VCE Accounting Question Thread!

[eeps]

Also, in the general journal, is it acceptable to abbreviate "profit and loss summary account" to "P&L Summary account" ?
The textbook does this, but my teacher warned me not to abbreviate - ever.

Write it out in full as what your teacher said. In the chance that there isn't enough room to write the whole thing out, then yes, you can abbreviate. In most cases, VCAA and the commercial companies will give enough room to write "Profit and Loss Summary account" in the General Journal.

[nacho]

1. Explain why you are unlikely to find "Commission revenue" under the "Other Revenue" heading in the Profit and Loss statement for a business.

[luffy]

1. Explain why you are unlikely to find "Commission revenue" under the "Other Revenue" heading in the Profit and Loss statement for a business.

Where did you get that question from? It doesn't make sense to me lol. Commission Revenue is meant to go under the Other Revenue column....

[nacho]

1. Explain why you are unlikely to find "Commission revenue" under the "Other Revenue" heading in the Profit and Loss statement for a business.

Where did you get that question from? It doesn't make sense to me lol. Commission Revenue is meant to go under the Other Revenue column....

Actually I made it up. The question just says "Unlikely" not "why it doesn't..." I didn't think it was likely that one would ever see "commission revenue". My own answer would be that the business itself does not earn commission (unless working under another entity, in that case, i'm not sure what this type of business would be called), rather its' employees do.

Furthermore, would commission owed to employees be listed under wages, or would it be a seperate expense? Seeing that commission is only incurred upon sales, whereas employees need not necessarily have to sell something to be paid. I'm probably completely forgetting something or steering off-track though lol..

I didn't want to  state that i made this question up so as to not introduce bias into your thinking and to maintain reliability in your answer which would be a direct result of you wondering as to why "commision revenue" is rarely seen in a business' profit and loss statement, rather than holding the knowledge that by definition "Commission revenue" will be listed under "Other revenue"

Don't lose me here, but i understand there if there is a category for which a business working under another business is listed, then one cannot say that "these businesses rarely exist and thus it is rare to see "Commission revenue". Is there honestly another way in which commission revenue can be earned, have i completely missed something? My own answer is based on the basis that business generally don't work under other businesses..

Also, in light of the 2007 VCAA Question you asked,
i was wondering, if a question ever asked
2. "Explain why that although the profit and loss summary account shows net profit earned, it is still essential to have a profit and loss statement."
I know that the profit and loss statement allows us to see gross profit earned and thus assess the adequacy of our mark-up applied, but, techincally, using the same reasoning as I did before, you don't  need the profit and loss statement to evaluate the gross profit, or the other goodies, such as how we earned our profit
you can do it just through ledgers, except it would be harder.

So therefore this could also relate to understandability?
sorry if my logic doesn't make sense, i've been doing too much accounting today and slowly becoming a freak.

[luffy]

1. Explain why you are unlikely to find "Commission revenue" under the "Other Revenue" heading in the Profit and Loss statement for a business.

Where did you get that question from? It doesn't make sense to me lol. Commission Revenue is meant to go under the Other Revenue column....

Actually I made it up. The question just says "Unlikely" not "why it doesn't..." I didn't think it was likely that one would ever see "commission revenue". My own answer would be that the business itself does not earn commission (unless working under another entity, in that case, i'm not sure what this type of business would be called), rather its' employees do.

Furthermore, would commission owed to employees be listed under wages, or would it be a seperate expense? Seeing that commission is only incurred upon sales, whereas employees need not necessarily have to sell something to be paid. I'm probably completely forgetting something or steering off-track though lol..

I didn't want to  state that i made this question up so as to not introduce bias into your thinking and to maintain reliability in your answer which would be a direct result of you wondering as to why "commision revenue" is rarely seen in a business' profit and loss statement, rather than holding the knowledge that by definition "Commission revenue" will be listed under "Other revenue"

Don't lose me here, but i understand there if there is a category for which a business working under another business is listed, then one cannot say that "these businesses rarely exist and thus it is rare to see "Commission revenue". Is there honestly another way in which commission revenue can be earned, have i completely missed something? My own answer is based on the basis that business generally don't work under other businesses..

