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[Tragesty]

Assuming we order pieces of stock X from a supplier, and on the same day a freight company charges $10 per unit of stock to be delivered, how do we put this in the stock card?

DATE DETAILS          IN                            BALANCE
18/7 Inv. 22      300 60 18000                      300 68 20400
         Inv. T02     300  8  2400


OR


DATE DETAILS          IN                            BALANCE
18/7 Inv. 22/INV T02      300 68 20400                      300 68 20400
   
I think my textbook says the second way, but NEAP practice exam has it separated?

I'm guessing if delivery was charged a day or two later it'd be separated but if it's all on the same day can we combine the product cost into the cost price in the stock card IN column? Thanks again!

[sam.utute]

Either way is fine. I know in the previous edition of the Cambridge textbook they had both methods listed.
I like your reasoning. Combine if it's on the same day, separate if it's not.

[bucklr]

Hey there again, thanks for answering all our q's i appreciate it...

here's another one:
Is Insurance on stock (applied to stock held on shelves and in storerooms) considered a period cost?
the solutions say yes, what do you think? I thought it would be neither period nor product and that it's simply an other expense.

 

[GoldenPie]

This is probably a stupid question and it's probably something obvious that I can't see but I'll ask anyway

On the 2008 Exam 2 Question 2.3.1 it asks to identify the effect of each transaction or event on the accounting equation

On 31st of December 2010: 15 single beds delivered to Great Southern Motels (Invoice No. BB34)

Apparently the answer is:
Asset: Increase
Liabilities: Decrease
Owner's Equity: Increase

Can you please explain to me why? I thought the stock would decrease so the asset and owner's equity would decrease but I guess not!

Your help would be appreciated, thanks! 

[BoredSatan]

Hey there again, thanks for answering all our q's i appreciate it...

here's another one:
Is Insurance on stock (applied to stock held on shelves and in storerooms) considered a period cost?
the solutions say yes, what do you think? I thought it would be neither period nor product and that it's simply an other expense.

 

Insurance is a really grey area.. If it says "insurance on stock" then it is definately a cost of goods sold but whether it is a product cost would depend if 1. there are other items purchased in that lot of stock and 2. whether the insurance was bought on a per time basis. If the insurance is neither of the above, then it can be a product cost. I really hope VCAA be specific with insurance in the exam as I have seen it as both product and period cost and also as a other expense

[BoredSatan]

This is probably a stupid question and it's probably something obvious that I can't see but I'll ask anyway

On the 2008 Exam 2 Question 2.3.1 it asks to identify the effect of each transaction or event on the accounting equation

On 31st of December 2010: 15 single beds delivered to Great Southern Motels (Invoice No. BB34)

Apparently the answer is:
Asset: Increase
Liabilities: Decrease
Owner's Equity: Increase

Can you please explain to me why? I thought the stock would decrease so the asset and owner's equity would decrease but I guess not!

Your help would be appreciated, thanks! 

NOT A STUPID QUESTION AT ALL!

Remember when you deliver the stock, your prepaid sale (im guessing it was a prepaid sale) becomes an actual sale and therefore assets would increase due to debtors control increasing as a result of the credit sale (because it says inv.) and increasing more than the outflow or decrease in stock control. Owners equity would also increase as a sale has been made increasing profit.

This is assuming that you sold for a profit of course which I think is the situation here

[GoldenPie]

Oh right!! Thank you so much!! 

[bucklr]

Hey there again, thanks for answering all our q's i appreciate it...

here's another one:
Is Insurance on stock (applied to stock held on shelves and in storerooms) considered a period cost?
the solutions say yes, what do you think? I thought it would be neither period nor product and that it's simply an other expense.

 

Insurance is a really grey area.. If it says "insurance on stock" then it is definately a cost of goods sold but whether it is a product cost would depend if 1. there are other items purchased in that lot of stock and 2. whether the insurance was bought on a per time basis. If the insurance is neither of the above, then it can be a product cost. I really hope VCAA be specific with insurance in the exam as I have seen it as both product and period cost and also as a other expense

thanks

[Tragesty]

Silly question no doubt after having done like 10 practice papers, but they've all been old ones - what are the exact differences between the new study design and old study design? I ask because the old papers I'm doing are all straight forward but I know they haven't put in GST in budgets, or mentioned anything on reducing balance depreciation...

[BoredSatan]

Silly question no doubt after having done like 10 practice papers, but they've all been old ones - what are the exact differences between the new study design and old study design? I ask because the old papers I'm doing are all straight forward but I know they haven't put in GST in budgets, or mentioned anything on reducing balance depreciation...

New:
GST in budgets
Reducing balance method of depreciation
Gearing (debt ratio)
No interest cover
More discussion questions
Separated into multiple question format

thats all I can think about atm

[Tragesty]

Cool thanks, but what do you mean by 'no interest cover'? 

[BoredSatan]

Cool thanks, but what do you mean by 'no interest cover'? 

i dont think its an indicator anymore.. was used last year but cant seem to see it in this years book

[sam.utute]

Cool thanks, but what do you mean by 'no interest cover'? 

i dont think its an indicator anymore.. was used last year but cant seem to see it in this years book

Yep, it's been removed.

The Debt Ratio has also introduced the "risk vs return" concept.
Expect a question (or two) on reducing balance depreciation.

[abcdqdxD]

Bad Debts are estimated to be 2% of credit sales" where credit sales are 100000+1000GST. I did Bad debts as 2000 (0.02x100000) but answers had 2200 (0.02x1100000). Which one is correct? Do you include GST?

Similarly, if it said "cost of sales is estimated to be 60% of total sales" when it sales says are cash 300k+GST, credit 100k+GST, if I did total sales as 400k would that be incorrect? Answers included GST in 'total sales'.

Another part says "balance 31 Dec is 20% of total credit sales" and answers included GST in the "total credit sales".

So, does "total sales", "credit sales" and "total credit sales" all include GST?

This all seems very ambiguous to me.

Thanks!

[BoredSatan]

Bad Debts are estimated to be 2% of credit sales" where credit sales are 100000+1000GST. I did Bad debts as 2000 (0.02x100000) but answers had 2200 (0.02x1100000). Which one is correct? Do you include GST?

Similarly, if it said "cost of sales is estimated to be 60% of total sales" when it sales says are cash 300k+GST, credit 100k+GST, if I did total sales as 400k would that be incorrect? Answers included GST in 'total sales'.

Another part says "balance 31 Dec is 20% of total credit sales" and answers included GST in the "total credit sales".

So, does "total sales", "credit sales" and "total credit sales" all include GST?

This all seems very ambiguous to me.

Thanks!

yeah because GST is new, a lot of companies have pretty much used their old exams and just changed the answers without changing the question.

VCAA should use "10% of Total Sales (plus GST)" that would mean with GST. BUT if it says "10% of total sales" I would not include the GST. Lets hope VCAA get it right