cash flow statement starting balance answer

[sdhains]

i realise the exam was a while ago but i spoke to my accounting teacher about this question. he went and asked an economics teacher at my school who is on the VCAA Accounting exam board. This teacher said there had been much discussion about the question already and that the VCAA will accept a number of answers. The starting balance either way is $20,000 and both $10,000 capital contributed and $30,000 capital injected in the Financial Activites section will most likely be accepted. This is because it was unclear whether the 30,000 in the cash reciepts journal included the starting capital.

The starting balance couldn't technically be 0, as this would breach the entity principle, as registration fees (and other business commencing fees) are business expenses. I gather that the injection of capital essentially commences the business and thus is the opening balance.

This is what i was told from my accounting teacher after he spoke to a VCAA Accounting exam board member.

I hope this clears up any questions, however i wouldn't treat this information as gospel

-S

[rhjc.1991]

The starting balance couldn't technically be 0, as this would breach the entity principle, as registration fees (and other business commencing fees) are business expenses. I gather that the injection of capital essentially commences the business and thus is the opening balance.

Not true in VCE. At VCE levels, this scenario has been covered. By accepting $20000 opening balance, VCAA is breaching the Reliability QC since the totals of the CRJ does not match the figure in report. Remember that you have already posted the cash injection in the CRJ, hence reducing your figure later would be wrong. But well, it's VCAA, they don't actually know what they are doing.

[sdhains]

The starting balance couldn't technically be 0, as this would breach the entity principle, as registration fees (and other business commencing fees) are business expenses. I gather that the injection of capital essentially commences the business and thus is the opening balance.

Not true in VCE. At VCE levels, this scenario has been covered. By accepting $20000 opening balance, VCAA is breaching the Reliability QC since the totals of the CRJ does not match the figure in report. Remember that you have already posted the cash injection in the CRJ, hence reducing your figure later would be wrong. But well, it's VCAA, they don't actually know what they are doing.

yeah its just what my accounting teacher said. who knows, i didnt speak directly with his VCAA friend so i guess we won't know for sure until August

[phanphy]

The balance was 0.