VCE Stuff > VCE Accounting
Random Accounting Revision Questions
costargh:
--- Quote from: jamesdrv on May 22, 2008, 10:00:19 pm ---Why is there a conflict between different qualitative characteristics when recognizing depreciation?
--- End quote ---
There is a conflict between reliability and relevance when depreciating non current assets. This is because the historical cost is the reliable value which is verifiable by a source document. This ensures that the value reported in the balance sheet is free from bias. However, this value may not be the best value to be reported because its value may be outdated. This value could lead to bad decision making based on an overstated non current asset value. That is why depreciation occurs. To include the "carrying value" in the balance sheet ensures that the most 'relevant' value is reported in the balance sheet, thus increasing the chances of making the best decision for the business.
elaine:
also, depreciating assets relies on estimates that are not supported by source document evidence.
costargh:
--- Quote from: jamesdrv on May 22, 2008, 10:00:19 pm ---Business Pty Ltd want to buy a vehicle valued at $50,000 (GST Exclusive). They pay a deposit of 10%, and pay the rest the following week. How would this appear in the cash flow statement (assume all transactions are for cash)?
--- End quote ---
Um wow. Lol never had a question like this.... but I would assume that the entire 50 000 would be reported as a Financing activity cash outflow because its the purchase of a non-current asset.
Although it could be a trick question and the 10 000 could be reported as an operating activity cash outflow and the 40000 as finacning.... hmm
costargh:
--- Quote from: jamesdrv on May 22, 2008, 10:00:19 pm ---Business Pty Ltd contracts with another business to supply 500 chairs for $100 each at some point before the end of the month. How would this affect the accounting equation?
--- End quote ---
No effect?
... wait. Are we assuming that the transaction has gone ahead or not? Or if they jut had a contract and it was expected that the transaction would occur.
elaine:
--- Quote from: costargh on May 22, 2008, 10:14:56 pm ---
--- Quote from: jamesdrv on May 22, 2008, 10:00:19 pm ---Business Pty Ltd want to buy a vehicle valued at $50,000 (GST Exclusive). They pay a deposit of 10%, and pay the rest the following week. How would this appear in the cash flow statement (assume all transactions are for cash)?
--- End quote ---
Um wow. Lol never had a question like this.... but I would assume that the entire 50 000 would be reported as a Financing activity cash outflow because its the purchase of a non-current asset.
Although it could be a trick question and the 10 000 could be reported as an operating activity cash outflow and the 40000 as finacning.... hmm
--- End quote ---
yeah i took one look at that and i thought- woah. i am dead. for the exam anyway lol.
but it's good to get those kind of questions, you can never get enough of those tricky ones.
where is it from?
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