bad. So you value stock gains at lowest cost price so assets and revenues are not overstated. Thanks guys! :D
No worries. :DSorry to barge in, but Stock Losses are recorded using FIFO; attached the study design below:
Yup, highest cost price of stock still on hand. Its to support Conservatism. :)
Sorry to barge in, but Stock Losses are recorded using FIFO; attached the study design below:
(Although it also makes sense to use Conservatism)
if anyone has done the neap 2013 trial exam, can you please explain how to get the depreciation expense for question 2a?
thanks
Carrying Value = 42,000 - 10,500
= 31,500
25% x $31,500
= $7,875
how do you get the $10, 500?
Trial Balance. 1st line.
Accumulated Depreciation - Motor Vehicle: CR $10,500
haha i feel so stupid now, thanks damoz
also in the attachment below, it shows CPJ and CRJ entries , with the entries does it matter if you write accrued wages first instead of wages?
Can someone please explain why in VCAA 2009 exam 2 question 2.2.2, the rent revenue in the budgeted income statement is $24000? I calculated it as $22000 since $2000 was accrued.Hey, just did this!!!
In general, do we add the accrued revenue to revenue recieved to calculate revenue earnt when reporting in the income statement?
Can someone please explain why in VCAA 2009 exam 2 question 2.2.2, the rent revenue in the budgeted income statement is $24000? I calculated it as $22000 since $2000 was accrued.
In general, do we add the accrued revenue to revenue recieved to calculate revenue earnt when reporting in the income statement?
Can someone please explain why in VCAA 2009 exam 2 question 2.2.2, the rent revenue in the budgeted income statement is $24000? I calculated it as $22000 since $2000 was accrued.just finished that!!
In general, do we add the accrued revenue to revenue recieved to calculate revenue earnt when reporting in the income statement?
when posting in ledgers, it is ok to post in the debtors ledger credit sales/gst in one or do we record it separetly?
When posting at the end of a reporting period it's fine to post with one total as Sales/GST Clearing.
When you're reconstructing an account, it's probably easier to split the Sales and GST Clearing though.
But yes, in formal recording Sales/GST Clearing is fine.
Should we memorise all financial indicators? Or is it going to be given in the exam? :/
Should we memorise all financial indicators? Or is it going to be given in the exam? :/They are not given in the exam.
I was asked to record the cash proceeds from a disposal of a van for $5,000 in the CRJ.Yeah its weird. There is no gst charged on the sale of non current assets. Only purchase. I don't really know why.
I added $500 GST and my bank value was $5,500.
But this is wrong and the answers have no gst on the sale.
Why would there be no gst on sale of a NCA?
Say I purchased 10 units of stock for $1000 with $100 for delivery expenses.If it can be allocated logically then allocate it. There is no rule saying delivery expenses or anything must be a period or product cost.
If the delivery expenses were $100 for the whole month (meaning that the business purchased more than the 10 units in the question stem), it would be classified as a period cost because we don't know the total amount of stock purchased so we cannot logically distribute the cost.
But what if I am told that the $100 delivery expense was for the 10 units alone? Do I classify it as a product cost since the $100 can be logically distributed to the 10 items? Or is delivery expenses always classified as a period cost regardless of whether it makes sense to distribute it to each stock item?
How does the Asset Turnover increase while the Net Profit Margin decreased and Return on Assets increased?Maybe a reduction in average assets?
Thanks
Maybe a reduction in average assets?
I don't think that's it because that means that Return on Assets would've increased.That's what you said :p
That's what you said :p
hey guys, do we have to close off sales returns to the profit and loss summary? like, debit p/l summary and credit sales returns? cos otherwise the figure transferred to the capital account wont be the same as net profit in the income statement.
cheers,
ahah ok thanks, so if the question said "close all revenue and expense accounts to the profit and loss summary" do we close off sales returns too?
Damoz,
Could you give an example of how the sales return is closed off?
Thankyou x
You said that the sales return has to be closed off separately,as he previously said:
What entries would that be? As in the entries to close it off.
Sorry if this is worded wrong.
;D
You said that the sales return has to be closed off separately,
What entries would that be? As in the entries to close it off.
Sorry if this is worded wrong.
;D
Separate entry in the General Journal.
General Journal Entries:
* DR: P/L Summary
* CR: Sales Returns
if anyone, is done the 2013 neap trial exam, can you please explain that in Q7, b, how to the value of the stock write down?
if anyone, is done the 2013 neap trial exam, can you please explain that in Q7, b, how to the value of the stock write down?
Question 7b only asks you to record the Sales Return in the General Journal, not the Stock Write-Down.
Compak 2013 worth doing?Bump! Since this thread has picked up speed :P
Bump! Since this thread has picked up speed :P
Yeah Compak exams are generally pretty good. Do it :PHarder than VCAA would you say?
Harder than VCAA would you say?
yeah sorry i mean how to calculate the value of the stock write down, in Q7a
Bump! Since this thread has picked up speed :P
The first thing to note, is the NRV. The Selling Price has dropped from $150 to $40.
Cost Price of Watches: $50
NRV: $40-$4 = $36
NOTE: Its $4 because the cost for eBay is $8 in TOTAL, so you have to divide it by 2 watches = $4
Therefore, the LOWER of Cost and NRV is $36.
Then you adjust it by doing the Stock Write-Down in the OUT Column, 2 @ $14 = $28.
Yeah, you should get through any Exams you have, especially if they are 2013. Compak is similar difficulty to VCAA.
thanks damoz, :)
Could someone explain to me how net profit changes when period cost is used over product costs?
Thanks :)
Probably going to be beaten byDamozCaparva :P What a top bloke
Because period cost recognises the full expense, it means that Net Profit will potentially be lower, IF the business still has unsold stock. In other words, Profit is usually understated as a result of an overstated COGS when period cost is used over product cost.
Hope that made sense. Happy to give an example if you need it.
With product costs the expense is allocated to each individual item stock; thus when it's sold it's included in the cost of sales. Unless every unit of stock is sold expenses will be lower and henceforth a higher profit. With period costs it's not added to each unit of stock, and all of the expense is recorded in the reporting period was purchased. Thus resulting in higher expenses and a lower profit.
I usually uses calculations to support my answer, I hope this made sense.
EDIT:Beaten
Probably going to be beaten byDamozCaparva :P What a top bloke
OK, so I'm doing the 4th Neap Smartstudy Exam and there's this question that's subject to interpretation:
Total Sales: $75 000
Credit Sales to be 50% greater than Cash Sales.
From this, I assume that Cash Sales are $30 000 and Credit Sales are $45 000
However, the answers state that Cash Sales are $25 000 and Credit Sales are $50 000
I thought this was an increase of 100% rather than 50%
What do you guys think?
Thanks!
Also, when a Disposal of a non-current asset occurs, do we record this in the General Journal on Balance Day or on the date that the disposal actually occurred. And if this comes up on the exam, will be required to record on Balance day or on this day (assuming that we have to determine accumulated depreciation)?
Thanks!
Yes your interpretation is correct.
As for the Disposal, I think it's on the actual date (in Uni anyway). Because it's not a BDA, I would assume it's not on balance day. Someone might want to confirm this.
Yes your interpretation is correct.
As for the Disposal, I think it's on the actual date (in Uni anyway). Because it's not a BDA, I would assume it's not on balance day. Someone might want to confirm this.
\That's what I thought, however, General Ledger entries are all completed on Balance Day as totals, at least that's what Neville Box said :PDid he really 0.o? Journals are posted at the end of each month, not at the end of the reporting period. And in the study design it shows that the adjustment for prepaid sales as done on the date the goods were delivered and not the end of the reporting period.
\That's what I thought, however, General Ledger entries are all completed on Balance Day as totals, at least that's what Neville Box said :P
If you're talking about the general ledger, then yes it will be at the end of the month.
Yeah! General Ledger, will it be recorded on Balance Day or the day of disposal?
General Journal it would be recorded on day of disposal
Yeah! General Ledger, will it be recorded on Balance Day or the day of disposal?
General Journal it would be recorded on day of disposal
If its for the General Journal, then the Date is the date of the Trade-in or Sale of the NCA.
If its for the General Ledger, use the last day of the Reporting Period. The last day of each Reporting Period is to always be used for all items recorded in the General Ledger Accounts, except for when you state Opening Balances (where the first day of the Reporting Period is stated instead). :)
Ok, I've consulted the past VCAA papers.
It is recorded in the General Ledger at the end of the reporting period, as are the journals.
Usually they explain when the posting must take place (ie. Record this in the General Ledger on 30 June 2013)
Which paper are you looking at? The study design changed in 2012
Can you show me the question?
http://www.vcaa.vic.edu.au/Documents/exams/account/2012/2012account2-w.pdf
Question 8:
On 19 December 2012, Landscapers provided the following details of transactions involving the purchase of
a tractor from Tractor World.
The old tractor had been purchased for $32 000 plus GST and depreciated to $9000. Landscapers bought the
new tractor for $61 000 plus GST and received a trade-in allowance of $8200 from Tractor World for the old
tractor.
Landscapers paid a deposit of $10 000 on the new tractor.
Complete the following General Ledger accounts on 31 December 2012.
• Disposal of Tractor
• Sundry Creditor – Tractor World
I'm confused as to how you think its at the end of every month? Is it in the study design?
• the process of posting to the general ledger from the general journal and special journals on a monthly basis
http://www.vcaa.vic.edu.au/Documents/vce/account/AccountingSD-2013.pdf
Page 25:
So of course you would complete it on Dec 31
Textbooks are only the authors opinion on the accounting course. If do learn from the textbook you can get it wrong, its pretty unfair but vcaa can still mark you incorrectly. I think fyrefly mentioned everyone using the box book got a question wrong one year.
The study design is god, its never wrong. At least hope not.
I think that everyone is confusing themselves here...
Journals are reported at the end of the month
General Ledgers are balanced on the end of the reporting period with all the BDA's
Here's a possible solution to this situation: Does anyone have a copy of the old Study Design saved? Then we can compare that dot point about the journals being posted to the General Ledger.
Yes it was a new addition to the SD last year
Journals will
be posted to the General Ledger at
the end of each month. This may
not necessarily be the reporting
period. (So it would be possible to
have 12 entries in a ledger by
balance day.)
I thought this to be a bit weird
It is stated that the business reports monthly so houldn't an entry from june be omitted from the current month's receipts journal.
Got it right but had a good think about it. Question for reference
The transactions provided below for Best Timber Supplies relate to an order for timber placed by a customer,
James Hay, to the value of $3500 plus GST (cost $1500 plus GST).
• 28 June 2012: A deposit of $500 was received from James Hay (Receipt 235).
• 2 July 2012: The goods were delivered to James Hay (Invoice 121 indicating credit terms 2/14, n/30).
• 9 July 2012: James Hay settled the account (Receipt 261).
The business prepares reports monthly.
Prepare the journal entries for the above transactions, including the adjusting entry that is necessary in
July 2012.
Okay guys, I was still pondering on the thing about the posting of the Journals to the General Ledger on a monthly basis. I know - I get paranoid about those simple things in Accounting, because you can't afford to lose any marks. Anyways, I've come to two conclusions:
* Usually, the Journals given are already for a period of a few months. e.g. It says Totals to date for like June-Sept or something. If this was the case, then you would just use Sept 30 for the Posting of the Journals to the General Ledger. I haven't come across a question, where it has CRJ's for different months. Correct me if I'm wrong.
* Also, if there happens to be a question with several Journals for different months, and there seems like there is a lot of space in the General Ledger (e.g. like 3 blank spots), then probably post each Journal INDIVIDUALLY. If there isn't enough space, then probably don't.
I think if we follow these two "guidelines", then we should be fine. :)
I don't think this really addresses the issue of "posting on a monthly basis". Whether there is a single or multiple journals/ledgers, as long as you post to the ledger accounts at the end of the month you will be fine. I can't believe teachers haven't gone through this in class!Teachers probably have. But its like one of those thing u just accept without thinking.
I can't believe teachers haven't gone through this in class!
Yeah fair enough. Most of the accounting cohort of last year were stressed over it too. But it's unlikely to cause any trouble in the exam so don't let it put you off your game.
If in doubt, record on a monthly basis - you can't go wrong.
For an Interest only question where the business does not make loan repayments during the course of the loan and only pays interest expense, how would this be recorded in the Balance sheet?
For an Interest only question where the business does not make loan repayments during the course of the loan and only pays interest expense, how would this be recorded in the Balance sheet?
EDIT: Beaten by Damoz. This guy is too keen.
What i meant was, transactions from the previous period should not be recorded in the special journal given that the new reporting period is started, or am i wrong. eerrgghh all this nitty gritty stuff is pretty annoying
The transactions provided below for Best Timber Supplies relate to an order for timber placed by a customer,
James Hay, to the value of $3500 plus GST (cost $1500 plus GST).
• 28 June 2012: A deposit of $500 was received from James Hay (Receipt 235).
• 2 July 2012: The goods were delivered to James Hay (Invoice 121 indicating credit terms 2/14, n/30).
• 9 July 2012: James Hay settled the account (Receipt 261).
The business prepares reports monthly.
Prepare the journal entries for the above transactions, including the adjusting entry that is necessary in
July 2012.
right
so special journals get posted in every reporting period than are zeroed. The deposit should have been recorded in the june CRJ, not in the one accounted for july seeing that it the business operates on a monthly reporting period basisI recorded it anyway though. This is off last year's exam
Yes, the Deposit would have been recorded in the Reporting Period of June's Special Journals, specifically the CRJ.http://www.vcaa.vic.edu.au/Documents/exams/account/2012/accounting_assessrep12.pdf
However, the Deposit (Prepaid Sales Revenue) must be removed in the General Journal for this Reporting Period. The Deposit is no longer a Current Liability in the Balance Sheet of Best Timber Supplies. Instead, its now Sales Revenue earned because the good have been delivered. So, we need to get rid of this Liability that was created close to the end of June.
Therefore, in the General Journal:
* DR: Prepaid Sales Revenue
* CR: Sales Revenue
and the record rest of the transactions into the Special Journals as usual.
Is this what you're asking for? ???
http://www.vcaa.vic.edu.au/Documents/exams/account/2012/accounting_assessrep12.pdf
Q4 answer, that is why i was perplexed, even though i included it
261 3 283 67 3 350
Ahhh.....Okay!
Ermmm...Yeah, I think that is a mistake in the Examiner's Reports. ??? abcdqdxD, would you agree?
Can I get back to you tomorrow? I need some sleep :P
Ahhh.....Okay!It seems like an error to me. It should have been amended tho...
Ermmm...Yeah, I think that is a mistake in the Examiner's Reports. ??? abcdqdxD, would you agree?
Can someone explain why the Capital contribution for the current R.P. will be already included in the 'Capital' balance, in a Post-adjusted trial balance. I thought it is included only when calculating profit + its balance for the upcoming R.P.? o.OI thinks it like, you record the ledgers after you have posted the journals. You then foot the accounts in order to prepare the preadjusted trial balance. After pl summary and bdas we then formally balance the accounts.
I thinks it like, you record the ledgers after you have posted the journals. You then foot the accounts in order to prepare the preadjusted trial balance. After pl summary and bdas we then formally balance the accounts.Oh so even in a PRE-Adjusted T.B., the Capital balance will include any contributions?
Oh so even in a PRE-Adjusted T.B., the Capital balance will include any contributions?np
Thanks Kuroyuki, seems like you were correct- my teacher said the same thing:
"When any capital contribution is made, whether it be cash or otherwise, it will be recorded in the journal and then posted to ledger at the end of the month. At the end of the reporting period, the amounts will be in the ledger account which then can be footed to prepare a pre-adjustment TB, and once profit or loss is calculated, balanced for the next RP for the Post-adjustment TB. It will already be included."
When a business is beginning and you're establishing the books of the business, Cash contributed by the owner/financed by a loan is recorded in CRJ?
And when establishing double entry do you record Cash at Bank in the General Journal with a DR balance?
Thanks!
When a business is beginning and you're establishing the books of the business, Cash contributed by the owner/financed by a loan is recorded in CRJ?
And when establishing double entry do you record Cash at Bank in the General Journal with a DR balance?
Thanks!
where does the receipt of a 6 month term deposit go in the CFS (principal part, not interest)?
also, where are term deposits classified in the Balance Sheet, current assets or non current assets (if the question doesn't state when it is to be received) ?
We will never be asked to report the receipt of a term deposit in the cfs.
I would go with operating myself, because it explicilty doesnt fit in the investing definition when it is received.
And anything that doesn't fit in financing and investing goes in operating.
Yeah, can't see VCAA giving that question to be honest. Personally, I would put it in operating as well.
It can't be a non-current asset if you're receiving the Term Deposit.
You only record the inflow when the cash is received (obviously). At the point of receiving the cash, the term deposit would be a current asset as the inflow of economic benefit is expected within 12 months.
It would only be treated as a non-current asset if you're expecting to receive the term deposit in >12 months. If that was the case, we wouldn't be asked to record the receipt of the term deposit.
So if VCAA does make you record it, it can only occur if the Term deposit has become a current asset.
In summary, this is what I think:
Taking out the term deposit : Investing outflow
Receiving the principal amount upon maturity: Operating inflow
Yeah so if the term deposit was greater than a year...
all the interest revenue received is operating inflows.
when you get the term deposit principle amount back, investing inflow
Hmm.. I guess we have differing views about the last bit. Well I won't argue with Bored "the king of accounting" Satan :Ppleaseeee :P
Hmm.. I guess we have differing views about the last bit. Well I won't argue with Bored "the king of accounting" Satan :P
pleaseeee :P
Well as I see it, when you get the principle back technically you are 'selling' a non-current asset
Recording the receiving of Term Deposits in the CFS has become quite controversial. In my opinion and the Cambridge Textbook's opinion, its a Investing Cash Inflow.
Term Deposits are usually recorded under Non-Current Assets if the business is going to receive the Term Deposit sometime beyond 12 months. However, your example says its for 6 months, so it would go under Current Assets because the firm will receive it within the next 12 months, and is thus recorded as a Current Asset. :)
pleaseeee :P
Well as I see it, when you get the principle back technically you are 'selling' a non-current asset
Yeah I guess so. If it was last year, I probably would've recorded it under Investing inflow. The way I see accounting has changed a lot since doing UMEP :P
I would go with what BoredSatan has said.
i would think that vcaa would mark both answers correct, cuz each of them can be argued.
But dont mess with AN accounting author.
LOL! Let's just hope that a Question on Term Deposits like that doesn't come up. If it does, you both can laugh at us all who are doing the Question in the Exam Room. :PI sure as will! :P
I don't think they will mark both answers correct. Again, go with what BoredSatan has said :P:/
If a stock write-down occurs and you have to show it in the stock card, would you have to put the written down stock at the top of the balance column? Does it matter?Hmm good question. I would put it at the top as one would assume you would want to get rid of that stock first hence the write down
Had 11 units at $860 each
Stock write down for 2 units (SWD value=$110)
What would the balance column look like now?
If a stock write-down occurs and you have to show it in the stock card, would you have to put the written down stock at the top of the balance column? Does it matter?Its never been actually covered. Some exams put it at the top some at the bottom. I don't think we can be penalised.
Had 11 units at $860 each
Stock write down for 2 units (SWD value=$110)
What would the balance column look like now?
Its never been actually covered. Some exams put it at the top some at the bottom. I don't think we can be penalised.Due to constant refreshing of this page
FIFO doesnt match the actual flow of stock anyway.
But i would put it in the top cuz the business would want to sell it first.
