VCE Accounting Question Thread!

[Lucho23]

Also, If one person is doing the recording errors can be carried over from Subsidiary ledgers to Control Accounts

[massachusetts8]

Is it possible that the discuss question would be about disadvantages and advantages of computerised accounting pacakges (e.g. MYOB and Quickbooks)? 

[Lucho23]

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!

[Damoz.G]

Is it possible that the discuss question would be about disadvantages and advantages of computerised accounting pacakges (e.g. MYOB and Quickbooks)? 

No, as far as I can remember, its not on the SD.

BUT, if it does come up...
Advantage - Automatically done so no errors are made. Saves time as well.
Disadvantage - Costly.

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!

Great list.

Could also discuss Non-Financial Information. e.g. Customer feedback, employee satisfaction, etc.

[Mafioso]

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?

[Damoz.G]

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?

I got confused by it as well.

This is what Kuchiki posted for me when I asked a few of weeks ago:

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.

[Lucho23]

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?

So its only the Expense that you're calculating so we base it off the expense in the Income Statement only (as that is what has been paid and accrued)

$95000*1.050=$99750 + 65000= $164750

The accrued wages as at 30 June 2013 of $3500 is included in this

[Mafioso]

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?

[Lucho23]

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.

[BoredSatan]

ok i lied the last time. im back now

[Lucho23]

Guys, I just had a mental blank. If you hold less stock on hand, you improve Return on Assets right?

If you hold less stock on hand, you don't improve stock turnover....or do you?

[Damoz.G]

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.

Good explanation.

Mafioso, just gotta think that the business had incurred the Wages, but just didn't pay for it yet. So as Kuchiki explained, they just paid less during the Reporting Period.

[Damoz.G]

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?

What your doing wrong is adding the Accrued Wages. You don't need to do this. The business simply paid less Wages Expense during the Reporting Period, which is why the Accrued Wages Expense increased by $1500 by the end of the Budgeted period.

[Mafioso]

Sweeeet. Thanks guys!

[BoredSatan]

Guys, I just had a mental blank. If you hold less stock on hand, you improve Return on Assets right?

If you hold less stock on hand, you don't improve stock turnover....or do you?

Not sure about the ROA part

but if you have less stock on hand you definately improve stock turnover because it is likely that you won't be holding stock for a long time until it is sold (like you would if you bought in bulk)

an easy way to understand this is to think about it this way:
Say you sell 1 item per day.

Business 1 purchases 100 items and it takes them 100 days to sell them all which means the stock turnover is ~50 days
Business 2 purchases 10 items and it takes them 10 days to sell them all which means the stock turnover is ~5 days

I think this is the correct logic :/