vcaa sample questions 2012

[Nima2703]

If you're provided with the Capital figure, never change it

[Nima2703]

The other accounting teacher in my school has been teaching the subject for 30 years and he said that net profit is 15400 because you deduct 1000 because advertising is debited due to the correction thus reducing net profit as it is an expense and there is a stock loss of 850 therefore reducing net profit by a total of $1850. As it was $17250, 17250-1850=$15400.

[Nima2703]

My teacher wrote GST Clearing in the solutions... Shouldn't GST be included because she is contributing assets which attracted GST therefore the GST that came with the asset should be contributed to the business also?

[abcdqdxD]

If you're provided with the Capital figure, never change it

Not true. You need to look if Revenue and Expense accounts are closed or not. If they are closed, the Capital figure will be the finalfigure, and you will have to work backwards when doing the ledger.

If Revenue and Expense accounts are not closed - which is most of the time - then you take the Capital figure in the Trial Balance and put it as your opening balance.

[abcdqdxD]

My teacher wrote GST Clearing in the solutions... Shouldn't GST be included because she is contributing assets which attracted GST therefore the GST that came with the asset should be contributed to the business also?

The GST is incurred by the owner prior, not by the firm. Keep in mind the entity principle.
Hence, there is no GST Clearing

[Nima2703]

If you're provided with the Capital figure, never change it

Not true. You need to look if Revenue and Expense accounts are closed or not. If they are closed, the Capital figure will be the finalfigure, and you will have to work backwards when doing the ledger.

If Revenue and Expense accounts are not closed - which is most of the time - then you take the Capital figure in the Trial Balance and put it as your opening balance.

Oh okay yes that's true now it makes sense :p but net profit is changed because its the end of a reporting period?

[abcdqdxD]

If a Net Profit figure is given, you will have to look whether any other adjustments have to be made (additional info). Very unusual to be given a net profit figure. If they do, chances are they want you to do something with that figure - no point in them giving you the correct answer.

[Nima2703]

Okay thanks, good luck with the exam

[Nima2703]

My teacher wrote GST Clearing in the solutions... Shouldn't GST be included because she is contributing assets which attracted GST therefore the GST that came with the asset should be contributed to the business also?

The GST is incurred by the owner prior, not by the firm. Keep in mind the entity principle.
Hence, there is no GST Clearing

Have you got the sample vcaa? The business is an existing business and it is commencing double entry accounting, therefore the GST is included. Entity principles states that, for example, if an owner used the business' cash to buy a non-current asset for himself, it would be recorded as a drawing as it is personal use, it does not state that an owner's transactions should be taken away from the business completely, the display fittings and rent is for the business, which already exists, and it attracted GST

[abcdqdxD]

Rule of thumb: If there is no cheque number, then there can be no GST because it was not incurred by the firm but by the owner

[Nima2703]

But there was no cheque number on any transaction..she is just commencing a double-entry system

[abcdqdxD]

But there was no cheque number on any transaction..she is just commencing a double-entry system

Exactly, so there is no GST

[Nima2703]

In the cambridge textbook in the chapter of general journal a double entry is commenced and gst is recorded too

[abcdqdxD]

In the cambridge textbook in the chapter of general journal a double entry is commenced and gst is recorded too

Which page?

[victoria123]

Best answer to get full marks is:

The inclusion of this information will reduce Net Profit by $1000 in the Income Statement as the operating expenses are currently understated and this will impact on the accurate calculation of profit.  In addition, in the Balance Sheet,  the Current Assets of Debtors Control will decrease by $1100 and GST Clearing will decrease by $100.  Owner’s Equity will decrease by $1 000.
Hope it helps