EDIT - BoredSatan faster than damoz
If a stock write-down occurs and you have to show it in the stock card, would you have to put the written down stock at the top of the balance column? Does it matter?I had a question like that, and the solutions put it first (at the top)
Had 11 units at $860 each
Stock write down for 2 units (SWD value=$110)
What would the balance column look like now?
EDIT - BoredSatan faster than damoz
I was busy answering the other Question on the new Thread. :P Beat everyone on that Thread. MUHAHAHAHAHAH! LOL!:(
:(
:'(:( I have to head back to bendigo soon so cant beat you :(
Waits anxiously for IT_Failure to post his next Question to beat everyone. :P
With a "Define Accrual Accounting" question worth 2 marks, how do you get both marks?I use to say just the first part. But a lot of 2013 exams are adding in the second part so just add it in just to be safe.
Is this answer enough?:
Accrual accounting is the matching or revenue earned to expenses incurred within a reporting period so that profit can be accurately calculated.
Or do I need to add more such as:
Under accrual accounting transactions are recorded as they occur, which is not always the same time as when the payment is made/received.
With a "Define Accrual Accounting" question worth 2 marks, how do you get both marks?
Is this answer enough?:
Accrual accounting is the matching or revenue earned to expenses incurred within a reporting period so that profit can be accurately calculated.
Or do I need to add more such as:
Under accrual accounting transactions are recorded as they occur, which is not always the same time as when the payment is made/received.
I use to say just the first part. But a lot of 2013 exams are adding in the second part so just add it in just to be safe.this is one of those questions in which just copying the practice exam answers are the best..
I like your first definition, but this is what I use: Accrual Accounting is determining Profit by matching Revenues earned against Expenses incurred in the Reporting Period in which they occur to accurately determine Net Profit.
I probably wouldn't use the word accurate. Very pedantic I know, but nothing is accurate in accounting as per my uni lecturer :P
Accrual accounting is just a system of accounting, whether its more "accurate" compared to cash accounting is a matter for judgement. Obviously you wouldn't be penalised, but just my 2c.
Man this question actually first came up on my exam.. and I had no idea how to answer..
nek minit 50
I probably wouldn't use the word accurate. Very pedantic I know, but nothing is accurate in accounting as per my uni lecturer :PSo I should probably say "more accurately" then.
Accrual accounting is just a system of accounting, whether its more "accurate" compared to cash accounting is a matter for judgement. Obviously you wouldn't be penalised, but just my 2c.
So I should probably say "more accurately" then.
So I should probably say "more accurately" then.
Thanks for the replies,"Similarly, if a business takes out a loan and receives cash, this is not recorded in a General Journal. Such transactions appear in the Cash Receipts Journal" from the assesments report. The question only asked us to prepare the general journal entries. It will in the receipts journal most likely as a bank statement.
Another question: When does a Loan go into the General journal?
If the owner contributes a NCA which was bought with a loan, that goes into the general journal, but what happens if I used to start a business? (VCAA EXAM 1, 2012)
I included that loan in the general journal, which the solutions didn't. Does that mean it goes in the cash payments journal? There is no chq no. And no cash payments journal given. Unless the loan is still the responsibility of the owner, why is there no general journal entry?
Thanks!
"Similarly, if a business takes out a loan and receives cash, this is not recorded in a General Journal. Such transactions appear in the Cash Receipts Journal" from the assesments report. The question only asked us to prepare the general journal entries. It will in the receipts journal most likely as a bank statement.my mistake, I meant cash receipts journal.
my mistake, I meant cash receipts journal.
The question says the loan was taken out to START the business, so how could it be in the CRJ? It happened before the journals began
my mistake, I meant cash receipts journal.Yeah the wording is a bit off. I think it means like to get the business up and running, not like start the business meaning formally establishing the business name or something.
The question says the loan was taken out to START the business, so how could it be in the CRJ? It happened before the journals began
Yeah the wording is a bit off. I think it means like to get the business up and running, not like start the business meaning formally establishing the business name or something.Thanks, it makes sense now!
I know right! How would be get a 50 without answering that Question! He probably wrote some crap, and the Examiner felt sorry. :PLOL this was in unit 3 exam which I lost 6.5 marks for lol
Nahhh, it probably clicked into his mind by the end of Writing Time. HAHA! :D
LOL this was in unit 3 exam which I lost 6.5 marks for lol
If a Loan was received to start a business, it would be recorded in the CRJ.
Loan is only mentioned in the GJ for a transfer by the Owner with a NCA, or the commencement of Double-Entry Accounting.
How do I record the transfer of a loan to the business by the Owner while giving a NCA in the GJ?
Ahhh, your already in Bendigo now? That was quick! :PLol no I'm still in Melbourne on the train to the city to get onto another train to get to Bendigo :(
6.5? You can lose 0.5 marks in Accounting? :o
Lol no I'm still in Melbourne on the train to the city to get onto another train to get to Bendigo :(
Anyways the exam is marked by 2 examiners so your marks are doubled. If one examiner gives you the mark but the other doesn't then you get .5 of a mark
Awww, that sucks! =/ Are you going there for Exams?Yep got an exam on Friday but I like to 'study' there beforehand ;)
Oh yeah. I forgot about that. :P
Study - What is Study? ??? HAHA! :PNo my thumbs accidentally clicked on the non-sticky thread button cause my phone is annoying like that :P
This thread got unstickied? :o (I'm guessing because its active again?)
No my thumbs accidentally clicked on the non-sticky thread button cause my phone is annoying like that :P
And you also logged yourself off from the Forum at the same time. :POMG wtf how did you know???
Would people be interested in me posting questions here for more practice? Or are we all too stressed :P
OMG wtf how did you know???
Going Concern Principle assumes that the life of the business is ongoing and indefinite. Many balance day adjustments recognise an asset or liability that must be carried forward into the next reporting period such as Accrued expenses/revenues or Prepaid Expenses/Revenues hence balance day adjustments are necessary so that the information in future and current reporting periods are updated.You can give an example like accrued wages aswell.
:/
On second thoughts, may be I should have said no to that request. =/Yeah this a pretty hard question :P
The business is continuous and its Reporting Periods will also remain constant, so Balance Day Adjustments are necessary to be accounted for because they must always be accounted for in the firm's reports for the life of the business, in order to keep these Reports relevant and useful for decision making?
Damn, that's a hard question. =/
Going Concern Principle assumes that the life of the business is ongoing and indefinite. Many balance day adjustments recognise an asset or liability that must be carried forward into the next reporting period such as Accrued expenses/revenues or Prepaid Expenses/Revenues hence balance day adjustments are necessary so that the information in future and current reporting periods are updated.
:/
Going Concern Principle assumes that the life of the business is ongoing and indefinite. Many balance day adjustments recognise an asset or liability that must be carried forward into the next reporting period such as Accrued expenses/revenues or Prepaid Expenses/Revenues hence balance day adjustments are necessary so that the information in future and current reporting periods are updated.Brilliant answer!
:/
The answer that massa gave is like 90% from a VCAA assessment report haha.
You can give an example like accrued wages aswell.
Yup. Lets go with that answer. Its 100x better than mine. :P
The answer that massa gave is like 90% from a VCAA assessment report haha.
LOL! At least he has remembered it. :PYep. But in the past it's asked as: 'referring to an accounting principle, explain why balance day adjustments are made'
Wait, what? It's been a Question on a past VCAA Exam? :o
Yep. But in the past it's asked as: 'referring to an accounting principle, explain why balance day adjustments are made'
And everyone in the state picks reporting period but going concern is also correct
Should the example depend on the scenario of the question?I just use ur one cuz vcaa does.
I feel like mine doesn't clearly link to the going concern principle very well.. :/
I just use ur one cuz vcaa does.
Going concern assuems the life of the business is indefnite and ongoing. Many balance day adjustments recognise an asset or liability that must be carried forward to a future period. For example, accrued wages.
If i memorised it right that's vcaa's model answer. Your answer is EVEN better!
And there wouldnt usually be a scenario given but if there was then might aswell link it back.
Copying VCAA answers are the bestYeah
Yeah
But like some of them are so short and concise, it feels risky to me.
Yeah I think VCAA don't give out perfect answers cus they know kids will memorise them :Pwas that a joke?
Yeah I think VCAA don't give out perfect answers cus they know kids will memorise them :P
was that a joke?
If not i need to add more detail to all my vcaa response answers lol
Question: http://puu.sh/5dYx6.png
VCAA's Answer: http://puu.sh/5dYz9.png
Why have they included the transaction on the 28th of June?
Question: http://puu.sh/5dYx6.png
VCAA's Answer: http://puu.sh/5dYz9.png
Why have they included the transaction on the 28th of June?
The question does say to "Prepare the journal entries for the above transactions," which would include the transaction on the 28th of June.
Just follow the instructions of the question and you cant go wrong
But Reports are prepared monthly? ??? You can't record a transaction that occurred in June into July's CRJ. =/
You mean journals are posted to the ledger monthly, right? Reports are prepared at the end of every reporting period.
Anyway, it doesn't say anywhere that it's strictly July's Cash Receipts Journal. Plus, you can clearly see that it's not a comprehensive Journal, anyway; you're just recording the transactions in the question. So, I guess, just imagine you're recording each entry as they've occurred, and you just happen to be putting them into one Journal template.
deposit is levied on total amount owing (therefore gst inclusive)
When you record it, you don't recognise the GST in your CRJ. But the deposit is levied on the total amount payable which includes GST.
I know that bit. :P
Wasn't the question if GST was to be included when paying the Deposit?
The question was whether the 20% is levied on the total amount owing or just the sales figure
Yeah, so you would do 20% x 500=$100 deposit, wouldn't you?
iirc its 0.2 x 550
note with past exams pree 2012 rules regarding this changed from memory (better check the vcaa bulletin for changes to SD though)
I'll be honest - That doesn't sound right.Yeah i know what you mean
As far as I know, GST is always charged at the time of the Sale when the goods are provided to the customer. So I would say its $100 Deposit. Then for when the goods are given I'd say its $400+$50 GST = $450 Balance owed on the Sale from the Debtor.
Yeah i know what you mean
but in the specific question i think thats how we were meant to do it.
– liability approach of recording prepaid revenue with no GST being recorded at the time of thehttp://www.vcaa.vic.edu.au/Documents/vce/account/AccountingSD-2013.pdf
deposit
Study Design page 29:http://www.vcaa.vic.edu.au/Documents/vce/account/AccountingSD-2013.pdf
Has anyone else notices an error in the Neap 2013 paper?
In the last question, the statement of account for SW Sports says that on the 2nd of June, a credit sale was made to SWS with the invoice number of X34 and amount of 3740. But in the sales journal, X34 was for a sale to Club Hampton...
Minor issue, but I just wanted to point it out.
In NEAP 2013 question 1a, I keep getting $420 for the prepaid rego for the GJ but the answers say 490. How do I arrive at $490? My thinking was that between October to March, 6 months have passed so the original $840 paid is divided by 12 then multiplied by 6 to give 6 months incurred.
When you record it, you don't recognise the GST in your CRJ. But the deposit is levied on the total amount payable which includes GST.
This is what I have been told. But I have actually heard multiple different comments saying otherwise. So I am still not exactly sure (especially with the non-congruence going around here with the idea!!! Is there a correct answer?
Use your fingers! It actually helps. :)
Cheers mate :). Also, question 2e in the same exam has debited prepaid rent expense on the 1st of April in the question booklet but in the answer template it has 1st of March debited in the ledger. Screwed up the 2 marker because of this. I thought Neap was supposed to be perfect!
A question on Stock Cards:
Stock Gain - always follow Conservatism, that is, if there are two balances with differing cost prices, always add the quantity to the cheaper of the cost prices so as not to overstate assets and owner's equity.
Stock Loss - always use FIFO as per normal
Purchase Returns - the credit note must identify the cost price of the stock that is being returned (i.e. FIFO doesn't apply)
Here's where my question is....
Sales Returns - it says in the VCAA Study Design that FIFO is reversed (i.e. Last out, first in - regardless of whether the last stock out was a sale or not). The textbook also suggests this.
However, in one practice exam, and I think maybe another one or two, there have been instances whereby in additional information they will say that a trade debtor has returned "stock line" purchased on "specific date" (which is normally a few weeks prior to the last entry in the stock card). So, my question is, should it appear tomorrow, do we uphold the rule stated in the Study Design and the textbook, or do we specifically record, in the 'IN' column, the particular cost price that the trade debtor paid on the specified date (because more often that not, the cost prices will differ depending on what way you go about it)?
Always LIFO. :)
I've come across that as well, and it was in last year's VCAA Exam 2 as well - Have a look at Question 6 (2012 VCAA Exam 2):
http://www.vcaa.vic.edu.au/Documents/exams/account/2012/2012account2-w.pdf
The second dot point in Additional Information says "A customer (T Wilson) returned two units purchased from Tech Talk on 25 November for a total of $1320 including GST (Credit Note 15)". Even though the Sale was in the previous month, you still had to use LIFO.
Hopefully that convinces you enough. :)
Life saver! Thanks so much.
Guess who's back online ;)
No worries! :)
Although, unfortunately, it didn't provide absolute clarity on the issue because they would have purchased the stock for $350 cost price most likely anyway, as that was the only cost price in the balance on 1 December (considering they purchased stock on 25 November). In saying that, it has increased my confidence by a long way regarding using LIFO. And, let's be honest, if the official study design states that LIFO is the correct way, surely that outweighs any of these 'specific date' type questions!
Stock Loss - always use FIFO as per normal
Say my stock card balance currently indicates that I have 1 stock item at $50 (first in) and another stock item at $60 (last in). If a stocktake tells me that I have 1 stock on hand, does this mean that I assume that the stock worth $50 is 'lost'? Doesn't this breach conservatism since the loss is being understated by not recording the stock worth $60 as being lost?
Well if it tells you a price in the information, then use it. But if it doesn't tell you a Cost Price even though it was in a previous RP (e.g. the 2012 VCAA Exam), use LIFO.
Say my stock card balance currently indicates that I have 1 stock item at $50 (first in) and another stock item at $60 (last in). If a stocktake tells me that I have 1 stock on hand, does this mean that I assume that the stock worth $50 is 'lost'? Doesn't this breach conservatism since the loss is being understated by not recording the stock worth $60 as being lost?
Yeah that seems like the way to go. Thanks again :)
What are some limitations of control accounts and subsidiary ledgers?If you mean negatives too there could be
If you mean negatives too there could be
- if there's only or two debtors it's rather pointless to set up control accounts and subsidiary ledgers
-can create more expenses due to more work required
Is it possible that the discuss question would be about disadvantages and advantages of computerised accounting pacakges (e.g. MYOB and Quickbooks)? :o
Are there any other limitations on using financial indicators to determine performance than:
- They rely on historical data and cannot guarantee future transactions
- Some rely on averages which may conceal details about specific information
- Using different accounting methods between firms may undermine comparability of these reports and financial indicators
Thanks!
Why is the wages figure in the VCAA 2012 exam 2 income statement $164750?
Wages increase 5% from 2012 so 2013 estimate is $997500.
Plus the additional employee means $997500 + $65000 = $164759.
Then the accrued wages of $2000 from 2012 that was settled,
This totals $166750. What am I doing wrong?
That was indeed a tricky thing for them to include (since they already gave you all the information to calculate the expense incurred in the Income Statement section), but it wouldn't affect the calculation; it just means that the business paid less in wages during the period than they incurred ($163,250 paid vs. $164,750 incurred, which is why the balance of Accrued Wages increased by the difference of $1,500). Hope that makes sense.
Why is the wages figure in the VCAA 2012 exam 2 income statement $164750?
Wages increase 5% from 2012 so 2013 estimate is $997500.
Plus the additional employee means $997500 + $65000 = $164759.
Then the accrued wages of $2000 from 2012 that was settled,
This totals $166750. What am I doing wrong?
Thanks! Yeah that clears it up a bit for me but I feel sorry for the guys last year who had to think through that in exam conditions. So generally, we record the payment of the previous reporting period's accrued wages in the income statement by including it in wages expense right?
So an Accrued Expense is an expense incurred but not yet paid for.
Thus, the $2000 accrued from last year was incurred last year but hasn't been paid.
As it won't be incurred this year (because it has already been incurred) it is not included in wages expense.
The only wages included in wages expense is wages incurred for a period (not a payment for accrued wages)
When you record a payment of accrued wages in the Cash Payments Journal, do you list it under 'Wages' or 'Sundries' (Accrued Wages)?
Sundries! So therefore, it is not a wages expense.
Why is the wages figure in the VCAA 2012 exam 2 income statement $164750?
Wages increase 5% from 2012 so 2013 estimate is $997500.
Plus the additional employee means $997500 + $65000 = $164759.
Then the accrued wages of $2000 from 2012 that was settled,
This totals $166750. What am I doing wrong?
Guys, I just had a mental blank. If you hold less stock on hand, you improve Return on Assets right?Not sure about the ROA part
If you hold less stock on hand, you don't improve stock turnover....or do you?
what is the purpose of preparing:
-budgeted balance sheet
-budgeted income statement
-budgeted cash flow statement ?
2 most important things:
* Planning - Indicates future requirements of the firm. Relates to issues such as Loan Repayments, and whether the business will be able to meet these cash requirements and short-term debts as they fall due.
* Decision-Making - Provides a standard against which trading performance can be measured. It allows problem areas to be identified, and then correct action to be taken by the owner.
Hey guys I know it's a bit late but, are we always suppose to assume that there is a GST settlement when reconstructing accounts? I did one of the TSSM ones and it recorded GST Settlement but gave no indication that there was one in the question.
No. You don't assume that there is a GST Settlement made. If the Budgeted Period is 12 months, then there probably is a GST Settlement so pay close attention to the information given in the question during Reading Time.
But if there was a GST Settlement, it would be stated or displayed somehow for you to notice.
TSSM Trial Exams have a lot of mistakes in the questions and solutions so probably don't do them. :)
Hey i have a question. In a cash flow statement, when payment of an accrued expense or revenue occurs, can you add it to the inflow/outflow, or is it seperate?
Eg. Accrued Wages from last reporting period are paid ($3000) and wages paid this reporting period is $27000. Which method is preferred, $30000 wages operating outflow, or the figure split into 2 outflows, accrued wages: $3000 and Wages: $3000.
I'm unsure which method vcaa prefers, or are both correct?
Alright, thanks so much! Good luck tomorrow (not that you need it, expecting a 50 from you mate :P ) and good luck to everyone else! :)
Hey i have a question. In a cash flow statement, when payment of an accrued expense or revenue occurs, can you add it to the inflow/outflow, or is it seperate?
Eg. Accrued Wages from last reporting period are paid ($3000) and wages paid this reporting period is $27000. Which method is preferred, $30000 wages operating outflow, or the figure split into 2 outflows, accrued wages: $3000 and Wages: $3000.
I'm unsure which method vcaa prefers, or are both correct?
Good luck to you all!!!
I'm expecting everyone to get 50's :P except Damoz, hopefully you can get that 30 ;)
Split 'em! Nah actually it's better to distinguish them as paying for an accrued wages expense is not the same as paying for a wages expense if you get what I mean :P
Split them - They are two expenses from different Reporting Period. Its more useful for decision-making, thus supporting Relevance. :PSo would you do the same in an Income Statement (wait is it called Profit and Loss Statement now or what?), like report Accrued Wages incurred seperately Wages paid for and incurred?
No, wages expense is just wages expense (all wages that have been incurred over the period) :)Thanks!
So would you do the same in an Income Statement (wait is it called Profit and Loss Statement now or what?), like report Accrued Wages incurred seperately Wages paid for and incurred?
And is it okay to shortcut names in the exam for eg. disc. rev. , accum. depn - vehicle, etc?