Also, in light of the 2007 VCAA Question you asked,
i was wondering, if a question ever asked
2. "Explain why that although the profit and loss summary account shows net profit earned, it is still essential to have a profit and loss statement."
I know that the profit and loss statement allows us to see gross profit earned and thus assess the adequacy of our mark-up applied, but, techincally, using the same reasoning as I did before, you don't  need the profit and loss statement to evaluate the gross profit, or the other goodies, such as how we earned our profit
you can do it just through ledgers, except it would be harder.

So therefore this could also relate to understandability?
sorry if my logic doesn't make sense, i've been doing too much accounting today and slowly becoming a freak.

1. When a business earns commission, employees only earn part of that commission. Yes, the employees earn the commission, but they are working under the business, the entity of which will receive the majority of the money. This is evident in real estate agencies and investment areas. Therefore, for these companies, of course the business would have commission. Also, note that this is not a small majority of businesses. They are called service businesses (to my knowledge). Not all business are retail stores! However, nice to know you're thinking logically.

2. The whole concept of Understandability seems vague to me, for which I clearly need to do more research. However, while I can see your point towards this, Relevance could also be argued. In fact, now that I think about it, Relevance covers the whole purpose of accounting itself!! and therefore, could be applied to almost any qualitative characteristic question. However, as the other three characteristics are technically just more "specific" forms of Relevance, they would be most suitable in some situations. But for your question, I would prefer not to give my opinion because I would likely be incorrect.

[nacho]

Thanks.
I know the answer to the following question, but i thought it was a pretty good one, so i wanted to share it:
1. Referring to one accounting principle, explain why the ledger must be closed.

[Fyrefly]

Also, in the general journal, is it acceptable to abbreviate "profit and loss summary account" to "P&L Summary account" ?
The textbook does this, but my teacher warned me not to abbreviate - ever.

Write it out in full as what your teacher said. In the chance that there isn't enough room to write the whole thing out, then yes, you can abbreviate. In most cases, VCAA and the commercial companies will give enough room to write "Profit and Loss Summary account" in the General Journal.

Anal VCE is anal.

[nacho]

Hey,
I've a question in regards to balancing in the general ledger and dates.

Given the following information:
On 1 March 2010 nacho paid $6000 (plus $600 GST) to cover the next six months' rent (ch.01). Nacho closes her ledger accounts and prepares her financial reports on 30 June each year.

So if, after recording the balance day adjustment in the general journal, i go onto balance my Prepaid rent account, would it go like this:
(all my figures are correct btw, just concerned with the date for the final step in balancing

Date | Cross-reference | Amount $ || Date      | Cross-reference | Amount $|
Mar.1    Bank                  6000          June 30      Rent expense       4000
                                                    30           Balance                2000
                                    6000                                                  6000
??         Balance               2000


In regards to the "blue 30" recorded in date on the credit side. It's not necessary to write out the same date over and over again is it? As long as you've written it once before? As in i can simply write a 30 there?

In regards to the "red ??" This does not have to be the next month all the time, correct? Just the next day, after the end of the current reporting period.
I think i know the answer now, it occurs to me as i type this question, but now that i've gotten so far, i'd like to make sure anyway.. lol

[BoredSatan]

you dont have to write the blue part again.. but its more safe if you do.. doesnt take a lot of time anyway

and the red should be the first day of the next reporting period. So July 1 in your case

[nacho]

Thanks, would someone mind checking these for me?
1. Referring to one qualitive characteristic, explain why the advertisiing owning shold be included in the Advertising expense for 2010.
(For reference, page 202 exercise 10.6 question b for the cambrdige textbook)
My answer:
Relevance.
All information useful for decision making should be included in our reports. As the expense was incurred in 2010, it needs to be recorded as such, despite the fact that it was not paid for, so that we can accurately calculate our profit for this reporting period.

book answer:
Balance day adjustments ensure that all information that is useful for decision-making is included in the reports. The advertising has been incurred/consumed in the period ending 31 December 2010,, and so should be included as an expense in this reporting period.

Do you think i'd still get full marks, even though I did not mention Balance day adjustments?



