VCE Accounting Question Thread!

[ashs_vb]

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?

[Kuroyuki]

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!!
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?

[dreambig]

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?

[sam.utute]

I think you deduct the whole amount because its discount revenue so its not cash hence shouldnt be in the CFS?

Correct. That's how I would approach it.

[Damoz.G]

Yup, gets recorded in the Income Statement. Nothing to do with the CFS.

[Kuroyuki]

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?

[Damoz.G]

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.

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!


EDIT: Sorry, I made a typo with the Total for the Sundries column. Should be $400, not $900. Was in a rush when I made it.

[Kuroyuki]

Correct me if I'm wrong, but I've attached an example to make sure I understand what you mean.

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?

[Damoz.G]

thanks
So should payments to creditors in the CFS be 360 or 340?

No worries.

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

[Kuroyuki]

No worries.

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

[Damoz.G]

ok sweet
And shouldn't it be "payment to sundry creditor...." ?
Or it doesn't matter

Ummm....you wouldn't have it as that title. =/

The Cambridge Textbook says to just have "Sundry Creditor - Name" under Cash Flows from Investing Activities, and then either under "Cash Outflows" or in brackets have the amount paid, depending on what you've been told to use.

[abcdqdxD]

I think you can also write the name of the asset purchased

[Kuroyuki]

Yeah I say cash purchase of [non current asset]
And why wouldn't it be payment to sundry creditor [name]
It's like payments to creditors instead of writing creditors control
I doubt it would make a difference tho.

[sin0001]

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)
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

[Kuroyuki]

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)
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

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.