Thanks :)
What are the effects on the financial reports if a business fails to recognise NRV when valuing its stock?
And is it okay to shortcut names in the exam for eg. disc. rev. , accum. depn - vehicle, etc?
Thanks :)
P.S.: Good luck to y'all, but it looks like a lot of you don't even need it haha
Thanks guys :)
What about the dates in the ledger accounts?
For eg. if all the items are related to Dec. 31 do we have to write in each line Dec. 31? Or can we write in the very first line Dec. 31 and then leave the lines underneath it blank?
Hopefully that makes sense LOL
Some Examiner's Reports have just the one Dec 31 for the rest of the entries, but you really should mention it for every entry.
Basically, avoid shortcuts and abbreviations at all times. I know your pushing for time, but don't take shortcuts, because it could be wrong or you may get a harsh assessor and you will lose the marks. So just don't use abbreviations or shortcuts - Write the full thing out and then there is no question on whether your assessor gives you marks or not (As long as the rest of the answer is correct as well). :)
Is it okay to shortcut names in the exam for eg. disc. rev. , accum. depn - vehicle, etc?
In a balance sheet, when should i draw a line/double lines? Eg. A double line under total assets.
Also, are there any other specific formats such as this in a balance sheet that i should be aware of? Do you need a space before the next heading?
It doesn't really matter. Assessors don't allocate marks to lines. As for spacing and stuff, once again it isn't important as you are not marked for formatting. If you use the Cambridge textbook, try to get a hold of the solutions to see how they set it out and use it as a guide. The exam will provide you with the necessary formatting so it isn't something you need to worry about :)
Can anyone help with Exercise 2.7 of the Cambridge textbook? I keep getting $91,300 for my total assets but the answer says $91,700 :/
Current Assets
Debtors 3000
Stock 35000
Prepaid rent 1200
Non-Current Assets
Fixtures and Fitting 12500
Fridges 40000
Total Assets 91700
I hope it's correct :-[
Can i get some help on Exercise 3.6 in the Cambridge Textbook? It's 'Opening balances in the General Ledger', the debit side of my Trial balance is correct but my credit side isnt? Am i supposed to add in the remainder as Capital or something?I haven't looked at the specific exercise but, the accounting equation is A = L + OE. So in the trial balance after you have included all the Assets and Liabilities, you do A -L to calculate the capital and record it as the last entry on the trial balance. This will also make the trial balance balance. Its quite a common error to not include capital.
I haven't looked at the specific exercise but, the accounting equation is A = L + OE. So in the trial balance after you have included all the Assets and Liabilities, you do A -L to calculate the capital and record it as the last entry on the trial balance. This will also make the trial balance balance. Its quite a common error to not include capital.
Hope this helps somewhat. :)
Oh okay, do i record it under the capital ledger under Balance?
Yep, I just had a look at the question, because the business is just adopting the double entry system it is recorded as balance.
So I have some holiday homework, it's Exercise 4.10 out of a book called VCE Accounting Units 3 and 4 (I think) with the business being Harvey's Electricals. It has a list of the transactions that occurred in the month as well as the general ledger balances from the previous month. The first question says to "enter the opening balances into the general ledger accounts" and then to "enter the above transactions into the general ledger". I'm just a bit confused, how am I supposed to enter the transactions into the general ledger without doing an analysing chart first?I don't have exact question you are referring to. You would be expected to enter transactions into the general ledger by either posting journals or questions may just ask to post the transactions. In the latter case you kinda have to know which accounts each transaction affects or you could think it through.
Just need some clarification on something that I forgot about from a few weeks ago, what is discount revenue and how should it be classified?Discount revenue is the reduction in outflows of economic benefit in the form of decrease in creditors control, which increase owner's equity in the form of net profit.
Can anyone please explain the relationship between accrual accounting and reporting period for me?I cant really remember how I would word this. But Reporting Period states the business' life must be divided into intervals of time so reports can be prepared and profit can be calculated. Profit is calculated under the the accrual accounting method. Which states profit is determinedby matching revenues earned in the period with the expenses incurred. Reporting Period ensures that only relevant revenues and expenses are included for the calculation of accurate profit.
And where can I get the answers of Cambridge accounting workbook for free? Sometimes I want to check the answers.
Thanks a lot
I cant really remember how I would word this. But Reporting Period states the business' life must be divided into intervals of time so reports can be prepared and profit can be calculated. Profit is calculated under the the accrual accounting method. Which states profit is determinedby matching revenues earned in the period with the expenses incurred. Reporting Period ensures that only relevant revenues and expenses are included for the calculation of accurate profit.
^ say something like that, sorry I cant be of more help. But hopefully i gave you a starting point. :)
I don't really understand the accounting principle Conservatism, the definition is losses should be recorded when probable but gains should only be recorded when certain, so that liabilities and expenses are not understated and assets and expenses are not overstated. Can you explain further for me?So for conservatism, accountants are meant to be prudent, like always on the safe side. For example, when a debt is unlikely to be recovered, like the loss is probable we write it off as a bad debt, this ensures that we are not overstating our profit for the period and the amount debtors owe us as an asset. Likewise we record our stock at cost price and only recognise the selling price after the stock has actually being sold, when the gain is certain in other words.
The accounting principle Consistency states that accounting methods should be applied..., what does the term "accounting methods" means?
I will appreciate your help, thanks
Just quick question, in regards to the general ledger. What accounts would be affected if the business "Received from cash clients $2860, including GST of $260 (Cost of sales $1400)?" I'm thinking there are 5 accounts but I'm not sure as the transaction was already completed but only being paid now so I don't know what to put in. :-\At the point of sale the accounts would appear as so: Debtors Control: (DR) $2680 (Individual Debtor account by same amount) Cost of Sales (DR) $1400, Sales: (CR): $2600, Gst Clearing: (CR) $260, Stock Control: (CR) $1400.
So for conservatism, accountants are meant to be prudent, like always on the safe side. For example, when a debt is unlikely to be recovered, like the loss is probable we write it off as a bad debt, this ensures that we are not overstating our profit for the period and the amount debtors owe us as an asset. Likewise we record our stock at cost price and only recognise the selling price after the stock has actually being sold, when the gain is certain in other words.
Accounting methods refer to how the business does accounting like using FIFO. The business shouldn't change from FIFO to any other cost assignment method, if it did reports would be inaccurate. Another example of different accounting methods is depreciation methods such as reducing balance or straight line.
Conservatism is there to account for the 'worst case scenario' so the firm can employ strategies to solve or to handle the worst possible outcome.I've got it, thank you
At the point of sale the accounts would appear as so: Debtors Control: (DR) $2680 (Individual Debtor account by same amount) Cost of Sales (DR) $1400, Sales: (CR): $2600, Gst Clearing: (CR) $260, Stock Control: (CR) $1400.
Therefore when a payment is received you are not recording the sale again but simply the receipt of debts owing to the business and the increase on bank. Therefore it will effect accounts in this way: Debtors Control: (CR) $2860 (Don't forget to record in individual debtor account too) Bank:(DR) $2680
Can anyone solve the problem for me? It is from the Cambridge workbook and I don’t understand what market value is.Market value is the current value of an item if sold now, eg a car bought for $30000 2 years ago may now have a market value of $24000.
Q: the owner of Frosty Fridegs believes its market value is shown in the Balance Sheet as the difference between total assets and total liabilities.
Referring to one accounting principle, explain why the market value of Frosty Fridges will not be shown as the difference between total assets and total liabilities
Thanks in advance.
Do we need to know analysing charts? Like do we have to know the definition of an analysing chart etc? I know they aren't account reports but was wondering whether they would ever appear on the exam etc.
(I did a lot of practice with ledgers last year so if I don't need to know AC's I'll just skip the section.)
Definitely won't be assessed in the exam. For SACs, technically the school could assess anything they want but it is highly unlikely you will be asked for a definition. They may get you to fill in one though. Feel free to skip the session if you feel like you have a good grasp of double entry.
Market value is the current value of an item if sold now, eg a car bought for $30000 2 years ago may now have a market value of $24000.
As Assets are recorded at historical cost, the balance sheet will not show the current value of these (even a carrying value does not directly relate to market value).
However I think this question is confusing, the difference between total assets and liabilities is the Owner's Equity (as per the accounting equation), and I don't see how this relates at all to the market value of the business at a whole.
Accounting reports should not be used as a valuation tool. The difference between total assets and liabilities is a number - and only a number. In theory, it represents owner's equity (the value of the owner's stake in the firm) but in practice this figure is meaningless. Owner's equity differs to market value in that market value can only be discovered at the point of sale. Market value is based on supply and demand, brand loyalty among other things and is not necessarily indicated by the value of the firm's owner's equity.
Do we need to know analysing charts? Like do we have to know the definition of an analysing chart etc? I know they aren't account reports but was wondering whether they would ever appear on the exam etc.
(I did a lot of practice with ledgers last year so if I don't need to know AC's I'll just skip the section.)
What is a situation in which a vehicle would be classified as a current asset?
If Vehicle falls under Stock Control, i.e. the firm sells cars as its main source of revenue generation.
Couldn't it also be if the vehicle is expected to be sold/decommissioned within 12 months. As wouldn't a car seller list vehicles which it intends to sell as stock in the balance sheet?
I am confused about this sentence, can someone explain it for me?Since the owner purchased the vehicle, the vehicle has probably gone down in value as the vehicle has been used by the owner. Therefore the value of the vehicle (capital contribution) must be recorded at the agreed value, which is an estimate of the vehicle's worth at the time of contribution. The figure is less reliable as there is no source document to verify the value, however the agreed value is far more relevant to the business as it represents the value of the vehicle, and hence the value of future economic benefit, the vehicle is to provide to the business. Essentially in this case relevance overrides reliability, no other time is that the case.
A vehicle purchased by the owner but then contributed to the business. The asset cannot be valued at the original price paid by the owner, as it is the cost to the business.
no other time is that the case.hmm
Since the owner purchased the vehicle, the vehicle has probably gone down in value as the vehicle has been used by the owner. Therefore the value of the vehicle (capital contribution) must be recorded at the agreed value, which is an estimate of the vehicle's worth at the time of contribution. The figure is less reliable as there is no source document to verify the value, however the agreed value is far more relevant to the business as it represents the value of the vehicle, and hence the value of future economic benefit, the vehicle is to provide to the business. Essentially in this case relevance overrides reliability, no other time is that the case.Thanks for your detailed explanation :)
The going concern principle means that a business entity will continue to operate indefinitely, or at least for another twelve months.That makes sense, thanks
Financial statements are prepared with the assumption that the entity will continue to exist in the future, unless otherwise stated.
The going concern assumption is the reason assets are generally presented in the balance sheet at cost rather that at fair market value. Long-term assets are included in the books until they are fully utilized and retired.
hmm
Isn't always the case? For example depreciation, it is an expense based on two estimates (unreliable) but we still do it because it is a relevant expense and will affect profit and decision making.
From what I remember relevance always overrides reliability.
I am SO confused with ledger accounts.
I understood it in the first place when I began with analysing charts...but as the exercises progressed I just began to struggle.
Should I make my own analysing charts before I put entries in the ledgers? Or is there another way to do it that isn't so time-wasting?
I am SO confused with ledger accounts.
I understood it in the first place when I began with analysing charts...but as the exercises progressed I just began to struggle.
Should I make my own analysing charts before I put entries in the ledgers? Or is there another way to do it that isn't so time-wasting?
I'm not up to this part in the course (if it even is in the course) but how do accountants classify assets that are affected by depreciation but their value goes up instead of down. For example, rare car dealers or antiques or something. Do they just list their assets at an agreed value or what?It's not in the accounting 3/4 course. Assets will never be appreciated or anything like that. Asset can only be depreciated down. :)
Thank you to all of you! This is actually really helpful. I'm kind of beginning to understand now by actually practicing over and over and trying to understand where each thing is entered. I like the acronym too, it's a good way to remember. :)
Now I just have to get the hang of GST!
Hey guys, I'm a little confused as to why OE is debited in the following question.
Kim Swood took home stock worth $1500
I thought when drawing increases it's credited?
I am SO confused with ledger accounts.
I understood it in the first place when I began with analysing charts...but as the exercises progressed I just began to struggle.
Should I make my own analysing charts before I put entries in the ledgers? Or is there another way to do it that isn't so time-wasting?
I'm not up to this part in the course (if it even is in the course) but how do accountants classify assets that are affected by depreciation but their value goes up instead of down. For example, rare car dealers or antiques or something. Do they just list their assets at an agreed value or what?
Can someone please explain this for me?
At the end of reporting period, the GST account has a debit balance, the business will get a refund. While if the GST account has a credit balance, the business will pay for the money owed. I don't really understand it. Thanks in advance
The GST account can be an asset or a liability.
A debit balance makes it an asset.
A credit balance makes it a liability.
If the GST is an asset, that means the business has paid more GST throughout the year than they were obliged to, so they're entitled to a refund of the extra money paid. The refund represents "future economic benefit".
If the GST is a liability, that means the business has paid less GST throughout the year than they were supposed to, so they still owe the ATO some money and must pay this. The payment represents an "outflow of economic benefits".
Can someone please explain how to work out cost price from a sales invoice when there is no mark up stated. eg $720 plus gst what would be the cost price? Thanks
You can't work out the cost price if markup isn't statedoh ok
Accounting reports should not be used as a valuation tool. The difference between total assets and liabilities is a number - and only a number. In theory, it represents owner's equity (the value of the owner's stake in the firm) but in practice this figure is meaningless. Owner's equity differs to market value in that market value can only be discovered at the point of sale. Market value is based on supply and demand, brand loyalty among other things and is not necessarily indicated by the value of the firm's owner's equity.
a business owner determines the difference between assets and liabilities in his balance sheet is $10,000. He therefore believes that this is the amount that would remain if all assets were sold and all debts paid. Explain with reference to an accounting principle why the owner is incorrect.
explain why assets and liabilities are classified in the balance sheet. In your explanation identify one qualitative characteristic that supports your explanation.
Is the monetary unit principle; all items must be recorded and reported in a common unit of measurement? Because the 3/4 textbook definition omitted "in the country where the reports were being made" which was included in the 1/2 textbook.I would say "common currency" rather than "common unit of measurement". The currency used should be that of the country where reports are made. Think of linking that to the understandability qualitative characteristic; is a report understandable if it's in a currency that's foreign to you? (someone correct me if i'm wrong..)
Ty
Can anyone explain why the term "term deposit" is a non-current asset? That will be great.We expect the benefits of a term deposit to last longer than a year, therefore we classify it as a non-current asset.
Is the monetary unit principle; all items must be recorded and reported in a common unit of measurement? Because the 3/4 textbook definition omitted "in the country where the reports were being made" which was included in the 1/2 textbook.
Ty
Thanks, Zealous
We expect the benefits of a term deposit to last longer than a year, therefore we classify it as a non-current asset.
How do you record drawings in the analysing chart and general ledger?
Drawings is classified as negative drawings account. So recording will be opposite to a standard OE account.
So if you were to record a drawings, then it will be a debit entry, with either a bank cross-reference (if cash drawings), or stock control cross reference (if stock drawings).
When wages are paid why does the wage expense go up instead of down
When wages are paid it is an expense, hence your expenses increase.Well they do ask that question quite a lot. Relevance vs Reliability discussion questions are quite popular. Usually if they are asking it you usually are meant to argue Agreed value. But anyway just think did the business purchase the asset by itself, if so you value at the historical cost. If not its agreed value.
Question, will I ever be asked whether a business should value something at it's historical cost or it's agreed value? I know why one is used over the other (Relevance etc) but how do i judge if one is better in a situation?
Well they do ask that question quite a lot. Relevance vs Reliability discussion questions are quite popular. Usually if they are asking it you usually are meant to argue Agreed value. But anyway just think did the business purchase the asset by itself, if so you value at the historical cost. If not its agreed value.
Please correct me if I' m wrong, its been a while. :)
Thanks!
'A debt of $350 owed by B.Quick that had been written off was recorded in the ledger account of B.Quack', do I still record in the General Ledger column even though Debtors Control doesnt change?
Hi, guysHmm is what you are looking for on page 467 in the textbook?
Yesterday I learned the debtors turnover, including the definition, formula and it's negative effects on a business. But the Cambridge doesnt give the details on what causes the DTO decreases or increase, can any one explain it for me? That will be great, thanks in advance. :)
Hmm is what you are looking for on page 467 in the textbook?Sorry, I couldn't find the info from textbook :(
That should give you a bunch of reasons for why DTO can speed up.
And you kinda do the opposite for why DTO can slow down
like the business has not been promptly invoicing so debtors are not immediately aware of their debt and the repayment date. Also the business may not have done sufficient credit checks, resulting in a lot more unreliable debtors that do not pay on time.
something like that
Could someone explain how i would go about recognising and recording a sundry creditor? Would i only record the creditor as a sundry creditor if i recognise that what im purchasing is a NCA and is infrequent? E.g purchase motor vehicle for firm, do i record it as a sundry creditor in the general journal, and do i record a sundry creditor seperately in their own ledger accounts and balance sheet?The short answer is YES.
Hey guys was just doing some practise sacs today and I was doing a question where the owner commenced business and contributed items. One of the items was: "Motor vehicle registration, which still has five months to run, with an annual cost of $840 (Memo 1)" Further down, it says "Identify and explain how the motor vehicle registration will be classified in the Balance Sheet of Bikes 4 Everyone." Would this be classified as a current asset and in the general journal as a debit of $350 (The price of the registration for the 5 months) and why? Thanks for any help.Yes it would be a current asset, because the motor vehicle registration will provide economic benefit to the business in the next 5 months since it provides the vehicle with registration and allow the vehicle to be used. Thus it is named "Prepaid Motor Vehicle Registration" and is a current asset.
Question guys: For example the owner of a business organised an advertisement to be run during June at a cost of $480, plus GST, but the paper has not sent an account to him yet. The owner thinks they'll send it during July.
Would the advertisement go into either statement of receipts and payments or income statement. Because I thought it wouldn't as its an liability as a creditor. Correct me please.
When did the cash payment occur? Before during or after advertising appeared?
If the advertisement occurred before or same time as payment.
I imagine it would be an expense as it would result in an outflow of economic benefit (cash) which decreases assets (bank) and resultingly decreases owners equity. Adhering to conversation expenses must be recorded when probable hence an account need not be sent by the newspaper, only a cheque recording the outflow of cash from payment be needed.
I could be wrong because the information you have isn't really sufficient to give a proper answer tbh.
Sorry for the lack of information. So let's say in the month of July I was to have my business advertised, the company that advertises my business hasn't sent a bill to me by the end of 31st of July, I'm expecting it to be sent to me during August. Would I include it in the income statement for the month ended 31st of July?
This question is pretty ambiguous, but if the business was advertised in July, but won't be able to pay for the advertising until August, then I think that the expense would be recorded in the income statement ended 31st July as an Accrued Advertising Expense, as the expense has been incurred, but not yet paid for.
Hope this answers your question!
Thanks, I just thought you wouldn't put it in until the August income statement, but anyway thank you.
From Cambridge Exercise 10.12:
Assess the sales mark-up applied by Maranelli Sports for the six months ended 31 Dec 2015.
How do i answer this? :x
Also, 'Yearly repayments of 12000 are made on Mortgage-xx, interest 6% p.a., payable on 28 Feb and 31 Aug each year' : Is this still a current liability of 12000?