EDIT: ANOTHER QUESTION on formalities...
I know when recording in ledgers, it's acceptable to split the payments for something which includes GST, and you can also have them merged
eg.  Jan. 31      Stock control/GST clearing       $4400

Or you could put
Jan. 31   Stock control       $4000
Jan. 31   GST Clearing        $400
(According to my teacher anyway)
But in cases of recording a payment, for a prepaid expense and an accrued expense,
is it acceptable to do the same thing?
I've noticed in the examples in the book, they've split them,
yet in the answers provided, they've joined them.
And, in the case of the split ones, it just seemed as if they did it on two lines, because they ran out of room? (see reference)
But i thought another possible reason was that they split it too show the individual payments, rather than running out of room.


Also, for the Wages example they've provided, in the Ch. No column, are we expected to put "BS" (Bank statement?)
And is it also a possibility that they did not split the payments, because they can show the different payments in just one column?
(the idea of  splitting to show different columns seems more appropriate now, but im going to ask just for the sake of it anyway. Would we ever get penalised if we split the payments into two different rows, bar the fact that they used different columns anyway? Eg. if we split the wage/accr wages payment)

[luffy]

Thanks, would someone mind checking these for me?
1. Referring to one qualitive characteristic, explain why the advertisiing owning shold be included in the Advertising expense for 2010.
(For reference, page 202 exercise 10.6 question b for the cambrdige textbook)
My answer:
Relevance.
All information useful for decision making should be included in our reports. As the expense was incurred in 2010, it needs to be recorded as such, despite the fact that it was not paid for, so that we can accurately calculate our profit for this reporting period.

book answer:
Balance day adjustments ensure that all information that is useful for decision-making is included in the reports. The advertising has been incurred/consumed in the period ending 31 December 2010,, and so should be included as an expense in this reporting period.

Do you think i'd still get full marks, even though I did not mention Balance day adjustments?

All of the following is subject to my opinion and could be wrong:

I think your answer would be given full marks. You have covered all the "key words" that are in the solution... so should be fine. However, you probably should incorporate the questions in your definition, during the I.D.L process....

Relevance:
Balance Day Adjustments ensure all information is useful for decision-making is useful in the reports.
 - I think this is a very good sentence and could be used for any Balance Day Adjustment - Relevance question, which are quite common

[BoredSatan]

Thanks, would someone mind checking these for me?
1. Referring to one qualitive characteristic, explain why the advertisiing owning shold be included in the Advertising expense for 2010.
(For reference, page 202 exercise 10.6 question b for the cambrdige textbook)
My answer:
Relevance.
All information useful for decision making should be included in our reports. As the expense was incurred in 2010, it needs to be recorded as such, despite the fact that it was not paid for, so that we can accurately calculate our profit for this reporting period.

book answer:
Balance day adjustments ensure that all information that is useful for decision-making is included in the reports. The advertising has been incurred/consumed in the period ending 31 December 2010,, and so should be included as an expense in this reporting period.

Do you think i'd still get full marks, even though I did not mention Balance day adjustments?

All of the following is subject to my opinion and could be wrong:

I think your answer would be given full marks. You have covered all the "key words" that are in the solution... so should be fine. However, you probably should incorporate the questions in your definition, during the I.D.L process....

Relevance:
Balance Day Adjustments ensure all information is useful for decision-making is useful in the reports.
 - I think this is a very good sentence and could be used for any Balance Day Adjustment - Relevance question, which are quite common

wouldnt it also ensure that all the information FROM THE CURRENT REPORTING PERIOD are included to calculate an accurate profit and hence be useful for the decision making.

[nacho]

wouldnt it also ensure that all the information FROM THE CURRENT REPORTING PERIOD are included to calculate an accurate profit and hence be useful for the decision making.

Yea, that's what i put didn't I?
Also, could someone have a look at this spark of curiosity:

ANOTHER QUESTION on formalities...
I know when recording in ledgers, it's acceptable to split the payments for something which includes GST, and you can also have them merged
eg.  Jan. 31      Stock control/GST clearing       $4400

Or you could put
Jan. 31   Stock control       $4000
Jan. 31   GST Clearing        $400
(According to my teacher anyway)
But in cases of recording a payment, for a prepaid expense and an accrued expense,
is it acceptable to do the same thing?
I've noticed in the examples in the book, they've split them,
yet in the answers provided, they've joined them.
And, in the case of the split ones, it just seemed as if they did it on two lines, because they ran out of room? (see reference)
But i thought another possible reason was that they split it too show the individual payments, rather than running out of room.


