VCE Accounting Question Thread!

[SDPHD]

Here are the pictures for my question and the solution for it.

Question data -



Solution -



How come the 'Interest on government bonds' is considered a 'Reciept from customers'?

Doesn't make sense to me. 

[123456k]

Operating activities can be split up into inflows and outflows. In this case receipt from customers - inflow and payments to suppliers and employees - outflow. You should note that these headings are not necessary when preparing cash flows statements in exams. The business has invested a certain amount to a government thing. The important thing is that "interest of government bonds" should be recognised as interest received by the business. Clearly this is an inflow and not an outflow. Usually when the business receives a amount of cash from someone, it is recorded in the cash sales journal.

That's the best i can do :/. Hope this helps..  

[SDPHD]

Thanks for taking the time to reply.

I knew that it was an inflow of cash but personally, I didn't think it would fall under the category of 'Reciepts from customers'. I don't know where I would have put it...

[nacho]

Does anyone have like a list of model answers to theory questions with the IDL approach?
I seem to be struggling with the Link component.

[soopertaco]

@samutute the correct definition of the cost of an asset? what do you mean?

and another question
what is advantage and disadvantage of prepaid rent?

[soopertaco]

I was going to make mine sometime in the next week or even this weekend
but really i find that with the link you just really have go above and beyond when explaining the link

[sam.utute]

Just make sure you use this definition:

"All costs incurred in order to bring the asset into a location and condition ready for use, that will provide a benefit for the life of the asset."

Adv. of Prepaid Rent:
Guaranteed/Assurance that you will have use of the premises for a fixed period of time into the future.
Disadv. of Prepaid Rent:
Loss of cash that could have been used for other purposes, such as the purchase of stock or repayment of liabilities.

I'll be spending the first 30 or so minutes going through how to link theory questions

[soopertaco]

For that question I also had another advantage which is that the business can utilise its cash resources when they are readily accessible so management will not have to worry about providing an outflow of cash in the coming periods.

now that i think about it, my answer isn't as strong but could you give your criticisms

and btw sam is accounting on saturday booked out? i'm thinking of going but i'm kind of reluctant that like other lectures it'll spend a majority of the time addressing things that we already know and not the important and more challenging things. is this not the case with connect?

[sam.utute]

For that question I also had another advantage which is that the business can utilise its cash resources when they are readily accessible so management will not have to worry about providing an outflow of cash in the coming periods.

You should provide some brief examples. The main advantage that you should highlight is the fact that cash is available for alternate uses. The last bit about management not having to provide outflow is a little off topic (Unit 4, Chapter 17 of your text: Budgeting).

i'm thinking of going but i'm kind of reluctant that like other lectures it'll spend a majority of the time addressing things that we already know and not the important and more challenging thing

This is the reason we started. Simply put, I wasted too much time in lectures that were useless last year. We want to make sure that you guys get the most out of the limited amount of time. You've been learning the course for the last 6 months. You don't need me to explain it. However, I can hopefully provide you with tips on scoring well in the exam.

I am willing to refund anyone who feels that they didn't get their money's worth out of the lecture.

[nacho]

someone correct this for me please



Question : Referring to one Accounting Principle, explain why the office furniture should be depreciated

Principle: Reporting Period.
Explanation: The asset has a finite life and in each reporting period it is partially consumed. As a result, the office furniture must be depreciated, so that this consumption is reflected in the reports and all expenses incurred in the reporting period are reported, and profit can be accurately calculated.

[nacho]

also,
"If non-current assets are depreciated to reflect all expenses incurred in a reporting period, referring to a principle, explain why current assets are not depreciated."

and
Same question as above, but with a qualitative characteristic.

[luffy]

also,
"If non-current assets are depreciated to reflect all expenses incurred in a reporting period, referring to a principle, explain why current assets are not depreciated."

and
Same question as above, but with a qualitative characteristic.

I would say the accounting principle would be Reporting Period:

The ability of a current asset to assist the business in earning revenue will not decrease in the reporting period. Hence, current assets are not consumed over time, but rather by a transaction or consumption. By depreciating current assets, reports would show expenses, which have not been incurred in the current reporting period. Hence, this would be a direct breach of the Reporting Period principle.

Also, just to explain my point more effectively, I would use an example, such as "stock control."

I hope my answer is sufficient  

[nacho]

In regards to accounting reports.
are they pedantic on the whole
"Plus, less, ( ... )" stuff?
I've noticed something which i think is incorrect in the assessment report.
They've put:
"less drawings" and then the figure for drawings is enclosed in brackets.
does this not indicate a 'double negative' and technically give the implication that the drawings figure is being added?

Thanks.

Edit:
- why do we have the profit and loss statement
- the balance sheet
- why do we put cost of sales in the special journals, despite the fact that it is a non-cash transaction 
- how does the cash flow statement assist in decision making (i hate the book answer for this.. can someoen provide something different, yet acceptable by VCAA?)

thanks again

[tazza]

Might seem like a silly question but is the historical cost of a NCA defined as the PURCHASE price + any additional one off costs, or is it just the purchase price? My teacher has confused me a little bit on this.

[soopertaco]

The historical cost of an asset should include its purchase price plus any additional costs incurred in getting the asset into a location and condition ready to earn revenue for the business. my wording could be better there but that's basically the cost you calculate depreciation from.

additional costs include: modifications, delivery of the vehicle to the business, extra features.
what i normally do is think to myself; is this a once off payment that will contribute to the benefit of the business over the asset's useful life.

common items not included in the cost of an asset: insurance, gst, warranty (basically things that will expire)