For your first question, if there was a considerable profit in the reporting period, I would say something like "The sales mark-up applied by the business for the six months ended 31 December 2015 is adequate as Gross Profit is able to cover all other expenses, whilst also yielding a significant profit". You could also mention the timeframe in which the profit was earned, i.e. if there was considerable profit in only a 6 month period
For your second question, the yearly repayments are still considered to be a current liability of $12000, however be careful of the remaining portion that is non-current, because this is usually the part where people lose marks
Hi all, just a question about SACs.In the exam you will be given all the templates.
Are teachers required to give us all the templates? In our first SAC our teacher made us draw up all the ledgers, trial balance etc. which was quite time consuming. I mean in reality, we're going to be given all the templates in an exam.
Hi all, just a question about SACs.wow thats pretty unreasonable..
Are teachers required to give us all the templates? In our first SAC our teacher made us draw up all the ledgers, trial balance etc. which was quite time consuming. I mean in reality, we're going to be given all the templates in an exam.
Hi all, just a question about SACs.
Are teachers required to give us all the templates? In our first SAC our teacher made us draw up all the ledgers, trial balance etc. which was quite time consuming. I mean in reality, we're going to be given all the templates in an exam.
Hi, there
Can I get some help? I don't know how to answer this question: why the vehicle contributed by the owner was valued at its agreed value?
And how can I structure my answer?
Thanks :)
Hi all, just a question about SACs.
Are teachers required to give us all the templates? In our first SAC our teacher made us draw up all the ledgers, trial balance etc. which was quite time consuming. I mean in reality, we're going to be given all the templates in an exam.
Basically the principles and characteristics you talk about here for this specific question are Conservatism and Relevance.
For example "The vehicle should be contributed at its agreed value as the conservatism principle states that losses be recorded when probably. The vehicle would have lost value overtime through use so the agreed value must be used so that the asset is not overstated. Furthermore, this provides a figure that upholds the relevance characteristic as the figure will be useful for calculating things such as depreciation which will aid in the businesses decision making" That would basically be how you structure it.
Someone feel free to correct me if I am wrong but I encountered that question in several practise SACs and that was pretty much how I answered it.
Hi, there
Can I get some help? I don't know how to answer this question: why the vehicle contributed by the owner was valued at its agreed value?
And how can I structure my answer?
Thanks :)
The principle is the entity principle. It can't be historical coat as the historical cost is the irrelevant amount the owner purchased items for and used part of the value on a personal basis. I can write a solution later when I'm not on my phone if you wish.
Yes, please.
And I don't know how to answer this question too: if an owner contribute his vehicle to his business, should we record the vehicle at its cost price or agreed value? and why? Thanks
Actually it sort of can be historical cost instead of entity and I think it makes more sense. Its usually a case of Historical cost and Reliability vs Conservatism and Relevance. The historical cost principles states that assets should be valued at their original purchase price as this is verifiable by source document evidence. The owner should therefore value the non current asset at its original purchase price. This will also uphold the Reliability characteristic as the amount will be verifiable by a source document.
That's extremely unreasonable. Why would your teacher make you do that? Was it still 1 mark a minute? All templates should be given to you.What's even more unreasonable is that he told us ON THE DAY of the sac that we had to draw everything by ourselves. The whole class was shocked and totally unprepared. We had a double period to do it, I was just lucky that I managed to finish in time.
Maybe try talking to your teacher about it? Just say it's so time consuming and isn't even something you have to know for the exam.Will do. :) He definitely knows how to make templates. He was being stingy about paper.
If they don't know how to make the templates for some reason maybe even show them how to make them on excel or something.
why the vehicle contributed by the owner was valued at its agreed value? :
(this is more of a 5 mark discuss type answer)
Usually businesses value assets at their historical cost, the cost of the asset to the business as verified by source documents. However this is not the case when the owner contributes assets to the business, this is due to the fact that due to the entity principle, the owner and business are considered two separate entities, with accounting records and reports made on that basis, thus as the owner and business are separate any transfer of control of assets between the owner and the business must be reported as a transaction, as an exchange of goods and/or services occurred due to a capital contribution. However, although the entity principle forces a transaction to be recorded, in practice the owner and business are the one in the same, thus no receipt or other source document would exist to verify the cost of the asset to the business, thus an agreed value must be used, which is an estimate of the value of an asset at the time it is contributed to the business by the owner. The agreed value also improves relevance of accounting reports as by including an estimate of the value of the contributed asset to the business this is likely to be more representative of the potential future economic benefit to the business from the asset, then the price the owner purchased the asset at (as the owner would have likely already consumed some of the asset's value before the contribution).
if an owner contribute his vehicle to his business, should we record the vehicle at its cost price or agreed value? and why?
(made this a 2-3 mark-ish answer)
The vehicle should be valued at it's agreed value, an estimation of the value of the vehicle at time of contribution by the owner. This figure is preferable compared to the price the owner paid for the vehicle originally, the cost price, as the agreed value is more relevant to the business as the agreed value represents a figure likely to be closer to the value of future economic benefit the vehicle would provide to the business then the cost price, as it is likely the owner used a portion of the vehicles economic benefit for themselves before contribution, thus meaning the cost price would likely overstate the true value of the asset if it was used. Thus an agreed value increases relevance by including a figure which is more useful for decision making (the true value of economic benefit to the business) as opposed to a less useful figure, cost price (as the owner likely used some of the economic benefit).
how to record correcting entries where a receipt from a debtor was incorrectly recorded as a payment to a creditor?
Does anyone know what the petty cash system is? :o :o
when calculating cost of sales from the stock cards, why isn't any memo transactions included?
also if the business receives a GST refund from the ATO how does it affect the GST clearing account in the general ledger?
When the GST on sales is less than GST on purchases, the account will have a debit balance. So I'm guessing that when the money is refunded by the ATO, it will go on the credit side of GST Clearing under "Bank"? Someone maybe clarify this.
On 1 July 2013, Knight's Prawns purchased new cabinets for $1800 plus 180 GST, depreciated using straight-line method at 20% p.a. Show how the cabinets would be reported in Balance sheet as at 30 June 2016.
Shouldn't the Accumulated Depreciation of Cabinet be $720? The answer says that it's $1080.
Wait sorry typo on my part, the item was purchased on the 1 July 2014 haha
1. I follow the 'IDL' layout when answering questions that involve an accounting principle and I came across a question in the Cambridge textbook that had an answer that didn't explicitly link the principle with the explanation.1.
Question: "Referring to one accounting principle, explain why only some of the wages paid on 9 July 2015 should be reported as an expense for July 2015".
Answer: "Of the $1260 paid in July, $810 was incurred in the current reporting period (July 2015) and $450 incurred (and accrued) in previous reporting period (June 2015).
They didn't explicitly mention how the reporting period period governs that the "life of the business should be separated...". So when is it necessary to omit regurgitating the definition? Secondly, if I were to link the definition to the explanation, how would I do so without bringing in other qualitative characteristics?
2. Is it more correct to say, 'accrued electricity', 'accrued electricity expense' or does it depend on the context of the question?
1.
I guess it depends on the amount of marks given for the question. If it were only 2 marks, I'd assume 1 mark would be for identifying the principle, and 1 mark would be for explaining how it relates to the question. I'm not too sure specifically about how accounting is marked in exams (spent too much time on maths =p) but I would slip in a quick definition of reporting period (or any principles) anyway though just to be safe so I've covered everything examiners could be looking for in my response.
I'm not too sure what you mean by "without bringing in other qualitative characteristics". Are you trying to avoid mentioning "relevance" when making a link? I personally feel that mentioning how the use of reporting period can link and serve an accounting characteristic can strengthen your response.
2.
I'm quite sure you use "electricity expense" as an expense and "accrued electricity" as a liability. So if we need to do a balance day adjustment to recognise electricity we have used in a reporting period but not yet paid for, we will debit "electricity expense" (E) and credit "accrued electricity" (L, as we are required to pay for the electricity at a later point).
I slipped in the definition for safe measures followed with an explanation but the explanation and definition weren't linked, they were isolated in a sense because I didn't know how to link them effectively. Usually when I add in 'relevance' my response ranges between 4-5 sentences which is excessive for the amount of space they give us. How do you normally link a principle and characteristic without taking too much time/space?I think you should say accrued something expense. Cuz if i remember correctly you have accrued revenues aswell. So when you say accrued interest its ambiguous.
Yeah that's how I see it but sometimes the solutions use 'accrued electricity expense' instead of 'accrued electricity', I was curious to whether there was a relation to context.
principal/ interest loans are where for you pay both principal and interest on the loan over the life of the loan, if maturity is over a year then it will be both a CL and NCL
interest only loans is where you only pay interest, then when the loan matures, you pay back the principal amount, if maturity is over a year, then the loan will be entirely a NCL
so if you have a 5% interest only loan for 100k, payable every year, then each year you will pay 5k interest, principal is not affected
if you have a principal/interest loan then the question will specify how much you pay per month/year and interest will also usually be given
So for the principal/interest loan, you'll be paying both interest and principal/month or year? Just say a business borrowed 100k from NAB with 10% interest, payable over 2 years, will the total interest over the 2 years be 10k? Or would it be:
100k x .1 = 10k [1st year]
50k x .1 = 5k [2nd year]
Total interest payable over the 2 years = 15k
For the example you have provided for the interest only loan, will the debt be covered in 20 years when 100k interest has been paid?
What is the difference between accrued expense and sundry creditor? the book has something on it but I don't quite get it
Hey guys, hopefully someone can address these questions I had,
1. In the cash flow statement, why is it we say 'receipts from debtors' instead of 'debtors control'? We do the same thing in SORP so I'm assuming it somehow links with understandability.
2. A business pays for rent in advance on the 16th May covering months July - November [BDA at 30 June]. If this firm prepares its reports every 6 months, why is it that in the general ledger for prepaid rent expense, the date is 30 June instead of 16 May [where the report on 30 June covers the past 6 months]?
3. Can the terms, firm and business be used interchangeably for 3/4 accounting?
And a general question, how do you personally avoid silly mistakes such as forgetting to include accrued wages in the CL section of the balance sheet or accidently omitting prepaid rent/rent expense from the general journal?
Thanks :)
1. Debtors control decreases are made up of both receipts from debtors and discount expense, we can't put debtor's control as that figure is usually not what was actually received from debtors. Receipts from debtors represents only the part of the decrease in debtor's control which resulted in an inflow of cash. I suppose understandability also comes into it as it's easier for the layman to understand what "receipts from debtors" is describing than trying to decipher "debtor's control".
3. Yes, but it's good to be consistent to avoid confusion.
If i understand q2 correctly, it's because journals are posted to the general ledger at the end of every month, hence 30th
Hey guys, just a quick question I came across today that I eventually got the answer to:
$500 of stock was donated to a raffle by the business. This was not recorded.
Explain the impact of the decision on the assets of the business.
MEMO 43 - 3 Tiles taken by Chanel for personal use
State the impact on the accounting equation of memo 43 not being recorded in the business's records
I remember my teacher saying something about how there is no overall effect but not too sure.
what is the correct way to record a stock gain.
E.g. If you have 5 units of stock valued at $30 each and 5 units of stock valued at $35 each but the $30 stock was purchased first would you record the stock gain as $30 stock?
You would record the stock gain using the lowest cost price in the balance column before the stocktake was conducted I'm pretty sure. In your case it would be the $30 of stock.
Explain how depreciation ties in with the demands of the qualitative characteristics of relevance.
1. Explain why an accrued expense is calssified as a current liability?
2. Explain why the payment of an accrued expense in a subsequent period requires the payment to be split in the CPJ?
Hey guys got a question, do cash purchases have GST included in them and do we have to find the GST from the cash purchase as we do for the Cash Budget
how do balance day adjustments ensure relevance?
Hi, just dropping in with a question from our prac SAC that I’ve been meaning to get off my chest:
The accountant of Hannah’s Hats provided the following Pre-adjustment Trial Balance (extract) as at 30 June 2014.
Account: Debit:
Prepaid Insurance Expense 1620
The accountant also noted the following.
-Reports are prepared on a quarterly basis.
-The annual insurance policy ends on 30 April. The payment made for the policy ending 30 April 2015 was $1500 plus GST.
a) Prepare the General Journal entries required to record the balance day adjustment on 30 June 2014.
I was sure that $370 would be the amount debited from the Insurance expense account. But apparently, some students have found the answer to be $1650 +$250 or something similar to that.
So yeah, I hope that makes sense.
how to record insurance expense when there are multiple payments due?
A little ambigious but insurance is no different to any other expense account. If there's a prepaid expense you determine how much is consumed in the period, if there is accrued you do the same and simply follow the BDA method for recording them.
Do you have a specific question from a paper/book you didn't understand because it's a little hard to answer the question you asked itself?
With the Cash flow statement is GST received/paid part of operating cash flows? What about GST charged on credit sales?
Just a quick question regarding the Cash Flow Statement.
When recording GST paid for a non-current asset, do we lump it in with the amount of GST paid for Operating activities or do we record it separately under Investing activities?
GST Paid and GST received will always be classified as operating inflows/outflows.
Investing activities concerns only the buying and selling of NCA for cash, and GST is not included in the cost of a NCA.
Hope this helps!
How do I explain cash vs profit questions? E.g. when the business has an increase in profit but a decrease in cash.
I have a question as well by the way. Is it called the Profit and Loss Summary or Profit/Loss Summary? In the textbook and VCAA assessment report is says Profit and Loss Summary but I thought the main purpose of having the account is to report a Profit OR a Loss, it can't report a Profit AND a Loss at the same time? Would I get marked down for saying Profit/Loss?
I always refer to it as P&L summary or profit and loss summary. You have a point with profit or loss but i think either way should be fine but check with a teacher in case.
with cash vs profit questions if you get a question like "Explain how a business can have a cash surplus even with a net loss", are you only allowed to use examples that decrease profit and don't affect/increase cash or can you use examples that don't affect profit but make cash higher?
Caruso's Store paid 9000 for 6 months of advertising contract on 1 March 2015. Contract covers the months from March to the end of August. The reporting period ends on 30 June each year. Complete the general ledger of the relevant entries.
In the Prepaid advertising ledger, they debited Bank 9000 and recorded the date as 1 March. Shouldnt this date be the 30th of june as we record in our general ledgers during the end of the reporting period, or am I forgetting something?
Yeah i know that but this question states that the RP is between March and June, and it's just a debit entry to record the purchase of the advertising contract, so would i be right in recording the debit as June 30th with the cross-ref being bank?
was doing some unit 3 practice exams and want to clarify something:
Caruso's Store paid 9000 for 6 months of advertising contract on 1 March 2015. Contract covers the months from March to the end of August. The reporting period ends on 30 June each year. Complete the general ledger of the relevant entries.
In the Prepaid advertising ledger, they debited Bank 9000 and recorded the date as 1 March. Shouldnt this date be the 30th of june as we record in our general ledgers during the end of the reporting period, or am I forgetting something?
If you were making a BDA on the 30th of June, then the entry could have been for the 31st of March with the cross reference being the bank or the 1st of June with the cross reference being balance. It depends when the the ledger accounts are posted since they can be posted monthly or once a reporting period. Usually the question won't specify when they're posted so you can choose accordingly. However you can't for example have the entry on the 1st of June with the cross reference being the bank.You cannot balance a ledger during a reporting period. Balancing separates reporting periods from another, not unlike closing, but in balancing the actual balance of the ledger is carried forward. If you ever want to know the balance of an account during a reporting period it is footed, which essentially does the same thing as balancing in a less formal way.
Hope this sheds some light on your issue :)
1) Interest expense paid, as shown per question, is recorded as $2300. Instead, the answers seem to suggest that $1200 was transferred from GST Payments to Interest expense, raising the total of the transaction to $3500. Is it a mistake on NEAP's part? Or am I just overlooking some minor detail?
2) I've calculated the Depreciation of the Motor Vehicle for the year to be $2450, but the answer is $2200 somehow.
how do you record a period cost? Essentials Book says it's recorded it it's own ledger account but in the exercises they put a period cost in the general journal
How does using a period cost affect the accounting equation? As the period cost is assigned in its entirety, regardless of how many stock items were sold, does this mean it overstates the cost of goods sold or cost of sales? Again textbook says it understates cost of goods sold which I don't understand
explain why sales returns is classified as a negative revenue account?
why is disposal an OE account?
If stock was puchased on credit, does it still get recorded in the stock card?Because there is a physical or real increase in stock on hand. Remember, your stock card is your measure of how much stock you actually have on hand at any point in time.
For instance; purchased on credit 10 watches @$25 each, plus $2.50 GST (inv 933)
Any response greatly appreciated!
Because there is a physical or real increase in stock on hand. Remember, your stock card is your measure of how much stock you actually have on hand at any point in time.
It doesn't matter how you purchase stock; cash or credit. A purchase of stock increases your inventory, and therefore needs to be recorded as such in the stock card.
In case you're unclear about what a purchase on credit represents:
We receive an invoice from the supplier accompanied by stock. We store the stock and begin selling it, promising to repay the supplier at some later date.
Also, when it is deduced that a stock loss has occurred, what effect will it have on OE? Is it that theres no effect? Because stock loss is an expense, this will decrease Net Profit, which will in turn decrease OE. Thus, having exactly the same effect. I dont get how this is so?Stock Loss results in a decrease in Assets and decrease in Owners Equity. You've explained it yourself, because Stock Loss is an expense it will reduce Net Profit leading to a decrease in Owners Equity.
why do we debit accumulated depreciation when we removing the non-current asset. Acc dep is usually a negative asset so it is credited but why debited now?
Mad Magazines has a term deposit for $10000 and earns 12% per annum interest. Interest is paid quarterly from the commencement of the term deposit on the 1 November 2013. THe first payment of interest was on the 1 February 2014. Complete the Accrued Interest Revenue account for the quarter ended 30 June 2014.
This was the answer:
April. 1 | Balance | 200 | April.30 | Bank | 200
Jun.30 | Interest Revenue| 200 |
This doesn't look right to me, could someone go through this question and make sense of it?
Just a quick question, "Why is it correct to record a deposit as Prepaid Sales"? So far all I have is because it increases bank and also creates a liability but I don't think I'm really answering the question.
A deposit is where a customer pays in advance to secure a sale. A deposit is a form of prepaid revenue (prepaid sales) because the revenue received (cash) is yet to be earned (after fulfilling the obligation by presenting the customer with the stock). It really depends on the marks allocated for this question, if it's 3 then you should explain why prepaid sale is a revenue.Im sorry but prepaid sales is not a revenue
You've got the basis, just need a little more breadth :)
Harry has been shown many times how to calculate GST by using relevant info from the journals, and balances at the beginning of the reporting period. He found some pieces of paper in his office. [<-- unneccesary info, just to set the context]
At 1 Jan 2009:
Creditors were 31,010
Cash Payments Journal for Jan showed he had paid creditors 25,000, while the creditors schedule showed that Harry owed creditors 38,900 at 31 Jan.
Calculate the GST charged on Credit Purchases.
Anyone know how to figure this one out? Any attempt greatly appreciated!!
You need to use account reconstruction to work out how much the credit purchase were so:
31 jan bank 25000 | 1 jan balance 31010
31 jan balance 38900 |
| 1 feb balance 38900
So all I've done is filled in the information which was given to me about the creditors ledger. There is one missing entry on the right hand side - that is credit purchases. Thus we simply work out the value of entries on the right hand side (31010+38900=69910) and the left hand side (25000+38900=63900). The difference between the right hand and left hands side is out missing figure so the Stock control/GST clearing entry would be 6010, that would be the amount of GST was charged and stock purchased from creditors. To find the GST amount we simply divide by 11 and we get 546 (with some irrelevant decimal places).
how does GST paid work in the budgeted cash flow statement? or what are some tips for recording it as i always get it wrong
Thank-you. I was wondering if this could be done through the format of: (it was just what the teacher had put on the board)
Opening GST Bal:
+GST on cash sales
+ GST on credit sales
-GST paid cash payments
-GST charged on credit purchases
Closing GST Bal:
If it can, how?
if sales were 10% higher than budgeted and my sales figure from the income statement is 550,000 then how do I work out what the budgeted is?
