Stock cards

[clinton_09]

could someone help me with this question. Steve owns a business called fuel stop, a petrol station. Steve filled up the family car with 40 litres of unleaded petrol  and filled the business car with 60 litres of unleaded petrol. Now would i only record the 60 litres of filling up the business car beacuse if i did both it would go against the accounting entity where the owners transactions is separate to the business. any help would be greatly appreciated. oh and the stockcard is for unleaded petrol so i cannot ignore both transactions. Thanks

[costargh]

The first transaction; "Steve filled up the family car with 40 litres" is irrelevant. Like you said, the Entity principle states that the business and the owner are separate legal and business entities and thus their accounting records and reports must be kept on this basis.

Only the transaction relating to the business would be recorded.

Edit
Sorry I just re-read the question.

The first transaction is a drawing by the owner so it would go in the OUT column. But it does not affect Stock gains or Losses.
What is the question actually asking you to do? If it refers to recording the transactions, both go in the Stock Card for unleaded fuel because both change the qty of stock available for re-sale. Both would be verifiable by the source document of a memo.
The fuel used by the business is an expense while the fuel for the family car is a drawing.

[clinton_09]

thanks heaps costargh

[clinton_09]

well the question asks me to record the transaction in to a stockcard. i think your edited version is correct because as you said it is a drawing so it would go in the OUT column. hmm its a tricky question

[costargh]

Well then basically,
40 litres of unleaded petrol OUT using FIFO
then 60 litres OUT using FIFO.

I just misread the question. It's not really that hard when you think of it in the sense of "Can I still sell the product". Any transaction that reduces the stock available for re-sale must be recorded in the OUT column but if you were trying to calculate Gross Profit you would have to remember not to include these transactions as part of the calculation because the first is a drawings and doesn't have anything to do with the margin on each sale and the 2nd transaction is IMO an expense incurred by the business which would be recorded in Other expenses.

Hope that clears up any ambiguities.

[clinton_09]

it certainly does, much appreciation

[costargh]

Can I ask, is your class up to Stock cards still or are you revising?

[clinton_09]

our class is up to stock cards. are you further ahead or behind? We use the Neville Box text book if you were wondering

[costargh]

Oh ok. We use the Cambridge text and their are 12 chapters for Unit 3 and we are up to 11.2 at the moment. That chapter is about depreciation of assets. We just finished chapter 10 about Balance day adjustments. We did Stock cards about a month ago.

[clinton_09]

it seems you are well ahead of my class, they are up to to chapter 9 out of 14 i am up to chapter 11 out of 14. I think im gonna have to work ahead even more. By the time my class finish, the exam will be 1 week away maybe even less

[costargh]

Geez. Well, I'd advise that so that you have heaps of time to revise.
We should be finished the course in the next 2-3 weeks. I'd say the 20th of May at the latest. Which would give us about 3 weeks revision.
I hope it all goes well =)
I'm off for the night cya.

[clinton_09]

I was wondering costargh or anyone else reading this thread are you allowed to write in pencil on the exam, because i find i am able to write quicker. Just not sure if your allowed though

[costargh]

Exert from 2007 Exam 1-Accounting

• Students are permitted to bring into the examination room: pens, pencils, highlighters, erasers,
sharpeners, rulers and one scientific calculator.
• Students are NOT permitted to bring into the examination room: blank sheets of paper and/or white
out liquid/tape.