Also, for the Wages example they've provided, in the Ch. No column, are we expected to put "BS" (Bank statement?)
And is it also a possibility that they did not split the payments, because they can show the different payments in just one column?
(the idea of  splitting to show different columns seems more appropriate now, but im going to ask just for the sake of it anyway. Would we ever get penalised if we split the payments into two different rows, bar the fact that they used different columns anyway? Eg. if we split the wage/accr wages payment)

Lastly,
i'm somewhat pissed with the VCAA.
I've read so many times to answer with dot points and that only include as many things as the question asks..
Reading the examiners report, I see comments like "Students are reminded that one sentence is often not enough detail to gain full marks"
and also for questions like:
"Explain the purpose of subsidiary records in the recording process." (2 marks)
the comments are "Students and teachers are reminded that a two-mark question usually requires two separate points as part of the explanation."
That is just dodgy and annoying... :@
The point of an 'explain' question is that you state/identify the answer (1 mark?) and then elaborate on it, no?

[luffy]

wouldnt it also ensure that all the information FROM THE CURRENT REPORTING PERIOD are included to calculate an accurate profit and hence be useful for the decision making.

Yea, that's what i put didn't I?
Also, could someone have a look at this spark of curiosity:

ANOTHER QUESTION on formalities...
I know when recording in ledgers, it's acceptable to split the payments for something which includes GST, and you can also have them merged
eg.  Jan. 31      Stock control/GST clearing       $4400

Or you could put
Jan. 31   Stock control       $4000
Jan. 31   GST Clearing        $400
(According to my teacher anyway)
But in cases of recording a payment, for a prepaid expense and an accrued expense,
is it acceptable to do the same thing?
I've noticed in the examples in the book, they've split them,
yet in the answers provided, they've joined them.
And, in the case of the split ones, it just seemed as if they did it on two lines, because they ran out of room? (see reference)
But i thought another possible reason was that they split it too show the individual payments, rather than running out of room.


Also, for the Wages example they've provided, in the Ch. No column, are we expected to put "BS" (Bank statement?)
And is it also a possibility that they did not split the payments, because they can show the different payments in just one column?
(the idea of  splitting to show different columns seems more appropriate now, but im going to ask just for the sake of it anyway. Would we ever get penalised if we split the payments into two different rows, bar the fact that they used different columns anyway? Eg. if we split the wage/accr wages payment)

Lastly,
i'm somewhat pissed with the VCAA.
I've read so many times to answer with dot points and that only include as many things as the question asks..
Reading the examiners report, I see comments like "Students are reminded that one sentence is often not enough detail to gain full marks"
and also for questions like:
"Explain the purpose of subsidiary records in the recording process." (2 marks)
the comments are "Students and teachers are reminded that a two-mark question usually requires two separate points as part of the explanation."
That is just dodgy and annoying... :@
The point of an 'explain' question is that you state/identify the answer (1 mark?) and then elaborate on it, no?

I don't understand your prepaid/accrued expense question..... What are you talking about? xD. My teachers, who are also "exam-markers", ALWAYS merge the cross-references and amounts and encourage me to do so....

For the wages example, I would separate the columns in all examples. I don't know if they allow you to do it one row, but I know for a fact that the "separate" rows is the correct method of doing it. Besides, why risk it?

When they say "two points," it just means they are looking for two key sentences that must be stated in some way. The answer, itself, will not be explained in one sentence but in two to "fully" answer the question. I hope I answered your question...

[nacho]

Unsure about this, check please.

1. Referring to one Accounting principle, explain why residual value is deducted from Historical cost when calculating the depreciation using the straight-line method.

"Entity Principle.
The business is seperate from the owner and other business and records should be kept on this basis. As the business will only consume the asset until it is at its' residual value,
upon which it will disposed of or consumed by another entity, the residual value must be deducted from the Historical cost to show the amount consumed by our business."

2. Referring to one accounting principle, explain why it si not always accurate to report depreciation expense per annum