I did 10% x 550,000 and then subtracted that from 550,000 but its wrong.
if sales were 10% higher than budgeted and my sales figure from the income statement is 550,000 then how do I work out what the budgeted is?
I did 10% x 550,000 and then subtracted that from 550,000 but its wrong.
Is it worth getting an Accounting tutor next year (2015) for units 3 and 4?
are debtors and stock classified as revenue? because when i'm doing income statements for trading firms, i only ever have to put cash and credit sales.
also,is the creditors/debtors schedule source documents, or records, or what?
"Referring to one accounting principle, explain why it may be necessary to prepare a Schedule of Receipts from Debtors when preparing a Budgeted Cash Flow Statement"The reporting period principle states that the life of the firm should be separated into equal periods of time to prepare reports that reflect the period in which they occur. A budgeted cash flow statement will contain information regarding projected receipts from debtors. However, credit sales to debtors and receipts from these debtors may take place over different reporting periods. By creating a schedule of receipts from debtors, we can accurately calculate the amount received from debtors during a particular budgeted reporting period.
what is the limitations of gross profit margin in assessing profitability?
how are some of the profitability indicators linked/explain how a change in one affects the other?
The most common link I have come across is return on assets, net profit margin and return on assets
Hope this helps.
Calculation of depreciation of display cases for the year ending 30 June 2016
Depreciation = Existing display cases New display cases
= $32 000 x 10% + $3 600 x 10% x 7/12
= $3 200 + $210
Depreciation of display cases $ 3 410
b WANGARATTA WATCHES
Balance Sheet (extract) as at 30 June 2016
Non-Current Assets $ $
Computer 35 600
Less Accumulated Depreciation 11 410 (?) 24 190
Does anyone know why the less accumulated depreciation is 11410, and not 3410?
Because the depreciation of display cases is $3410 per annum.
Hi guys i wanted to do accounting 1/2 next year but my school doesn't let us do itHi, my school doesn't offer 1/2 accounting, and I'm doing 3/4 at the moment.
Do you guys think i should get the book and do the accounting 1/2 course anyways
Because my school does offer accounting 3/4 and i want to do it
how important is 1/2 accounting in terms of 3/4 accounting
Will i be missing out on alot if i dont do accounting 1/2 but do 3/4
All help appreciated :)
I have a pre adjusted trial balance and information that says insurance is paid annual in advance on 1 march. The trail balance is as at 30 june 2013 and the only figure I have is prepaid insurance expense for 2200 DR
I also have a term deposit that was invested on 1 august 2009 for a period of 5 years. Interest is receivable half yearly on 31 January and 31 July each year at the rate of 5% per annum. The term deposit is valued at 12000CR. Not sure what to do
Bert decided to reduce the selling price of the item to $12 each (plus $1.20 GST). He also isSo there are 60 units of the Coloured Paynes on hand. The Net Realisable Value of each item will be $12 less the advertising costs. The advertising costs a total of $60 and there are 60 units of stock so the advertising will cost $1 per unit. Therefore the NRV will be $11 for each item.
going to make 3 signs to advertise this sale costing $20 each. (Memo 202).
Apparently you are meant to write-down the latest line of stock by $1 per unit but I'm not sure how.
can someone please explain the answer to b), which is 200. (in terms of the months)My memory of accounting is pretty dodgy but ill try to explain it
i know its 1800/x
x=? & why
thanks!
Your calculations were for the depreciation of display cases, not the firm's computer :P
They are supposed to be for the display cases?
Calculation of depreciation of display cases for the year ending 30 June 2016
Depreciation = Existing display cases New display cases
= $32 000 x 10% + $3 600 x 10% x 7/12
= $3 200 + $210
Depreciation of display cases $ 3 410
b WANGARATTA WATCHES
Balance Sheet (extract) as at 30 June 2016
Non-Current Assets $ $
Computer 35 600
Less Accumulated Depreciation 11 410 (?) 24 190
Does anyone know why the less accumulated depreciation is 11410, and not 3410?
Because the depreciation of display cases is $3410 per annum.
Does the term selling price include GST? Likewise cost price?
I might as well ask another question since you guys were quick enough to respond to my last query.
A payment of wages of $505 was incorrectly recorded in the cash payments journal as a payment to creditor- N. Smythe for $550.
The solutions debit $505 to Wages expense and likewise credit $505 to Creditors control.
Now what happens to the extra $45 from payments to Creditors? Should there be an extra entry that debits $45 to Bank?
wages debit $505 (to correct the fact that no wages recorded)
creditors control&creditor n smythe credit $550 (to undo the changes to cc/cns)
bank debit $45 (to restore bank to what it should be)
i formatted it weirdly, but thats how i would do it - im fairly sure im right but i cant be certain
wages debit $505 (to correct the fact that no wages recorded)
creditors control&creditor n smythe credit $550 (to undo the changes to cc/cns)
bank debit $45 (to restore bank to what it should be)
i formatted it weirdly, but thats how i would do it - im fairly sure im right but i cant be certain
Alright, I'll try to be online as much as possible to help with Accounting Questions! :D
Hey guys,
Sorry to ask these questions but i really want to know...
I'm rank 1 in my school with 94% in Unit 3 and 92% in Unit 4. I did well on the trial exam (TSSM) with 93%, Im dying to know, do i have to get 100/100 on the exam for a 50?
This place has been a ghost town for the past 11 months :P I'll try revive it;
Summarised information;
Question concerns the budgeted cash flow statement for operating activities.
GST collected from cash sales is $18,700
GST paid is $19,445
They have told us that balance at the END is $11,105 and NO information has been provided for the START.
So if those are the only transactions that involve GST and we reconstruct the ledger, we should have a debit entry cross referenced 'bank' for $11,850. This figure representing a refund from ATO.
However, as the answers didn't include this entry, I'm not too sure whether I overlooked a key step.
Nah you don't. Last year 194/200 (97/100) was enough for a 50, so don't fret! :D
It might be different this year though :P
This place has been a ghost town for the past 11 months :P I'll try revive it;
Total agree with you!
Anyhow, what is the purpose of the going concern principle?
Going concern states that
-the business is assumed to be continuous and its records should be kept on that basis.
-this allows the recording of transactions that have an effect on the future (such as depreciation, prepaid revenue/expenses etc)
-also assets and revenue can be distinguished
Thanks! If you don't mind, could you explain how going concern helps distinguish between assets and expenses? I saw it in the Acc study design and could not connect the two ideas together!Because the business' life is assumed to be infinite therefore we are able to classify a prepaid expense as an asset as we know that the business will exist in the future/next reporting period in order to consume that part of the asset. Therefore we can separate the prepaid expense into segments depending on how much we have consumed in the reporting period.
For questions like these:
Prepaid Sales Revenue relates to an amount paid as a deposit on an antique dining table and chairs. The stock had a selling price of $23,000 with a cost price of $14,375. This stock was delivered on 30 June 2013 and Invoice AA132 was raised.
Are we supposed to assume that that $23,000 is the value PLUS GST even though it isn't specified? The answers assumed that it was 23000 + 2300(GST) but I thought that we didn't have to if the question doesn't specify.
Hope everyone's going well with revision!
Could anybody please explain this question from 2008 Unit 3 VCAA Exam 1? I've attached a pic of it below. I don't understand where the $5000 accrued wages from October went.
if there is a decreasing trend in the net profit margin (graphically). can someone outline some factors that may be to contribute to this trend?There's heaps of things which could cause that. Think about the income statement and the sort of items which fit there, what will increase net profit and what will decrease net profit? So a decrease in net profit margin could be due to increased cost price of stock, poor expense control, decreased markup (constant cost price), maybe the business decreased their advertising (reducing expenses) but that impacted their sales proportionally more? even the business purchasing a new non-current assets which caused a large amount of depreciation (compared to previous periods) can decrease the amount of each sales dollar retained as net profit compared to previous periods. These sort of responses may accompany data of a business so base your answers off the question and data given and since it says "may" you can be a little creative (and less generic).
thanks
I'm averaging low 80s in my practice exams and would like to increase this to at least a high 80s. I correct all my exams and type up all my mistakes so I don't know why I'm still making so many errors - they're usually little marks here and there that all add up :(Well, you type up all of your mistakes - have you been reviewing them frequently? Reading through them and applying what you've learnt to new practice exams? I recommend compiling all of your most common mistakes into a word document, printing it out and briefly reading it before you do a practice exam. If you know all your stuff but it's just silly mistakes holding you back then I think that could help.
Its kind of late but...any tips?
Because the business' life is assumed to be infinite therefore we are able to classify a prepaid expense as an asset as we know that the business will exist in the future/next reporting period in order to consume that part of the asset. Therefore we can separate the prepaid expense into segments depending on how much we have consumed in the reporting period.
Well, you type up all of your mistakes - have you been reviewing them frequently? Reading through them and applying what you've learnt to new practice exams? I recommend compiling all of your most common mistakes into a word document, printing it out and briefly reading it before you do a practice exam. If you know all your stuff but it's just silly mistakes holding you back then I think that could help.
Thanks! That actually came up in a practice paper I did today :Pdepends if you're talking about the straight line or reducing balanced method
Also, does anyone know if we need to know how to calculate the depreciation percentage rate?
does 5/7 credit terms mean 5% discount if payed within 7 days or other way round?
On reporting day (30th of june) if it is found that a transaction such as a cash payment that occurred earlier for example on the 16th on june has not been recorded. Do we record it in the cash payment on the day it occurred (16th of june) or the day the transaction was found 30th of june?
heyy1. No you do not have to to define profitability if it asks you to discuss regarding to a business however with any ratio given you need to describe what the numbers actually mean. So for example, if the business had 0.8:1 (2011) and 1:1 (2012) as their WCR figures then you need to state that the working capital ratio increased from 0.8 (2011) to 1(2012) which is a favourable trend as the business now has more current assets available for its current liabilities. So you need to embed the definition in your answer which is a very common thing that is required in accounting.
could you guys help me with a couple of questions i have?
1) if i were to get a question such as "Discuss the changes in profitability of the business between 2012 and 2011" or "Explain the trend in the Working Capital Ratio", do i have to explicitly define the terms profitability and working capital ratio before answering the question
2) for a budgeted report do we have to include GST Settlement/GST Refund in the budgeted cash flow statement?
for example if at 31 Dec 2012 there was a GST liability of 1480, do we have to include this amount in the budgeted cash flow statement for the year ended 21 Dec 2013?
thankyou in advance :)
Hey,
Which unit cost price would you need to adjust for the following transactions and why?
• Memo 24: stock loss of 3 units @ $55 (because of FIFO)
• Memo 25: stock write down of 5 units @ $55 (because of FIFO)
• Memo 26: stock write down of the remaining 4 units @ 55 and 30 units @ 50 to $40 each
tell me if any of it does not make sense
Which date should you use to record prepaid sales revenue in the general journal once it has reached the end of the reporting period? The end of the reporting period where the revenue has not been earned yet or the date of when it was earned?I am pretty sure it is recorded at the date it is earnt in the general journal :) and that is probably a mistake? I am not too sure :/
Because in the study design pg 40-41 it records prepaid sales revenue when it was earned even though it is not the end of the month
http://www.vcaa.vic.edu.au/documents/vce/account/accountingsd-2013.pdf and also in the 2010 vcaa exam 2
However in the 2012 exam question 4
http://www.vcaa.vic.edu.au/Documents/exams/account/2012/accounting_assessrep12.pdf
It was recorded at the end of the month where the revenue has not been earned yet.
is the DR side of GST clearing account for assets and the credit side for a liability? So If A GST refund or a GST settlement from ATO happens which side does it go on?
Also, does anyone know how to do question 4a) and b) of the image attached below? It's actually driving me crazy!! I've also attached the answers from the examiner's report.
Thanks in advance :)
Do accrued wages go in the income statement?
I know that this is probably irrelevant here, and I do apologise but I really need some help.
So I've done like 5 practice exams, and I'm only getting like 70. I'm losing marks on prac and theory and I don't know how to get better. Does anyone have any actually helpful tips ? TIA.
I second this, need some last minute tips as well!Hey,
Accrued wages are wages that the are still owing to the employees and is therefore a liability. The income statement only consists of revenues and expenses, while the balance sheet consists of liabilities, assets and owners equity. Therefore, accrued wages would be recorded in the balance sheet not the income statement :)Yeah I know Accrued Wages are a liability. But I remember I had to put accrued wages into the income statement. If the business paid off accrued wages, would it be listed as accrued wages or just wages in the income statement?
Yeah I know Accrued Wages are a liability. But I remember I had to put accrued wages into the income statement. If the business paid off accrued wages, would it be listed as accrued wages or just wages in the income statement?you NEVER write accrued wages in the income statement. If they are wages that are accrued for the current reporting period (so you incurred this expense but you have not paid it yet) then you include it in your wages expense. But if it is from the previous reporting period then it is not included.
Yeah I know Accrued Wages are a liability. But I remember I had to put accrued wages into the income statement. If the business paid off accrued wages, would it be listed as accrued wages or just wages in the income statement?
Hey guys,I'm wondering about the same thing for the first question. And to close off sales return, you close it by it self as a negative revenue so the entry would look like this
We we write-down stock in the stock card, what position do we record them in the last column (balance column)?
When we are required to close off rev/exp accounts to P/L summary in the general journal, how do we treat sales return? Since it's a (-R) account, do we close it off with the expenses? Or do we first transfer it to the sales ledger and then close off the sales account?
Thanks in advance
I'm wondering about the same thing for the first question. And to close off sales return, you close it by it self as a negative revenue so the entry would look like thisYep, I've been told that since Sales Return is neither a true revenue or expense, we just close it off separately to Profit and Loss Summary.
DR profit and loss summary
CR Sales return
You can also close it with sales because my teacher (who is an assessor) told me there are 2 ways to do it. But she also told me that its not in the course.
Hi I'm not sure if this has been answered yet, but what are the limitations of using control accounts and subsidiary ledgers?I don't know about the limitations, disadvantages are that they can increase expenses as a staff member is required to record in the subsidiary ledger
And also, what is the effect on the income statement if the NRV rule hadn't been recognised if the NRV had fallen below cost price?
What do I need in the exam to get 45+
I get around 90 in practice exams :/
Does anyone know how to figure out question 1c?
This what the answers say
Bank - $1078
Discount revenue - $22
Creditors control - $1100
Thanks!
What do I need in the exam to get 45+How are you even getting 90 ? Like I'm struggling to even get 70 ffs >:(
I get around 90 in practice exams :/
How are you even getting 90 ? Like I'm struggling to even get 70 ffs >:(
In my experience, it's usually silly mistakes like forgetting to include an entry or getting the cross-reference wrong that can cause a 70%. In one practice exam, I got a 70% but I realized that around 15 marks were lost just on easy things
Lyalls Imports bought 3 chairs for $500 each plus GST. Since they returned one, the balance now owing is 2 chairs (2x550)
The questions states the CPJ from Lyalls imports POV: 1100 Creditors control 22 Discount Revenue (0.02 x 1100 as stated) and therefore 1078 bank (1100-22)
you NEVER write accrued wages in the income statement. If they are wages that are accrued for the current reporting period (so you incurred this expense but you have not paid it yet) then you include it in your wages expense. But if it is from the previous reporting period then it is not included.
If a firm has incurred wages expense for a reporting period and haven't paid, an accrued wages (current liability) account is created. However, through the underlying principles of accrual accounting, revenue earned must be matched with expenses incurred in a given reporting period and so the wages the firm hasn't paid increases wages expense for the reporting period. When the firm pays after the reporting period, only their bank balance and accrued wages decrease since expenses was recognised in the previous reporting period. Thus you'll never see 'accrued wages' in an income statement but the 'wages expense' may include a portion of wages that hasn't been paid.Thanks for the responses guys it cleared it up for me. My teacher mentioned accrued wages and income statement at one stage and I found the question.
Hi, could anyone please clear up the concept of prepaid expense for me?
Say for example, a business has a yearly reporting period. If the question specifies that the business pays for example, rent, in advance for the next month, and this is within the same reporting period, is this reported as "Prepaid Rent" or "Rent" in the Cash Flow Statement?
Thanks man..
Way to trivialise my marks >:(
Is GST refund recorded on the credit side and GST settlement on the right? If so then what does the debit and credit side mean for GST clearing?
Could someone help me out with this question, I don't have the answers :(
A trading firm increased its cost of goods sold from $80 000 in 2014 to $88 000 in 2015. The owner of the business claims that this indicates an increase in stock turnover of 10%. Is this necessarily correct? Explain your answer.
Thanks :)
Not necessarily, think about what other reasons could cause an increase in cost of goods sold (such as an increase in the cost price of individual items of stock (supplier's price))
Also, an increase in stock turnover could be due to reducing stock levels, getting rid of slow moving lines of stock etc
sorry I meant it more along the lines of that you already know the main concepts its probably just small things that are stopping you from getting 90%That's okay, I'm sorry for jumping down your throat when you were only trying to be helpful. I'm just stressed [like most of us no doubt] and sensitive, so ignore the theatrics :P
could a bank statement be given to us and if so, how to record one?
Hey Guys, when looking at discussion questions, is it more of a discussion of positives/negatives, or is it just a more general discussion of the topic.
E.g. The motor vehicle is 3 years old, and the owner has estimated its value at $15200, rather than $22000 its listed at in the Balance Sheet. Discuss how the motor vehicle should be valued, citing at least two qulitative characteristics in your answer.
Would I just talk about how the $15200 is the agreed value and therefore the most relevant, despite not being as reliable as the $22000? Or would I have to discuss positives/negatives?
Cheers!
Hey Guys, when looking at discussion questions, is it more of a discussion of positives/negatives, or is it just a more general discussion of the topic.
E.g. The motor vehicle is 3 years old, and the owner has estimated its value at $15200, rather than $22000 its listed at in the Balance Sheet. Discuss how the motor vehicle should be valued, citing at least two qulitative characteristics in your answer.
Would I just talk about how the $15200 is the agreed value and therefore the most relevant, despite not being as reliable as the $22000? Or would I have to discuss positives/negatives?
Cheers!
There's no harm talking a little bit about both sides. So discuss both ways that it could be recorded and describe why one method is better than the other. Discussions are often quite open which can also make them difficult.
This is your classic reliability vs relevance question. Using the reliability characteristic, the $22000 should be used as it is verifiable by source documents and is free from bias - it is not based on estimations. This will provide the most accurate figure in reports and also supports the historical cost principle. However, the $15200 is more relevant and will provide a better picture of the business position at the point where reports are made. Ultimately, using the $15200 will allow the owner to make better decisions as the information is more relevant and up to date, so the vehicle should be valued at $15200.
any tips on an excel sac for general journal?
last year the class average was 40% and no one finished
so time might be an issue
I have a trial balance with "Insurance" listed.expense.
Do I include it in the income statement ? Is it an expense or an asset?
(http://i.imgur.com/xLUjjWS.png)
can you combine the entries for disposal of van?
Do discounts on credit purchases reduce the cost of stock? And if so, would that be a period or product thing?Nope. The cost of the stock won't change, all a discount is doing is reducing our liability to creditors, it doesn't actually change how much the stock is worth.
