Random Accounting Revision Questions

[elaine]

yeah elaine for ur BDA ques when r we doing the adjusting entry for? im thinking though that the monthly depreciation would be $2500 (assuming there is no residual value so (acc dep)/18 months) but the ques is like kinda left hanging...

yeah that's all the info that was given, but the answer was $15000.

"Explain how the use of a Stock Control Account and Stock Cards assist in the managing of stock."
The stock cards show a business the fast and slow moving stock lines, thereby the business can make better decisions whether to discontinue selling a particular stock type. Stock cards would also indicate which stock needs to be reordered due to low stock on hand. Stock control sums up all the current stock on hand and can be used as a double-checking mechanism against the total of the stock cards (is there such thing as a stock schedule? o.0), thus eliminating simple errors and enhance the management of stock.

lol sounds like such a crap answer >.< any other suggestions on how to answer it?

i reckon your answer is pretty good, but i just don't get how the operation of BOTH of them together will assist in managing stock. i guess the only think i can think of is the double-checking mechansim- but how does that assist in the management of stock? it sure beats me lol

[costargh]

I was going to say double checking mechanism but using both of them (assuming comparing the totals) doesnt actually help in the management of stock. It just helps to identify whether have been errors in the recording of transactions in either the stock control ledger or stock card.

Maybe the question just means how both of them individually can help in the management of stock which would produce an answer such as sheepz

[jamesdrv]

I was going to say double checking mechanism but using both of them (assuming comparing the totals) doesnt actually help in the management of stock. It just helps to identify whether have been errors in the recording of transactions in either the stock control ledger or stock card.

That's what is meant by a double-checking mechanism; something that will reveal errors in recording.

The question is basically asking "Why use both ledger accounts AND stock cards when you could just use a ledger account?". Hence, you need to explain why using a stock card is beneficial (sheepz gave the main reasons).

elaine: Losing only 1 mark on each exam would definitely get you a 50. However, I did worse on the second exam (as did a lot of other people, hence the 78~/90 cutoff for an A+) and only got 44. The question I lost a mark on was the one about why you should classify elements in the balance sheet. I said relevance, as the text book we used last year specifically gave relevance as the reason (could I sue for misleading conduct? ).

I think you guys are going to do a lot better than we did last year.

[costargh]

Ok thanks James.

Lol Mmmm HOPEFULLY I can get an A+. This subject has to be my best =( or else ENTER = (N)

I have a feeling at least 2 ACC VCENotes membeers will do very well (not me)

[costargh]

I think this may be an error in the question.

At 30 June 2005, Veronica provides you with the following details of Non Current Assets

Fixtures and Fittings                   18 000
Acc. Dep of Fixtures and Fittings      500
....


Fixtures and fittings were purchases on 31 March 2004 for 12 000 (WTF???). Useful life of 10 years and residual value of 2000.

Required
Calculate depreciation expense for Fixtures and Fittings puirchasedd on 31 March 2004 for the year ended 30 June 2005.


... Soo they bought the NCA for 12000 and they say it was bought for 18000 HC.
This obviously affects the ability to work out Dep expense cause HC is differnt

[costargh]

Another question:

If the owner has a Non Current Asset (eg. Computer Equipment)  which he bought for his own personal use in 2005 for $5000 and then in 2007 he contributes it to the business (at an agreed value of $3000 decided by the accountant and owner) why do we not indicate the $5000 anywhere in the records or reports?

What verifies the accuracy of that $3000 estimate? Does this not undermine the QC of Reliability?

[sheepz]

i think the depreciation expense should be $1250 because im assuming that this amount is based on the $12000 bought on 31 March 2004. I think the $18000 may be a result of fixture and fittings bought earlier (before 31 March 04) and that we don't have to this into account. Don't know if it's right but that is what i would do...

The $3000 would be the value/amount of equipment that is contributed to the business so this is the mount reported. Yea it does undermine reliability to a certain extent, but relevance overrides it because it is worth $3000 when the business acquired the equipment. The $2000 is like the amount that has already been depreciated/consumed when the equipment was with the business. that is how i think of it...

im sure u'll do well costa! uve done like so much revision... me on the other hand... i havent started doing any prac exms yet (yes, i noe im screwed)

[costargh]

I looked at the original of where the question came from and the 18000 is just a misprint. It should be 12000 and you forgot HC- RV/ UL (useful life) you only did 12000 /10 not 12000 - 2000/10 which yields 1000 which is the answer.

And yeh I know about what ur sayin.... but i just find it weird that the actual price that the item was bought at is not even reported in the business

[ben4386]

Compak 2008 Question 2.5.3

Explain how the profit and loss statement prepared in question 2.5.2 (this was a standard profit and loss statement) could be changed to enable the qualitative characteristic of comparability to be applied.


Answer: It would require the addition of last reporting periods (six months) figures to provide a comparison. This requires a consistent application of principles.

WTF

there is no last reporting periods profit and loss statement given in the question, so you can't compare the two and see if the headings are different etc..

The question and answer seem to be on completely different planets, the question is asking HOW it could be changed, the answer is saying you need the other profit loss statement (No shit).

does this seem stupid to anyone else?

[sheepz]

6hh i just assumed there isn't a residual value since it wasn't mentioned... i get what u're saying as well but there isn't anywhere you can put the $5000 original value, really...

and ben, that ques itself sounds a bit dodgy i reckon... its like so weird o.0 not to mention the answer

[costargh]

Yeh. Safe to say you wouldn't get a question like that on the exam.

I see what you mean. Do you have any exams I could have Ben (A) lol

I find more mistakes in exams (mistakes the companys make) than I get wrong. lol how stupid

[jamesdrv]

It just means having a profit and loss with columns for each period. Something like this: http://www.techcrunch.com/wp-content/rackspace-income-statement-full.png

Stupid question anyway.

[costargh]

6hh i just assumed there isn't a residual value since it wasn't mentioned...

Fixtures and fittings were purchases on 31 March 2004 for 12 000 (WTF???). Useful life of 10 years and residual value of 2000.

[sheepz]

ohh oops sorry >.<

i did (12000-2000)/10 = 1000 then 1000 * (15/12 months) as from 31 march 04 -> 30 june 05 there was 15 months. obviously my brain isnt working that well right now... accounting overload!

[costargh]

Cambridge book says when doing commencing entries put bank in the General Journal while all other sources including questions with worked sollutions say when doing commencing entries, any cash capital contributed by the owner to the business should be put in the cash receipts journal

WTF... now im looking at a 2005 question which puts commencing entries in the cash receipts journal (for contributions of cash) while the 2007 first question has bank in the general journal for commencing entries (first question) OMG
What the go with that!