Your questions answered.

[Akirus]

Bad debts represent a reduction in the inflow of future economic benefits that decrease assets (debtors) and owner's equity.

[mojomojo]

How does going concern, reporting period, and relevance relate to Depreciation?
Also, how does Debtors control relate to going concern?

And lastly, do prepaid expense and accrued expense relate to accounting principle or qualitative characteristics?

[Akirus]

How does going concern, reporting period, and relevance relate to Depreciation?

Going concern: The life of the entity is assumed to be continuous and its records are therefore kept on this basis. Purchasing a non-current asset is predicated on the notion that they will receive economic benefits in the future; this means it is necessary to distinguish between that which is due beyond twelve months by allocating the historical cost of the non-current asset as an expense over its useful life.

Reporting period/relevance: Given that we assume that the life of the entity is continuous as per the going concern principle, it is necessary to divide it into arbitrary reporting periods for the purposes of reporting its progress (reporting period)/Financial information that is relevant to making decisions as to the allocation of scarce resources should be included in financial reports (relevance). By allocating the historical cost of a non-current asset as an expense over its useful life, we can match revenues earned within a period to expenses incurred. In doing so, we are able to determine profit for the period with a greater degree of accuracy, enhancing the relevance of the financial information thus provided in the financial statements.

How does Debtors control relate to going concern?

-Life of the entity is assumed to be continuous, and the records are kept on this basis.
-Credit sales are made on the assumption that the entity will receive economic benefits in the future (i.e. the receipt of cash), within twelve months.
-As such, debtors control represents a current asset.

Do prepaid expense and accrued expense relate to accounting principles or qualitative characteristics?

Of course.

BDAs stem from the QC of relevance; that is, the need to report all financial information that is relevant to making decisions as to the allocation of scarce resources, either in a confirmatory or predictive capacity. By matching revenues earned in a period with expenses incurred (i.e. the accrual basis), profit can be more accurately determined, enhancing the usefulness of the reports.

Furthermore, given that the life of the entity is divided into arbitrary reporting periods, it is necessary to match the revenues earned in each of these periods with the expenses incurred (as above, too lazy to retype; reporting period and relevance are heavily related in this context, as you might have guessed).

They are the main ones, although principles like conservatism and consistency can also apply in given scenarios.

[LFTM]

Explain the role of the general ledger in the recording process.

[Akirus]

Explain the role of the general ledger in the recording process.

The general ledger is used primarily as a mechanism to ensure the fundamental rule of accounting, the accounting equation, is always in equilibrium. In doing so, it reduces the likelihood of error by ensuring that the accounts are always balanced. This in turn facilitates the preparation of the financial reports.

[LFTM]

state the benefit of reporting the financing and investing activities seperately in the classified cash flow statement.

btw thanks for answering all my questions akirus

[Akirus]

No problem, I'm just sitting here procrastinating anyway.

State the benefit of reporting the financing and investing activities seperately in the classified cash flow statement.

-Classification of the cash flow statement into financing and investing activities enhances the understandability of the report; it allows the contents to be more readily accessible to the intended users by sorting the information into relevant categories. This allows assessments to be made as to the weak areas in the cash flow and confirming any past evaluations (i.e. comparison with past budgets), as well as assisting in formulating plans for the future activities of the business (i.e. budgeting).

You could also mention how separation from operating activities allows assessment as to the efficiency of the entity's normal trading activities in regards to the management of funds.

[Albeno69]

i think this is an important question about a business wanting to make a profit but are experiencing sever cash shortages. could some one supply a good answer to this because i can seem to get one that will get me fully marks.

[Akirus]

i think this is an important question about a business wanting to make a profit but are experiencing sever cash shortages. could some one supply a good answer to this because i can seem to get one that will get me fully marks.

What's the question?

[cleo_xo]

How come in some ledger questions, you have a balance and then you have to assume that the balance has been paid during the reporting period. This prob doesn't make sense, it's like question 2.2.4 in NEAP 2010 (accrued wages) and question 1.1.3 in VCAA 2009 (GST Clearing)?

[LFTM]

dont know about the neap, but the vcaa 2009 question 1.1.3 the business paid the ATO, its in the sundries column(CPJ)

[cleo_xo]

dont know about the neap, but the vcaa 2009 question 1.1.3 the business paid the ATO, its in the sundries column(CPJ)

omg what an idiot i am thanks

now to figure out why the neap question is like that lol

[kepal5]

Why is prepaid expenses not an expense but instead recorded in the current assest

[LFTM]

Why is prepaid expenses not an expense but instead recorded in the current assest

If it says PREPAID it should be an asset.

[Buharrr]

um the question about the NEAP 2.2.4 the answer is because it says in the additional information that the balance of the accrued wages account at the start of the reporting period at 1 jan is 700 and then at the end it was 600. We assume he had paid of the 700 simply because wages do not tend to take a very long time to be paid of (the employees want their money) and that it is a small amount means he is able to pay it off. Therefore only 600 remains owing at the end as the 700 has been (assumed) paid off.

i hope that this is the kind of logic one would involve. someone please tell me if i am wrong thanks