Luke has stated that he would reduce his profit as much as possible as he doesn't want to pay too much tax this year. In order to do so he has stated that he will record the whole amount of Prepaid Rent Expense as an expense in the reporting period.Conservatism: If you treat all the rent expense as an expense in the current period, there's going to be zero rent expense allocated to the next 'x' periods. This means you're acutally overstating your profit in future periods. It's better to spread out the expense.
Discuss, ref to AP (OTHER THAN reporting period), why this is inappropriate.
I could only think of going concern that could fit, but can't come to the conclusion as to why. Any one got any suggestions?
I've been seeing in a couple of practice papers/Checkpoints questions relating to internal control mechanisms. I know it was somewhat covered briefly in Unit 1/2, but I can't see anything about it in the Study Design or in the Textbook. Will it ever/Has it ever come up on any actual VCAA exams or am I wasting my time doing questions on it?I think it came up once a while ago - but I don't think it has come up since. I wouldn't worry too much about it.
(http://i.imgur.com/xLUjjWS.png)It's fine to do boths. If you combine them you'll still get the same overall effect on the general ledger. So combining them will make the ledger look neater while separating them could make it slightly easier to understand.
can you combine the entries for disposal of van?
Why do business' depreciate?
In the cambridge textbook it says because its a balance day adjustment and blah blah blah
Thanks ;D ;D
How would you figure out Cost of Sales if selling price was $600,000 and mark-up was 50%?600000/1.5
Hey guys, quick question, are we expected to recognize which expenses incur GST on their payment and which don't? For example, Advertising and Office Expenses will always incur GST, whilst Wages will not. Should we always treat these expenses as having GST incurred on their payment, even if the question does not explicitly state that they have?They would usually tell you. But yes you should .
Thanks!
They would usually tell you. But yes you should .
Yeah I have noticed they are including a lot more in the practice exams I've been doing as a way to trick students. Thanks for the quick response!No worries, hows your revision going?
If anyone has done the NEAP 2014 Exam please let me know, I think there may be a few errors in it but I'm not 100% sure...Yep , Questiom 3e if im not wrong.
They would usually tell you. But yes you should .In last years exam (VCE ofc) they didn't for the balance sheet question, and you needed them to get a proper gst figure. They do use it to trick you.
when calculating cost of sales for budget reconstruction, should it be recorded separately or together in the ledger account if its from cash sales or credit sales?
In the stock control ledger right? Separate for cash and credit sales, both called cost of sales credit side
Two questions if anyone could help would be appreciated =]
1) $200 interest expense was incorrectly recorded as interest revenue. Record the necessary correcting entry.
My guess was;
Int Rev 200 debit
Int Exp 200 debit
P+L Sum 400 credit
Is that right? If not, how do you do it when they are both on the same side?
2) Just in general, how do you do prepayments and accrued expenses in the cash flow statement (operating activities)
Say Insurance paid 12 months in advance $1800 1 October, cash flow statement for end of December
So how do you record this fully in the operating activities? I know that the insurance expense for that period is 450, but what do I do with the rest of the prepayment since it is technically an outflow
And also same thing, what about accrued expenses?
How do they get rent paid in cash outflows as 26800?
(http://i68.tinypic.com/104rtxy.png)
(http://i65.tinypic.com/29bydcj.png)
If a question asks us to "Close the revenue accounts", do we have to close the Sales Returns account in this entry despite it being a negative account? The Compak 2014 for question 7b does not include the Sales Returns in the closing of the revenue accounts but surely, as it is still a revenue account, Sales Returns must be closed too in order to allow for the calculation of an accurate profit?
2000 per month from July to November and then 2400 per month from December to June
so (5 times 2000) plus (7 times 2400)
Ah thank you and also how did the get the interest on loan to be 9100 and not 8400?The accrued interest amount paid so 8400 plus 700 that was owing then paid
The accrued interest amount paid so 8400 plus 700 that was owing then paid
I think lmfao I'm probs wrong somehow
in the 2014 exam question 4 what do you do with the overdraft and the stock being ordered?
Hi.. just a quick one. Why isn't collecting money from debtors considered revenue? Thank you
Hi.. just a quick one. Why isn't collecting money from debtors considered revenue? Thank youReceipts from debtors isn't revenue even though it is an inflow of economic benefits (cash) in the form of an increase in assets (bank), as it also reduces assets (debtors control) and has no effect on owner's equity.
Hi.. just a quick one. Why isn't collecting money from debtors considered revenue? Thank you
it is i think- it goes in the accounts receivable section of the income statement, under 'add other income'
Seeing as I just dropped methods and picked up accounting 3&4 without 1&2, could i get as many tips/advice as possible because I'm currently so scared!!!!!? feel free to private message :'( :'( :'(
Seeing as I just dropped methods and picked up accounting 3&4 without 1&2, could i get as many tips/advice as possible because I'm currently so scared!!!!!? feel free to private message :'( :'( :'(
Hey- I've always had trouble with balance day adjustments...i was wandering if any of you guys had any notes or a good website i could use? my book either isn't explaining it well or i'm just not getting it...
thankyou sooo much in advance :)
Shoot us some questions specifically about BDA and we should be able to explain them. I generally don't use external resources for Accoutning because i find a lot of the stuff online is VASTLY different to the VCE/WACE course. Sorry :(
If you need someone to explain the whole BDA topic, i can do that.
yeah i will definitely- when i have questions...it's just that i did 1&2 accounting last year and BDA was my only downfall- unfortunately it was a pretty big drop (oh no)
If you want/have time to explain the whole BDA topic i would absolutely love that? please
Thankyou so much though
Haha ok I will write up a short summary in my free period tomorrowthankyou so much human :)
yeah i will definitely- when i have questions...it's just that i did 1&2 accounting last year and BDA was my only downfall- unfortunately it was a pretty big drop (oh no)
If you want/have time to explain the whole BDA topic i would absolutely love that? please
Thankyou so much though
Ok so here it is - KEEP IN MIND I HAVEN'T REVISED THIS IN OVER 3 MONTHS. So please don't use my exact wording but hopefully this will clarify the idea.yeah- thank you...i just never get them right...hopefully practice will alleviate that problem :) thanks for the context info though :)
BALANCE DAY ADJUSTMENTS - BDA
Balance day is the day we create our reports for a reporting period, so balance day adjustments are adjustments we make in order to ensure our information is 1) relevant and to also satisfy the 2) reporting period principle
In essence, there are a few special instances in which accountants may not pick up on certain things.
FOR EXAMPLE
We may pay for advertising in advanced ( prepaid advertising asset ) for the next 3 months, however 2 weeks of advertising means we used or consumed 2 weeks worth of it. So we must "adjust" our records accordingly so that we report the correct figure next Report period.
Another example is, depreciation. Our NCA will slowly be used up and hence we must allocate a price to it that represent its actual worth. So we must adjust our records on balance day so we have an accurate figure that represents the actual value of that NCA.
Hopefully you are catching on to this recurring theme of "adjusting" for things that are not picked up the first time round when we do our reporting.
The concept of accrual accounting also helps us understand how we can miss certain transactions or events, since it broadens the definition of "revenue" and "expense" so that we recognize it once the economic benefit is consumed or the inflow of economic benefit occurs.
So a lot of expenses and revenue are missed because it is commonly thought that we don't actually receive the revenue until the cash is in our hands, when in actuality it is when the inflow of economic benefit occurs!
TLDR ( sorry for the tangents :P ) BDA'S are simply adjustements we make on balance day, these adjustements are commonly employed to recognize revenue or expenses following the accrual accounting version of expense and revenue. So making sure things like : Prepaid expenses, depreiciation of NCA and ect are recorded and reported.
Hahaha hope that helps a bit :P
hey- I've got that BDA question :)
i have an answer for both but don't really understand it and was wandering if someone could please help?
1. Wages paid in july should be $8200. On 31 july 2019 accrued wages are predicted to be 150.
2. Electricity expense for july should be $3000. On 31 July 2019 accrued electricity should be $1000
on a cash budget- why does the electricity go as (3000-1000=2000) and wages as $8200? whats the difference between how you work out them?
Thankyou in advance :)
So look at the key wording,Thankyou :)
We know WAGES PAID ( WAGES PAID IN CASH) is 8200, this is pretty obvious since we get told it. Also add that to ACCRUED WAGES of 1000 and the TOTAL WAGE EXPENSE IS 9200
However the cash budget only includes the amount paid in cash of 8200
Now the ELECTRICITY EXPESNES ( In other words : Electricy paid + electricty accrued) = 3000
but in the cash budget only ELECTRICITY paid in cash is included so we minus the electricity accrued from the overall electricity and we get 3000 - 1000 = 2000
and that value is put into our cahs budget
Make sure to look out for terms such as ; Expenses vs Accrued
hey
Can someone please clarify this for me?
Why are debtors included in the cash budget when the accrued stuff isnt? Isnt kinda the same thing...like money owed but not received? and it's not cash
Thankyou :)
The criteria to be included in the cash budget you need to be cash based, as long as it is a cash inflow or outflow it will be in the cash budget. By debtors I assume you mean receipts from debtors? They are cash based transactions so they will be included ( the debtor control however will not be included since it is not cash based ). The accrued stuff by defintion is pretty much sutff you havent paid for so obviously if you have not paid for it, you cannot have it in your cash budget as it is not a cash based transaction.right- that makes sense , thank you :)
But I have a feeling you know this already but are confused with the term "debtor" with the term " receipts from debtors" which is the actual money we get form our debtors to settle what they owe to us.
Does anyone know any good websites/youtubers for the theory aspect of the content. Also anyone i can buy notes off?https://www.youtube.com/watch?v=kJdKF0bNLhk&list=PL_w5nl2l8qjtzj4UbFWLs4DVILnjBn4Ni - pretty good theory
https://www.youtube.com/watch?v=kJdKF0bNLhk&list=PL_w5nl2l8qjtzj4UbFWLs4DVILnjBn4Ni - pretty good theoryThanks heaps!!!!!!!
https://www.youtube.com/channel/UCf5jyuJoYwie8tWfvjEc0zg - WAY BETTER IMO * HE teaches at trinity
Also for notes - search up sara doan ( 49 raw in 2015 ) she sells her notes for 20 bucks
https://www.youtube.com/watch?v=kJdKF0bNLhk&list=PL_w5nl2l8qjtzj4UbFWLs4DVILnjBn4Ni - pretty good theoryI can't seem to find her, could you provide a link sorryyy
https://www.youtube.com/channel/UCf5jyuJoYwie8tWfvjEc0zg - WAY BETTER IMO * HE teaches at trinity
Also for notes - search up sara doan ( 49 raw in 2015 ) she sells her notes for 20 bucks
hey
quick question and id appreciate any help..
does anyone know any managerial accounting reports...besides the budget sheet?
by reports, do you mean reports like the income and cash flow statement? :)yeah soz... i meant statement- like I've got income statement, balance sheet and performance report...
yeah soz... i meant statement- like I've got income statement, balance sheet and performance report...Actually guys don't worry about the question...can u guys please help with this one instead?
managerial accounting is concerned with internal users of accounting information- so those used to make changes to policies and
how the business is run..that sort of thing...it's a 12 mark question so theres a lot to write :)
thank you guys soooo much in advance
Actually guys don't worry about the question...can u guys please help with this one instead?
what sort of regulations are there covering the preparation of financial reports?
when you use the term regulation..... i am assuming you are referring to something more legal rather then something like accounting Q.C and principles.yeah that is along the lines i was thinking...do you know of any others by any chance?
So I would mention ATO requires reports be prepared at least annually for taxation purposes
yeah that is along the lines i was thinking...do you know of any others by any chance?
thankyou btw
Explain, by referring to one accounting principle, why the the market value is not shown as the difference between total assets and total liabilities in the balance sheet
a weird question tbh
Perhaps are your referring to the market value of the firm? as in if you were to sell it?
Either way I would state that TA - TL represent what the firm owes to the firm ( Entity principle ) and has no relationship to the value an asset would take in the market which is dependent on numerous other factors such as demand and supply.
I would usually deifne entity principle at the start as well
Explain, by referring to one accounting principle, why the the market value is not shown as the difference between total assets and total liabilities in the balance sheet
Actually guys don't worry about the question...can u guys please help with this one instead?
what sort of regulations are there covering the preparation of financial reports?
it is a weird question
TA-TL is owners equity
but the entity principle is 'the dealings of the business is independent to the dealing of the the owner(s)...so how does that relate to equity and assets minus liabilities?
then entity principle establishes the business as a separate entity to the firm, it is a bit more broad then your definition but still works with your one. The business can only owe a certain amount to the owner (OE) ... if we distinguish the firm from the business in the first place. So I guess that is my justification.right yeah i get you know haha...yeah i reckon thats right
- prepared frequently (no later than a year)Thankyou so so much :)
- using figures pertaining to the current reporting period and not from previous periods
- all amounts in the financial reports must be verifiable by a source document (except depreciation)
- including transactions relevant to the business and not the owner's transactions
- compiling reports in a manner that is unambiguous and easily understandable
a few i could think of (not 100% sure if these are regulations but they are requirements) :).
in your answer, you can also add that failing to comply with these regulations will violate certain accounting principles and qualitative characteristics, ie. including transactions irrelevant to the business' activities in financial reports will prevent the owner + business from being treated as separate and distinct entities, and will thus breach the entity principle.
accounting principle: historical cost
explanation: assets and liabilities will be reported in the balance sheet at their original purchase price, as these values are verifiable by a source document. the market value, on the other hand, represents what a potential buyer is prepared to pay for the
assets.
hope that helps :P
I do not understand general ledgers in chapter 3 in the Cambridge VCE Accounting Textbook Third Edition Units 3,4.One reason the names are flipped (this is called Cross-Referencing) is it makes it really easy to see what caused each entry in a transaction. Eg if I just wrote Bank in a Debit Entry in the Bank Ledger, I won't know what caused the increase in bank without looking through all my other ledgers - was it Sales, or a Capital Contribution etc? Using the cross reference accounting method, we can quickly see what transaction occurred.
Why are the ledger entries sometimes flipped when putting it into the general ledger?
Like the names and the debits and credits being flipped in a general ledger.
Can someone explain all this to me from basics?
Appreciate it
One reason the names are flipped (this is called Cross-Referencing) is it makes it really easy to see what caused each entry in a transaction. Eg if I just wrote Bank in a Debit Entry in the Bank Ledger, I won't know what caused the increase in bank without looking through all my other ledgers - was it Sales, or a Capital Contribution etc? Using the cross reference accounting method, we can quickly see what transaction occurred.
Does that make sense? (That's not a model answer, but it is just my simple way of putting it)
hey since you have done accounting already, I am going to assume that answer is correct and mine isnt. Can you explain how you dealt with the TA-TL aspect of the question cause that is what confuses me. Essentially I interpreted it as " why shouldn't market value be used as a value for Owner's equity" and I don't fully understand how your answer answered that.
Thanks!!!
Can someone please explain mark-up? If selling price is $900 and cost price is $600..Mark-up is the difference between the cost and selling price
Worked example please, thanks.
Can someone please explain mark-up? If selling price is $900 and cost price is $600..
Worked example please, thanks.
mark-up is calculated by using the mark up formula :) mark up = (sales price / cost price) -1yeah so thats how to get it in a percentage...if you want it as a monetery value...you just deduct it
like mq123 said, mark-up is basically the difference between the business' cost price and selling price. however, we cannot simply calculate it by deducting sales price from cost price.
EXAMPLE: if i sold a car at $47500 per unit, and purchased it from my supplier (the cost price) at $19000, what would my mark up be?
by using the mark up formula:
(sales price / cost price) -1
(47500/19000) -1
= 2.5-1
= 1.5 x 100 (the 'x 100' isnt part of the formula, but we cant leave our answer at 1.5)
= 150%
so if we followed the same procedure for your question,
(sales price / cost price) -1
= (900/600) -1
= 1.5 -1
= 0.5 x 100
= 50% mark up :P hope that helps!
yeah so thats how to get it in a percentage...if you want it as a monetery value...you just deduct it
Hi
Can someone please give me tips to know all the different cross references for the different ledger accounts?
Hi everyone! :)
Bit confused about this concept: is the total revenue always the amount received + the amount owed?
Thanks everyone!
Hi everyone! :)Hey yeah it is :)
Bit confused about this concept: is the total revenue always the amount received + the amount owed?
Thanks everyone!
Hey,
do you guys do Cash flow statements in year 12?
If so do any of you humans have any prac tests that you are will/able to share?
1) yesYeah we do, but we don't have a lot of tests to practice on...and that's generally the way to go as far as studying for a test :)
2) nah not really :(
I mainly use the textbook . I can send you some half baked notes lol, they are very rushed by its something i guess :P sorry i couldn't be anymore help.
You have any questions on CFS?
Yeah we do, but we don't have a lot of tests to practice on...and that's generally the way to go as far as studying for a test :)'
What chapter are you all up to? We're on chapter 16 on the cambridge textbook
'yes please :)
I have some theory questions I came up with myself if ya want?
yes please :)
What chapter are you all up to? We're on chapter 16 on the cambridge textbook17 here - SAC on 15/16 next week though
Hi everyone :D
I have another question I was hoping I could get some help with since my SAC is tomorrow! It's about product costing :D
What does the "logically allocated" bit of the definition mean? Does this exclude numbers with decimals? e.g If the expense calculated for each unit cost of stock is $9.09, (the total cost of goods expense is $300), do we still allocate it to each unit cost of stock or do we count it simply as a cost of goods sold expense (not part of cost of sales)?
Thanks so much the Usual Student, you always save the day 8)
My teacher has disappeared these few days and isn't answering his emails either, so I'll go with what you said! Just have to decide between the examiner's or your teacher's words :P
For stock cards, I'm a bit confused about the recording process.
e.g. There is are 5 units of stock at $1000 each (total $5000) on 1/2/16 in the BALANCE column.
The next day, then there is a transaction e.g. sales returns which leads to 1 unit of stock coming in at $1200 each (total $1200) and 2 units of stock coming at $1000 each (total $2000 each). It's recorded in the IN column in that order (stock at $1200 first, then stock at $1000).
What do we write in the BALANCE column now? Do we write 5 at $1000 (total $5000), then 1 at $1200 (total $1200) and lastly followed by 2 at $1000 (total $2000)? Or do we combine the stock at $1000? Or something completely differently?
Thanks again, hope that made some sense :)
Hi everyone :)
Having some trouble with these two questions (no idea how to approach them/ get started)!
The business has a 6 month reporting period. The following data is provided.
Balances at 31/12/19: Accrued wages $700 & Prepaid sales $4500
Income Statement Data for 6 months ending 30/6/20: Wages $26300 & Sales $107000
Cash Flow Statement for 6 months ending 30/6/20: Accrued wages $700 & Wages $25 000 & Prepaid Sales $18700 & Sales $90000
What are the balances of accrued wages and prepaid sales at 30/6/20?
Accrued wages: 26300-25000=1300 (because figure in IS includes accrued wages for this period)
Prepaid sales: 107000-90000= 17000 (all sales that aren't cash. I'm gonna assume that there are no credit sales)
17000-4500= 12500 ( this is how much of the 18700 prepaid sales that has even converted to sales)
18700-12500= 6200 (remaining balance at 30/6)
Hope this makes sense!
The accrued wages BALANCE will be (total incurred) - (total paid)
so wages incurred = 26300 - ( 700 + 25000) = 600
the end balance being 600 CR for accrued wages.
Alternatively, you can use your method and take the 1300 and minus 700 balance from it to get 600.
As long as you account for the 700 accrued wages paid.. all g.
Hey Guys,
Just wondering what increases stock control that is cross referenced Bank?
