Theory Questions

[TyErd]

I was wondering if you could give the answer, TyErd... to the second question:

2. Given that discount and GST are both applied at a rate of 10%, explain why the dollar amount of the discount is greater than the dollar amount of GST.

I don't know the answer and I didn't really get Chavi's explanation either. =S

Thanks.

oh yeah sorry guys there was extre info as Chavi said that I forgot to add for question 2.

On 9 August 2010, Suave Suits paid Woollen Mills Australia $3 168, receiving a $352
discount for early payment. At the end of August 2010, four of the suits purchased on 3 August
2010 remained on hand.

the answer to the question is:
gst is levied only on the selling price whereas the discount is levied on the entire amount owing.

[TyErd]

I'll add some questions:

3. Distinguish between Accrued Revenue and Debtors.

Also EPL.11.4ever what is the answer to this question?

[eeps]

My answer was:

Accrued Revenue is revenue earning from the previous reporting period (i.e. from an investment/term deposit) which provides economic benefit to the business. With Accrued Revenue, the amount specified is the amount that must be paid to the business and there is no chance of bad debt occurring.

Whereas, Debtors is money owing from the sale of stock/assets of which must be paid - though the business may not always receive the full amount due to discounts being offered. The two are very similar in terms of providing economic benefit and what not.

[eeps]

I'll add some more:

1. Explain why Sales Returns are shown separately in the Profit and Loss Statement.

2. Explain why valuing stock at its selling price would breach conservatism.

3. Explain the term 'accrual accounting'.

4. State two ways to improve estimated operating inflows and two ways to reduce operating outflows.

I'd think these are the more easy questions. =P

[eeps]

My answers (if anyone wants them!) were:

1. Sales Returns are shown separately because they provide valuable information regarding the business relationship with customers and issues regarding the quality of the products being sold. This will assist the business to make decisions that will improve performance.

2. The selling price valuation would recognise a gain before it is realised/certain. This would lead to Assets and Owner's Equity being overstated. This would breach conservatism because accountants will recognise probable losses but will not recognise probable gains before they are realised/certain.

3. Accrual Accounting is where revenue earned are matched against expenses incurred in a current reporting period. This will be necessary for Balance Day Adjustments because many transactions will be incomplete at balance date.

4. Two ways to improve estimated operating inflows are: increase advertising to attract cash sales and offer greater discounts to encourage faster payments from debtors. Two ways to reduce operating outflows: delay payments to suppliers and reduce + control operating expenses.

[Albeno69]

epl where do you get these questions from

[eeps]

I'd be lieing if I said, myself. =P

Basically all the theory questions (that I've posted) are from the TSFX booklet. I went to their lectures and they gave me 3 booklets - one of them was dedicated to theory questions in relation to Unit 4.

[Albeno69]

I'd be lieing if I said, myself. =P

Basically all the theory questions (that I've posted) are from the TSFX booklet. I went to their lectures and they gave me 3 booklets - one of them was dedicated to theory questions in relation to Unit 4.

yea they seem good just too much work for accounting, are there many questions relating purely to characteristics and principals? if so can u post em please.

[eeps]

Yeah sure.

Here are some more:

1. With reference to two Accounting Principles explain why ratio comparisons with industry averages can be misleading.

2. Referring to one accounting principle, explain why it is necessary to prepare a schedule of receipts from debtors whilst preparing a budgeted cash flow statement.

3. With reference to one accounting principle, explain the valuation of NCAs at the time of purchase.

4. Using your definition of revenues explain why prepaid revenue becomes a revenue when the goods are delivered.

5. Explain using a Qualitative Characteristic, why the loss/profit on disposal of asset is recorded in the P/L Statement.

6. Identify and explain the Qualitative Characteristic that is achieved from making Balance Day Adjustments.

[Albeno69]

Yeah sure.

Here are some more:

1. With reference to two Accounting Principles explain why ratio comparisons with industry averages can be misleading.

2. Referring to one accounting principle, explain why it is necessary to prepare a schedule of receipts from debtors whilst preparing a budgeted cash flow statement.

3. With reference to one accounting principle, explain the valuation of NCAs at the time of purchase.

4. Using your definition of revenues explain why prepaid revenue becomes a revenue when the goods are delivered.

5. Explain using a Qualitative Characteristic, why the loss/profit on disposal of asset is recorded in the P/L Statement.

6. Identify and explain the Qualitative Characteristic that is achieved from making Balance Day Adjustments.

thanks i cant every get them all correct so all these are excellent practice

[eeps]

Since I have nothing better to do (besides studying for Accounting! - which says a lot), I decided to type up all the responses and questions which fellow VN users posted - to make it easier so that people have one document with just THEORY questions to refer to. =)

I haven't typed out every question, since I'm lazy =P ... LOL this thread is rather slow! But if people are willing to post up more questions and stuff, then I'll add them to the doc progressively.

NOTE: Excuse any grammatical/spelling errors in the document! =P

[mojomojo]

Since I have nothing better to do (besides studying for Accounting! - which says a lot), I decided to type up all the responses and questions which fellow VN users posted - to make it easier so that people have one document with just THEORY questions to refer to. =)

I haven't typed out every question, since I'm lazy =P ... LOL this thread is rather slow! But if people are willing to post up more questions and stuff, then I'll add them to the doc progressively.

NOTE: Excuse any grammatical/spelling errors in the document! =P

wow thanks. =]
Hope you get the study score that you want.

[eeps]

Here is another one that I typed up. I thought I'd give back to VN, since this website has done a lot for me - many VN users have helped me with countless queries and given detailed explanations etc (the list goes on!).

This second doc is pretty much straight-forward and simple. I'll add more... if I can be bothered. =P

LOL I'll try and get something up before Thursday. 5 days to go!

NOTE: Excuse any grammatical/spelling errors in the document (again)! =P

[Albeno69]

Since I have nothing better to do (besides studying for Accounting! - which says a lot), I decided to type up all the responses and questions which fellow VN users posted - to make it easier so that people have one document with just THEORY questions to refer to. =)

I haven't typed out every question, since I'm lazy =P ... LOL this thread is rather slow! But if people are willing to post up more questions and stuff, then I'll add them to the doc progressively.

NOTE: Excuse any grammatical/spelling errors in the document! =P

these are brilliant but just for other users who will be basing revision of these i found a few errors.
Q8 - Your answer is wrong. They are debtors if there is an invoice AND it is for stock. Otherwise it is accrued revenue.
Q16 - This answer is wrong (its also the same as 15). Advertising will not increase the mark-up. It will simply increase the amount you sell and increase your COS. Therefore, while you may now have more customers and a higher Gross Profit, your mark-up will stay the same, thus keeping the GPR at the same rate.
thou taking nothing away these are a brilliant contribution.

[eeps]

Thanks for pointing that out! =P (Now, I can blame TSFX... LOL.)

I heed your feedback - though I probably won't be re-typing it. I'll have a disclaimer:

PLEASE ENSURE THAT WHAT I HAVE WRITTEN COINCIDES WITH WHAT YOU'VE LEARNT. IF MY NOTES DON'T MATCH UP TO WHAT YOU'VE LEARNT... you're probably right - since I rushed a few points here and there (lame excuse, eh?) =)

Please ensure you read Albeno69's corrected points regarding the first doc.