Ohh but I thought the $700 accrued wages from CFS was to pay off the $700 accrued wages at the start of the period, then it kinda cancels out and the accrued wages for this period is just $26300-$25000?
Hello,
I'm struggling to grasp the concept of general ledgers and I've been coping so far by memorising the templates and not actually understanding the reason for it. I'm often confused with what entries must be made and ensuring that everything is included. I have a sac this week so hoping someone could help me understand ledgers better.
Thank you!
yeah soz read the question wrong, your answer is fine :)
Thank You so much. You saved my life.
Just wondering what are the different expenses that could be in the budgeted income statement?
When you trade-in a NCA and on the invoice, it says "less trade-in $1500" and "less deposit $12000", what would be the debits and credits in the general journal?The trade in reduces what you owe to the Sundry Creditor, so it would Debit Sundry Creditor and Credit disposal of vehicle I think (it's been a while and I just woke up :P).
I'm pretty sure there aren't control accounts called "trade-in" or "deposit"...
What lectures is everyone going to?
I'm thinking of going to the Engage Lecture and buying the recording from the VCTA lecture, but I'm not sure if it's worth it!
Love to hear all your opinions ;D
Thanks The Usual Student :D
Did you go today to the VCTA lecture?
What lectures is everyone going to?Don't think I'll be going to any... Out of interest, what do you take away from these lectures?
I'm thinking of going to the Engage Lecture and buying the recording from the VCTA lecture, but I'm not sure if it's worth it!
Love to hear all your opinions ;D
Nah planning in buying it. City is waayyyyy to far
Don't think I'll be going to any... Out of interest, what do you take away from these lectures?
Have all of you finished the course already? I feel like my school is behind... we're starting Unit 4 Outcome 2 this week :-[Finished content, last SAC this week.
Also, where's everyone getting the practice exams from? VCAA is the only "company" I know of hahah :)
Hi :) I'm only in the 1/2 class at the moment but I have a couple of friends doing the 3/4. I think (not certain here) that they may have already finished the course. Not sure at all where they are with assessments but I do know they had a SAC about 3 weeks ago.
For the practice exams, my school provides us with A LOT of them that are titled 'Nano exams'. I'm not sure if these are company or school made but they are really good revision. I believe that TSSM sells accounting practice exams, so maybe check there?
Hope this helped! :)
Finished content, last SAC this week.
My teacher has a lot of previous papers from various companies. Have you asked your teacher if they have any - or can get any?
I've finished all coursework, now doing trial exams this week in 3/4.
I have been doing practice exams and marking my mistakes in red... Lots of red...
If anyone has any tips on remembering how to record specific items, I'd gladly take it on board.
Thanks.
I've finished all coursework, now doing trial exams this week in 3/4.To be honest I don't think there are any 'tips', you just need to work through it logically and think about where the money will go. Alot of this will come from following examples but you can always just rote memorise as well
I have been doing practice exams and marking my mistakes in red... Lots of red...
If anyone has any tips on remembering how to record specific items, I'd gladly take it on board.
Thanks.
Hi The Usual Student :D
Thanks so much, understand it know :)
What did you mean by "The period and product assumption is always assumed, as in you apply the assumption." though?
Also, what are the restraints of budgeted reports? I guess I can use common sense to write an answer, but I can't seem to find anything on it in my teacher's notes!
Another question haha If the estimate for bad debts is 1% of credit sales plus GST, why do we have to include the GST in the debtors control accounting.
e.g. If credit sales was $710 000, then bad debts would be $710 000*0.01= $7100. But on the credit side of the debtors control account, the answer says $7810 (which is 1.1 * $7100). The cross reference is only to "bad debts" (not "GST Clearing"). I don't understand why we need to include the GST as the total bad debts though?
Last question, when we reconstruct accounts, do we need to balance/ close? :P
a better way to think about the gst and bad debt bit, the gst + sale = total owed by debtor
and when we think about what the debtor represents to the firm, the debtor owes both GST AND SALES to the firm and we don't really distinguish between the two. Bad debts are the amount we aren't going to get paid back, so 1% of credit sales is 1% of what the debtor owes to the firm. Unless you intepret 1 % of credit sales as literally 1% of exclusively the credit sales which some people in my class did :P so that might be the correct answer. I still remain in the GST included camp but yeah idk
Ah I got it, thank you so much!! (Btw I see a premier's coming your way)
Yeah it's a bit weird. I guess you could take 1% of the credit sales + GST or take 1% of the credit sales, THEN multiply it by the GST. Comes out with the same ans, but I wonder which method is correct... especially when most questions don't say bad debts + GST...
Or is it assumed that the bad debts already inc. GST e.g. debtor receipts, so technically the 1st method is correct? ???
The GST is assumed as apart of the bad debt. Only issue is the wording of the transaction.
Since it says 1% of credit sales you can interpret it as your bad debts being ONLY 1% of your credit sales and you won't need to apply the GST afterwards.
But I assume 1% of credit sales ( you include the GST in the figure ) when you multiply it by 0.01 since the debates owe the firm the credit sale and the GST. It's kinda a hidden implication.
So you get two VERY different answers depending on the method you take , the second method wouldn't really make any sense since you shouldn't be applying GST to a bad debt figure AKA there is no such thing as bad debt + GST.
Hey guys, does anyone know how many marks you can drop to get a 50 in accounting? Assume you've been ranked 1st throughout the whole year?
Hey guys, does anyone know how many marks you can drop to get a 50 in accounting? Assume you've been ranked 1st throughout the whole year?195/200 for most years.
195/200 for most years.
So 97.5 + usually.
hey, im a bit confused with this question attatched below.
i calculated stock-write down; historical cost (14000) - NRV(8000)
= 6,000 for 4 mazda cars
not sure if this is right tho.
Hey ffs1234,thanks Jo! according to the answers you're correct :) and yes this was off a practice exam made in 2014, by the company '2 for 1'. The solutions have adjusted for stock write-down before memo 21.
I'll try and explain this as best as I can, so here goes:
Firstly you need to recognise that there are two things you are required to complete:
1. Accounting for the stock write down using the Lower of Cost and NRV rule (as you mentioned).
2. Adjusting for the stock gain.
First I would adjust for the stock gain, but remember using conservatism we use the lowest cost available in the stock card. So our lowest cost will have to be the 13600.
So we will have in the IN column
1 @ 13600 = 13600. (nice and easy)
And the BALANCE will be
4@ 14000
4 @13600
NEXT we account for the stock write down as some(not all) have been damaged. So the key with the NRV rule is that is by definition "estimated price less all costs incurred in the selling marketing and distribution of the stock items". So firstly as always in a stock card get rid of GST for anything. Then work out what your NRV is for each item of stock. In this case it is:
NRV= 10000 (HC) - $2000/5 (Advertising as this is a cost incurred in selling cars being written down)
= 10000 - 400
= 9600
This is our NRV which is lower than cost price so a stock write down is necessary. This is the amount that the 5 cars which were damaged now have to be revalued at.
Now to calculate the stock write down (keep in mind 5 cars are being written down... that is 4 of the $14000 and 1 of the $13600 Mazda 2).:
Therefore we have:
14000-9600 = the value we have to write down per each of the 14000 dollar Mazdas (i.e. in the OUT column of the stock card) = 4400.
But we have 4 of these Mazdas (see the balance of the stock card), so 4*4400 = 17600, will give us our total stock write down for the Mazdas that were initially $14000.
But this is only 4 of the cars so using FIFO we write down the 5th car which is the $13600:
13600 - 9600= 4000= the value we have to write down per each of the 13600 dollar Mazdas (i.e. in the OUT column of the stock card) = 4000.
So therefore in the OUT column of the stock card we have:
4 @ 4400 = 17600
1 @ 4000 = 4000
Therefore in the BALANCE column of the stock card we have:
5 @ 9600 = 48000 (notice our new balance which accounts for the 5 written down cars)
and leaving us with 8- 5 = 3 cars that have not been damaged @ 13600 = 40800
So finally our stock card will look like:
5 @ 9600
3 @ 13600
Btw, notice the question says that all of this happened on one day... 30th November. In VCAA I don't it matters which transaction you record first unless it actually says so. But I did the stock gain adjustment first b/c the marks allocated were 1 followed by 2 marks (usually a stock write down is worth more marks than a stock loss/gain adjusting entry especially in a stock card)... but don't quote me on that. I'd be interested to see what the solutions have to say. Also was that off a practice exam, i'd be interested to know which one.
Hope that makes sense,
p.s. i did this in a rush so anyone please double check and approve or disapprove.
Jo
hey guys,
i have stumbled upon something that i'm unsure of in the answers of engage's accounting practice exam 'C'.
http://engageeducation.org.au/engagedownloads/Practice%20Exams/2013/Accounting/Exam%20Solutions.pdf
Question 6b, i was asked to prepare an income statement. I had previsouly worked out bad debts to 7100 (was 1 percent of credit sales which was 710,000)
in the answers, they have included bad debts PLUS gst as 'other expenses'.
this has got to be incorrect right?
oh yeah and same thing with discount expense
appreciate it
There definitely shouldn't be GST included in the bad debts figure. GST isn't included in an income statement at all.
There are a lot of wrong answers in accounting exams and worksheets, so don't be too concerned about it.
Can someone please explain why gst collected from cash sales not classified as a revenue? thanksWhile it is an inflow of economic benefit (cash) that increases Assets (Bank), it doesn't increase Owner's Equity. The GST is incurred on behalf of the ATO and is owed to the Government.
Also how can a get clearing account have a closing debit ratio?Do you mean having a closing debit balance? This occurs when the GST paid on purchases/expenses is greater than the GST received on Sales, eg. We paid $50 GST on Electricity and $50 on buying Stock, but we only received $75 GST on Sales, therefore we are owed $25 (which also means it is a Current Asset).
please provide an example
Hey GuysOn a realistic income statement, any income of any form (revenue or gains) is reported first. The expenses follow from all income.
Just wondering why sales return is reported separately in the income statement?
could you say that the role of a physical stocktake supports the accounting principle conservatism as well as reporting period by ensuring that the number of stock on the stock card matches with the amount on hand so that assets (stock control) is not overstated?
hey guys, there was a question in one of the practice exams that asked to calculate bad debts from a % of total credit sales. the answers included gst as part of the total credit sales. I didn't include gst in my calculation but i'm not sure which one is right. Anyone know?
I've seen one recorded as 'GJ note' followed by the number so I think it's possible? Sorry, I'm not really sure :/Oh I've never seen GJ note before! I'll keep an eye out, thanks :D
What's the relationship between Return on Assets and Return on Average Owner's Investment? How do they affect each other? Is it true that an increase in one will also lead to an increase in another and vice versa? ???ROA is a profitability indicator that measure how effectively the firm can generate net profit using its assets. If there is a favourable trend in ROA, and that is due to an increase in net profit and not a decrease in assets, then it should also lead to an increase and favourable trend in ROI, if the increase in net profit is proportionately more than the increase in capital (If there is any). Thus, the owner is earning a greater return for the capital investment that has been made.
Cheers for helping a very confused student :P
Ah I got it, thanks Hannibal! :) Definitely well explained, no doubt about that!
Also, I've got a pretty simple question!
I've actually never been taught the "full definition" of an expense (the "Expenses are outflows of economic benefits or reductions in inflows" bit). Same goes for revenue. I didn't realise that "inflows of economic benefits or savings in outflows" was part of the definition until just then!
So now I'm not too sure how to answer questions which need to justify the treatment of an item. e.g. Why is depreciation an expense?
How do I know which part to choose?
- For expense items, "outflows of economic benefits" OR "reductions in inflows"?
For revenue items, "inflows of economic benefits" OR "savings in outflows"?
Not sure if I'm explaining myself clearly, but if anyone could help out, that'd be great :D
Hey Guys,Yes, under "Other Expenses".
Is Bad debt recorded in the income statement?
For depreciation you would choose 'outflow/consumption of economic benefits' because the non-current assets ability to generate revenue decreases as it is consumed. You can also refer to the next part of the definition to be certain, that is, it leads to a decrease in assets (Accumulated Depreciation, which is a negative asset), thus reducing owner's equity (as it is an expense and reduces net profit).
You would use 'reduction in inflows' for something like discount expense, as there is less cash received cash received from debtors.
For revenues you'd use 'saving in outflows' for items such as discount revenue, as less cash is being paid to the creditor as a result of early repayment. Interest revenue is an item you would describe with 'inflow of economic benefits' as it leads to an increase in assets (bank) and owner's equity.
Sorry it's a little rushed, but I hope that helped haha :D
I know this seems like such an obvious answer but really dissect what the expense is doing to the accounting equation. Something like depreciation is ( in simple terms ) reducing the value of our assets ( technically its not but just go with this for now ) so we are losing economic benefit. However, with something like discount expense, you are not receiving the amount you expected back hence it is a reduction in revenue.
lol abcxyz beat me to it but yeah pretty much think about the accounting elements and you will be fine.
Thanks so much! I get it now, your explanations definitely helped ;DI reckon the key difference is that consumption of economic benefit is when you're consuming something that's pre-existing, so say rent expense because you're consuming prepaid rent or depreciation because you're consuming an asset. But really they can be used interchangeably, don't think it actually matters.
Is outflow of economic benefits and consumption of economic benefits the same? Can they be used interchangeably?
Also, depreciation doesn't actually decrease the value of the asset, right? It just increases the negative asset, accumulated depreciation, which decreases assets overall?
And is discount expense the only expense that is a "reduction in inflows..."? Likewise, is discount revenue the only revenue item that is "savings in outflows...?"
Thanks again ;D
Thanks Hannibal! :D
So rent could also be an outflow of economic benefits if cash from bank is used to pay it?
Also, if given a stock card, how do I determine the stock gain value? The lowest value from the whole stock card or from the last entry?
Rent would be considered an outflow of economic benefit when cash is used. It is a present obligation, arising from past events, the settlement of which is expected to result in an outflow of economic benefit from the entity.
Rent would be considered an outflow of economic benefit when cash is used. It is a present obligation, arising from past events, the settlement of which is expected to result in an outflow of economic benefit from the entity.That sounds like the Liability definition. I don't think I've ever come across Rent as a Liability (edit unless Accrued), it is either prepaid or paid month to month etc.
So if Discount expense is an outflow in economic benefitDiscount expense is not an outflow, it is the reduction in the inflow of economic benefits. You are getting less money from debtors.
what is Discount revenue?
*Not looking for definition looking for how to refer to it in this context
Stock gain is valued at the lowest price in the stock card, this is due to conservatism and preventing assets from being overstated when the stock gain is realised.
Discount expense is not an outflow, it is the reduction in the inflow of economic benefits. You are getting less money from debtors.
Discount revenue is a reduction in the outflow of economic benefits. You are paying less money to creditors.
Stock gain should be valued at lowest cost price of stock still on hand. So whatever is the lowest amount in the balance column of your stock card :)
Hi everyone!!
How's everyone feeling? :P
A last-minute question: are bad debts written off when probable (according to Conservatism) or only when deemed irrecoverable?
Also, can rent revenue be described as "a reduction in the outflow of economic benefits as it decreases a liability (prepaid rent revenue) that increases owner's equity..."? If not, how would it be defined in this case?
Also, on a totally different topic (still accounting related haha), does changes in quantity traded change Net Profit Margin? ???What do you mean "quantity"? NPM is Net Profit/Sales, so if you sell less stock at a time, but overall Sales are the same, then it wouldn't affect NPM.
What do you mean "quantity"? NPM is Net Profit/Sales, so if you sell less stock at a time, but overall Sales are the same, then it wouldn't affect NPM.
Sorry I don't have an answer for your other question, I need to look over some of that stuff. Best of luck for tomorrow!
Sorry I wasn't clear! I meant how many units are sold. Does that affect NPM?Just think about these things logically and in terms of the formula.
Same goes, no doubt you'll smash it! ;D Thanks for all your help!
Hi everyone,Purchasing a non current asset is simply an example used. More generally, it can be said that GST on purchases exceeding GST on sales will mean the business is owed money from the ATO. Also, equipment is assumed to be used beyond 12 months, businesses purchase equipment to last for a lot longer than 12 months
I'm having a little trouble with GST refunds - the textbook says for example, if a business purchases an expensive non-current asset, then GST paid during purchases could be greater than GST received from sales, and therefore the business will be owed GST by the ATO (GST refund). But why is it a non-current asset? Why not an expensive current asset (e.g. equipment that is expected to be used up within the next 12 months)?
Thanks!
Purchasing a non current asset is simply an example used. More generally, it can be said that GST on purchases exceeding GST on sales will mean the business is owed money from the ATO. Also, equipment is assumed to be used beyond 12 months, businesses purchase equipment to last for a lot longer than 12 months
HEY GUYS, this question is for the accounting gods. my first sac just past and i have a query bout a point that i got wrong. does discount apply to the whole gst total when receiving money back from a debtor or does it apply to the gst exclusive total. coz the rule is that gst is not included when paying creditors or receiving money from debtors. So apparently im wrong that discount applies to the total not including gst. What do you guys think?
How do you improve theory in accounting 1/2
Is it possible to get answers for cambridge review questions
Hello, can someone please help me with these theory questions
Kylie provides you with the following information on March 1: Bank Overdraft ($5000), Equipment ($37800), Motor Vehicle ($43500), Loan - Listening Loans ($42000) - repayable $3000 per month, Stock ($41500), Debtor - DJ Danny ($2900), Debtor - BJ Lo Fi ($3250), Creditor - Ytunes ($3690), Creditor - Upload ($3380), GST owed to the ATO ($2570).
b) Identify and explain one current asset on March 1 2016 which best illustrates the accounting principle of conservatism (3 marks)
c) Identify and explain one current liability on March 1 2016 which best illustrates the qualitative characteristic of relevance (3 marks)
Thank you :)
Any tips on how to answer theory questions in general, i find myself either knowing what to say in my head but cant quite word it properly or just not know the answer. I've done basically all the exercises and still find myself struggling with theory. Any help would be appreciated! :D
Just some help with balancing, i'm kinda confused with what needs balancing in general ledgers, i know that only assets, liabilities and owner's equity accounts are balanced. However, when doing practice sacs, i'm noticing that some assets and liabilities don't get balanced, for example, stock control, gst clearing Any reasoning behind this? Thanks
Hi all,
I'm having some trouble with Question 2.2 from VCAA 2008 Exam 1:
On 11 October 2007 the business paid $3 960 (including $360 GST) to renew the annual insurance policy due to expire on 31 October 2007 (Chq. 1245). The payment was correctly recorded in the Prepaid Insurance account. On 30 June 2008, before any adjusting entries, the balance in the Prepaid Insurance account was $4 720. Prepare the necessary General Journal entries to record the BDA and closing entry relating to insurance for the year ending 30 June 2008. Narrations are not required.
(Solutions are here: http://www.vcaa.vic.edu.au/Documents/exams/account/accounting_assessrep_june08.pdf). How is the value of $3520 in the General Journal obtained? I've tried drawing a timeline and everything but I can't seem to understand it.
Many thanks.
Hey guys,
I have a couple of questions:
With reference to one qualitative characteristic or accounting principle, discuss the importance of a physical stocktake (4 marks)
Explain the effect on the accounting reports of the business using the FIFO cost assignment method when suppliers prices are falling. (5 marks)
I have the basic idea of the questions but I'm not too sure how to answer them when they are worth this many marks.
Thanks :)
Hello I was wondering if I could get help with two questions I am having trouble with.
Aladdin's accountant has informed him that classification of reports is important. Discuss this statement, referring to both an accounting principle and qualitative characteristic in your answer. (6 marks)
Bunny has been informed that the business should adopt the Historical Cost principle. Discuss how Historical Cost impacts the Balance Sheet. (5 marks)
Thanks!!
Classification of reports splits assets and liabilities into current and non current. What this does is it allows organisations to better make decisions based on their long and short term debt, working with the long and short term assets (liquidity vs earning revenue in the long run).bro ur so smart u could give a better answer than that
Historical costs, instead of present or fair value, values assets at their original cost (usually higher.) This may end up overstating your assets.
Why is GST refund not counted in revenue?It is not counted as revenue because:
Why is GST refund not counted in revenue?
Hello,What is the question? Doesn't it usually ask you if something is a product v period cost? In which case Insurance would be period.
Is the insurance in this question a period cost or an other expense?
In my opinion, it should be an other expense because it relates to insurance whilst the stock is on the business floor. However, the answers say period cost (maybe because this question is from 2009?)
Any help is appreciated.
What is the question? Doesn't it usually ask you if something is a product v period cost? In which case Insurance would be period.
The question is 'How would you classify insurance of stock?'Yes that is correct - it is an Other Expense, not Cost of Goods Sold.
I think it should be an Other Expense because it is not involved in getting the stock into a condition and location ready for sale (the stock is already on the shop floor)
Yes that is correct - it is an Other Expense, not Cost of Goods Sold.
However I think you were getting confused earlier - the opposite of a Period Cost is a Product Cost. And insurance would be Period in this case, however on the income statement it would be classified under Other Expenses. Depends what the question is specifically asking for.
But don't they describe two different things? Period/Product Costing have to do with getting stock ready for sale (they both have that in their definition) whereas Other Expenses are expenses involved in selling?Yeah that's what I'm saying, they are separate.
I'm slightly confused now :/
Yeah that's what I'm saying, they are separate.
Insurance can be classified as a period cost or other expense.
In this case they list a number of costs associated with stock, so they are assuming you to state whether insurance is product or period, not COGS or Other Expense. Hope that makes sense!
Why is no GST recognised when a deposit is provided to our business? In other words when we record prepaid sales in the CRJ why dont we record the GST?
Also referring to thew elements of reports explain why Prepaid sales must not be reported as revenues ?
For budgeting, do we have to include dates when reconstructing ledger accounts such as debtors control, because from past sac papers, none of them include dates?
Thanks in advance
IDK why i am still doing practise exams from Neap after all the errors that i have found with the solutions.
However just to confirm in case i am wrong. If Disposals of EEquipment or any other non-current assets occur on the start of the month. Lets say May1. Do we record it as May 1 or May 31.
I am pretty sure it is 31 but the solutions say 1 HMMM :/
Thank you in advance
Can I use pencil for the accounting exam???Hey!
Just wondering,
When using the Lower of Cost and Net Realisable Value rule, and Net realisable value has fallen below cost price, the new cost will be net realisable value less Direct selling expenses. Does Delivery to customers (paid by the business) and installation costs count as direct selling expenses? What are other typical examples of direct selling expenses?
Thanks!
Does anyone know where i can get worked solutions for the unit 3/4 accounting workbook?
Does anyone know where i can get worked solutions for the unit 3/4 accounting workbook?Bump, does anyone know where I can get worked solutions for the cambridge accounting unit 3/4 workbook (exercises)?
Hey guys just a quick Q,
For donations of stock, how is advertising involved? I was doing a NEAP Question and it was something along the lines of 'Stock units are donated....but its not recorded...state the effects on the accounting equation.' And the answers had something like Advertising is understated, but I'm not sure where Advertising came from.
What chapters from the Cambridge accounting textbook does sac 1 for unit 3 cover?Generally Chapters 1-6 or in some schools 1-8
Generally Chapters 1-6 or in some schools 1-8thank you :)
Borrowed $28,000 cash from the NAB, which was used to purchase another van. The Loan is to be repaid in monthly instalments of $1,000, commencing in May 2015.
Van (asset) will increase by $28,000
loan(liability) will increase by $28,000
are these correct?
Question 2
As at 30 september, assets + liabilities of sam's shop
assets
debtors = 3000
fixtures + fittings = 15000
stock = 25000
fridges = 40000
equities
bank overdraft = 2500
creditors = 7000
loan ( repayable $6000 p.a) = $36000
capital = $37500
In the first week of October 2015, the following occured
october 1. Paid $2000 to creditor
2. sam contributed $5000 of his own money to the business
3. paid $3000 off the loan principal
4. purchased stock on credit for $10000
5. sam took $2500 of the fixtures and fittings home for personal use
6. paid $1200 in advance for the next 6 months
Can someone please explain how to do a balance sheet with all this information? (question 2)
Thanks
Hey!You're awesome ;D thankyou 8)
Usually for these type of questions, you can either draw up a T ledger, or do each individual transaction, recording the effect on either side of the balance sheet; as I will.
1) Paid a creditor: Bank; down $2000, Creditors Control; down $2000
2) Capital Contribution: Bank; increase $5000, Capital; increase $5000
3) Paid off loan principle: Bank; down $3000, Loan; down $3000
4) Paid stock on credit: Stock Control; increase $10000, GST Clearing (asset); increase $1000, Creditors Control; increase $11000. -I'm assuming you didn't include GST, and assuming the GST balance will become a current asset.
5) Withdrawal of fixtures and fittings: Fixtures and Fittings; down $2500, Drawings (Negative Owner's Equity); increase $2500 (overall decrease by $2500 in Capital).
6) Paid $1200 in advance (for the purposes of this, I will assume it's rent): Prepaid Rent Expense; increase $1200, GST Clearing (asset); increase $120, Bank; decrease $1320.
Overall Effect on the Balance Sheet
Current Assets: Current Liabilities:
Stock Control; $35000 Bank Overdraft; $3820
Debtors Control; $3000 Creditors Control; $16000
GST Clearing; $1120 Loan; $6000 $25820
Prepaid (Rent) Expense; $1200 $40320
Non-Current Liabilities
Non-Current Assets Loan; $27000 $27000
Fixtures and Fittings; $12500
Fridges; $40000 $52500 Owner's Equity
Capital; $42500
less Drawings; $2500 $40000
Total Assets: $92820 Total Equities: $92820
Hope this helped! Let me know if you have any questions.
Hey guys, what qualitative characteristic would relate closest to conservatism. I'm not sure if it would be relevance or reliability.
2 Questions
1.Is Wages expense the same as wages in the general ledger?
2. What is a negative owner's equity?
Thanks :)
Would a sac average of ~85% and about the same on the exam be enough to get a 40 raw study score in accounting?
It all really depends on the strength of your cohort and your ranking, rather than your SAC scores although, SAC scores are definitely important in terms of determining how good you are in comparison to your friends . Last year I got 2 unit 4 sac's in the 70's and still managed to get an a+ for GA2. I think if you get an 85 in the exam, it won't be enough to get a 40 but most likely a high 30. Perhaps aim for at least a 90 for a 40+. Do not stress now, by the time you come around to exams, you will be much better at the subject and will have done enough practice exams to get an over 90. All the best for accounting! Absolutely loved the subject and hope you will too!So do you reckon a sac average of 85% and 90% on the exam would get 40 raw?
It all really depends on the strength of your cohort and your ranking, rather than your SAC scores although, SAC scores are definitely important in terms of determining how good you are in comparison to your friends . Last year I got 2 unit 4 sac's in the 70's and still managed to get an a+ for GA2. I think if you get an 85 in the exam, it won't be enough to get a 40 but most likely a high 30. Perhaps aim for at least a 90 for a 40+. Do not stress now, by the time you come around to exams, you will be much better at the subject and will have done enough practice exams to get an over 90. All the best for accounting! Absolutely loved the subject and hope you will too!
My teacher is a VCAA accesor and has been for 10+ years (forgot how many exactly). He told my class that in that time he hass never marked an exam that got 100%. The highest was a 98%. So doubt you could only get a 40 with a 90%+ exam. I think a high 80 would get a 40+, given you have a high SAC result.High sac results as in would 85% be enough for 40 raw?
High sac results as in would 85% be enough for 40 raw?
Thanks
Well for me, i averaged 93% in first semester and then 97% in second semester on fairly reasonable sacs but then choked the exam and got around 80-85% and got 38 raw. My mate averaged the same but he got around high 80% for the exam and got 40 raw. he was rank 4 and i was rank 3. just goes to show the exam matters most and that choking the exam can really hit hard. probs focus on not dropping alot of marks like i did in the first semester and ur gud for a 40. my dm's are open if u need any help with accounting coz i did around 40 prac exams and choked the final exam 0.0
Thanks
Do you know why in the general ledger the stock control account (asset)
1.Has the stock control on the debit side
2. Calls it creditors control
3. Has cost of sales on the credit side even though it's an expense?
Thanks :)
Overstated - too much is being reportedBut wouldn't the liabilities be overstated if you didn't record a credit purchase of stock?
Understated - too little is being reported
No effect - self explanatory.
These are usually used in questions where you are asked to describe the effects of a transaction, particularly when it has been omitted.
Eg- "Explain the effects of not recording a credit purchase of stock for $440 including GST."
From this example, Assets will be understated 400 and liabilities will be also be understated 400 (understated 440 creditors control and overstated 40 GST clearing).
Hope this helps :)
But wouldn't the liabilities be overstated if you didn't record a credit purchase of stock?
No, they would be understated because you haven't accounted for:Thanks
- an increase in amount owing to creditors (440)
- a decrease in GST liability (40)
Which overall means that liabilities is understated 400.
Hi I'm having trouble on getting the dates right for the general ledger balance accounts I know you put the last date of the month for posting, but then sometimes you put the 1st date of the month for "Balance" and sometimes you put the last date for "balance". Why is that?The first date of the month is used when it is an opening balance (i.e. a balance carried forward from the previous month, e.g. debtors control)
Thanks
Travis milton owns terrific tellies. On 25 march 2015, he received a letter from a solicitor stating that one of the firm's debtorsThe best way to do these questions is to consider the effect if the transaction was recorded.
(Ian solvent) was declaring bankruptcy and would only be able to pay 20c of every dollar owed (memo 52). Thee letter was accompanied by a cheque from Ian Solvent for which Travis issued Rec. 31. on 1 March 2015, total debtors owed $19,500 with $2000 of that amount owed by Ian Solvent.
Can someone please explain why the effect on the accounting equation if a bad debt was not recorded is
Assets: Overstated (Debtors Control) 1600
Liabilities: No effect
Owner's equity: Overstated (No Bad Debts expense would overstate Net Profit) 1600
Thanks ;D
Also, would telephone charges be an expense?
Don't quite understand this question. Is someone able to explain this fully in response to this question?? Explain the effect on net profit of using the FIFO cost assignment method at a time when suppliers’ prices are falling.
Hi I'm having trouble on getting the dates right for the general ledger balance accounts I know you put the last date of the month for posting, but then sometimes you put the 1st date of the month for "Balance" and sometimes you put the last date for "balance". Why is that?
Thanks
It’s definitely worth talking with your teacher first before you spend money on a tutor. They should be able to better your understanding of accounting. If not, a tutor might be worth looking into to improve the SAC marks. The tutor would probably go through the theory component of accounting because in turn that will improve the practical component.
Good luck with it
Hope that helps 😊
Random question. What is the legal obligation that is fulfilled by completing an Income statement and a profit and loss statement?Public companies need to submit financial reports for shareholders
Would it be to just know what the financial health of the business is at? I don't actually think this is a legal thing, but yeah
How to work out question 10.8 a and b??
Hi, I was just wondering when we were supposed to split credit sales and cash sales in the income statement with net sales below them. I've seen them split with net sales below in budgeted income statements, but does that only apply if there are both credit and cash sales? What if there are only credit or only cash sales? Also what about if the question is asking you to report 'sales' (not split) and there are sales returns? Do you just write sales, then less sales returns below it with the total beside it? Or do you do sales, less sales returns, and under it net sales? This question probably looks a bit confusing but I hope I explained it well enough. Any help or opinions are appreciated! Thanks :)
Thanks for your answer Maddy. :)
I was wondering about question 4 from the 2016 exam. In the question, the Cost of Sales figure is $105,500, yet in the answer it's $105,580. Where did the extra $580 come from? The only place I could think of was prepaid sales revenue but I don't see how you could have gotten $580 out of that.
It's 105 000 - 670 (Sales Return) + 1250 (Prepaid Sales) = 105 580
I just asked my teacher about this today, thanks for your answer though. :)
The question still confuses me though to be honest. Wouldn’t half of the the sales return already have been taken away from cost of sales? The debit to sales returns and credit to cost of sales are recorded at the same time in the general journal, so how would the sales return exist without the cost of sales? It doesn’t make sense to me, wouldn’t you just assume that it’s already been taken away from cost of sales?
Thanks.
Ahaha I actually remember having the exact same argument with my teacher. I reckon it was a bit unfair seeing as the Sales Returns had already been adjusted for. My teacher justified that cost of sales was exactly half of sales despite a sales return and that was the danger sign to look out for adjusting cost of sales, but I reckon it was harshly done by VCAA.Thanks for this, it makes more sense now! :)
Thanks for this, it makes more sense now! :)
Does anyone have a list of all the topics that commonly appear on the 6 marker in the accounting exams? Off the top of my head i can think of:
-straight line vs reducing balance method of dep? which method to use.
-Depreciation breaching QC and AP but satisfying others.
-Product vs Period costs and effects on Income Statement.
-Agreed value vs historical cost.
-Discuss use of control accounts and subsidiary ledgers
Anyone know of any others we should prepare for?
Cheers
Is the answer for vcaa 2018 nth q2b wrong, because it was a stock gain and you’re supposed to value it at the lowest cost? Also for sales returns, do you use reverse FIFO?
Is the answer for vcaa 2018 nth q2b wrong, because it was a stock gain and you’re supposed to value it at the lowest cost? Also for sales returns, do you use reverse FIFO?
I’m bringing in both; pen for theory and then pencil for prac and also highlighter for budgeting!
just wondering if it is worthwhile to create notes for a subject like accounting or would it just be more useful to do the exercises and practice?
Can anyone help me with vcaa 2018 exam question number 5 d please? Should the final debit for the van be $45000 not $55000 because it should minus the trade in of $10000?
Yeah u is right. it should be 45k. It's different in the 2018 exam answers cos they had Sundry creditors.Thank you so much
Does anyone have experience with completing accounting 1&2 or 3&4 through virtual school victoria? Was the program well run? What is the general structure of doing a subject through distance? Sorry for all the questions!!
Hi,
Can someone distinguish between Accrued Wages and Wages Owing, providing which report that they will be required to be reported in!
Thankyou
Hi !
A business uses FIFO to manage its inventory of clocks, and their current balance is:
2 Clocks with a cost price of 45 each-------was purchased first by the business
12 Clocks with a cost price of 50 each
On the 7th of Jan, a customer purchases 4 clocks, and in order to fulfil the rules of FIFO, the customer receives the 2 Clocks worth the $45 each and 2 clocks worth $50 each
Two days later, the customer makes a sales return of one of the clocks (but the info doesn't specify which clock was returned)
SO my question is, is there a specific rule that determines which clock is recorded as the sales return in the inventory card?
Thankyou!
Hi, I'm curious to know what level of accounting knowledge would people expect in first year BCom at Monash or Melbourne Uni? I'm asking because I have just recently dropped VCE accounting 3/4 but I know it's a compulsory subject for commerce at uni.Bump!
I know it's not a prereq but would someone who had done accounting 3/4 (or even 1/2) be in a much better position than someone who hadn't?
Hi, I'm curious to know what level of accounting knowledge would people expect in first year BCom at Monash or Melbourne Uni? I'm asking because I have just recently dropped VCE accounting 3/4 but I know it's a compulsory subject for commerce at uni.Bump!
I know it's not a prereq but would someone who had done accounting 3/4 (or even 1/2) be in a much better position than someone who hadn't?
Does anyone have experience with completing accounting 1&2 or 3&4 through virtual school victoria? Was the program well run? What is the general structure of doing a subject through distance? Sorry for all the questions!!
I did units 1 and 2 through vsv and it's well run and well structured! The only thing is that you have to be motivated, and you have to stay motivated throughout the entire year. If you fall behind by one or two weeks, that can really set you back if you're not quick to catch up! Otherwise, if you're motivated and determined, it can be really good!
Hi, I'm curious to know what level of accounting knowledge would people expect in first year BCom at Monash or Melbourne Uni? I'm asking because I have just recently dropped VCE accounting 3/4 but I know it's a compulsory subject for commerce at uni.
I know it's not a prereq but would someone who had done accounting 3/4 (or even 1/2) be in a much better position than someone who hadn't?
Hello, I have a query regarding Unit 1/2 statement of receipts and payments.
I've been given this question where I have to create a statement of R & P (that's all that's required). I've already recorded the payment for the supplies the owner bought during the period (worth $4000).
However the question also states as additional information that the owner has used up some supplies (worth $2000) during the period and believes that it should be recorded as an expense. I understand that this would be true in an income statement (please correct me if I'm wrong) but would that make any changes to my supplies listed as $4000 in the statement of R & P?
Thank you in advance for the help!
Good question, I completed Accounting 3+4 in High School and then went on to complete a BCom at Monash. The first accounting unit you study is essentially the same as high school accounting. The university assumes you know nothing about accounting, and teaches it to you in that way. That being said, it is university, so the expectations on you speed of learning is greatly accelerated. You will be expected to learn 2 years worth of high school content in 1 semester, roughly 16 weeks or so. So to answer your question, someone who has completely VCE accounting, even just 1/2, and actually understands the concepts and fundamentals will find the first accounting subject in university a breeze. All subsequent accounting units in university are beyond the scope of VCE accounting, but build on its fundamentals.
ah ok, thank you so much for your reply! So people who have done accounting will have an advantage, but the course is designed for those with zero background knowledge?
Sorry for all my questions but do you know roughly what proportion of people in BCom at uni have done vce accounting? Is it a significant number? thank you! :)
Hi,
If there is a decrease in cost of goods sold, there would obviously be an increase in the GPM, but would this affect the NPM in any way (as I've read that only expenses can affect the NPM).
Any help would be appreciated thanks.
Yes, that would be correct. They teach that unit as though you have no knowledge of accounting.
With respect to your second question, I do not know the answer to that. There are so many people that study BCom at Monash it is impossible to tell.
thank you so much for your help! :)
HOW IS A DEPOSIT MADE BY A CUSTOMER REPORTED IN CASH FLOW STATEMENT -- LIKE WHAT HEADING DO I USE -- DO I USE UNEARNED SALES REVENUE OR DEPOSIT?
Hi
I was just wondering whether wages was part of owner's equity or not?
Hi!
In a balance sheet, there is a section called "Bank: ". I was wondering if you have to add the loan in it too?
For example in one of the questions it says:
Someone has Cash $70000, office assets $11000, vehicle $35000. They also borrowed $30000 cash from
ANZ Bank and $5000 cash from AMP Finance.
Is the cash value $70 000
OR
is it $70 000 +$30 000 + $5000
= $105 000
?
Oh I understand nowHi, For starters sorry to respond to you late. I think it generally link to what the question asks. In many question related to balance sheet you might have to change bank section. Cash in hand is really rare and do not think it is really common in year 12.
In other questions it doesn't specify how much loan is taken but we just have to assume that the loan is included in the 'bank' section?
Could someone give me a hand with this question? How would the mark allocation work? (It's not a VCAA question tho)
I am also not sure how to begin answering this. A sample response/ key points would be greatly appreciated. Thanks!
Hi guys
Plz help:
what payments and receipts include GST?
Hi guys,
what impact does:
"business takes on owner's personal loan"
have on the accounting equation and why?
thank you for all help