VCE Accounting Question Thread!

[ech_93]

also, vcaa 2009 exam, i just did it.
i dont quite understand one of the question i got wrong.
1.7
A credit sale that occurred in june has not been recorded.
State the effect of this omission on the profit and loss statement.

they say
Revenues:
Credit sales            understated
stock gain    understated

how is there a stock gain, if a credit sale goes unrecorded?
shouldnt there be a stock loss, because u have fewer stock on hand, and when u take a stock take, it will show up as 1 less stock than what our stock cards say?

It's not necessarily saying that it created a stock gain, rather that the stock gain will be understated; not as high, without the recording of the credit sale.
So, there are other factors that created the stock gain, then the ommission of the credit sale is pulling the stock gain down. If that makes sense. I think it just wanted to see if you could think of two revenues effected, thats the hard part.
I dunno if thats right though?

[benrattray]

Do correcting entries ensure Reliability or Relevance?

[laree_23]

This might be stupid but could someone tell me the difference between "Interest on loan" and "Loan Repayments". Like is interest on loan an expense?

[ech_93]

Interest on loan is an added expense to the repayment of a loan; so yes it is an expense.

Loan repayments is when the principal of the loan is being paid back. So it is the actual amount of money that has been taken out, that is being repaid.

[ruchika5]

Guys... when the business pays a loan repayment, what is the details for that in the cash payments journal?? is it just loan repayment ?? or something else ?

[eeps]

Do correcting entries ensure Reliability or Relevance?

Relevance.

Guys... when the business pays a loan repayment, what is the details for that in the cash payments journal?? is it just loan repayment ?? or something else ?

It's just "Loan repayment".

just a bunch of last minute questions:
- explain the role of stock cards in an accounting system

Stock cards detail the movement of stock coming in-and-out of the business. It shows which stocks sell the best, which ones don't. It can also show when levels of stock are low; re-ordering points.

[Anon123]

^Stock cards can help a business to identify fast and slow moving lines of stock, which can then help the business to create a better stock mix
would this be ok?

[Hodgeyhodgey]

^Stock cards can help a business to identify fast and slow moving lines of stock, which can then help the business to create a better stock mix
would this be ok?

This would be an advantage of using stock cards, it's not necessarily the role that they play in the recording process. But definitely tag it onto the end of the role if required.

[1337XaH]

Hi , wondering if you could explain this to me.
During times of rising prices, explain the effect that it has on net profit.

i was thinking that even though the stock will be more expensive, your net profit won't be affected as your old stock is still being sold.
seeing as it is your old stock that was being sold before rising prices, your net profit shouldn't actually change in relativity to your old
net profit as you are still selling the old stock and not the new, cheaper stock.

however, the answers still seem to point towards your net profit decreasing as the expensive stock is being sold and it doesn't seem very realistic to me.
Can someone explain? or would vcaa accept different responses as long as they are justified well?

[luffy]

Do correcting entries ensure Reliability or Relevance?

Relevance.

Guys... when the business pays a loan repayment, what is the details for that in the cash payments journal?? is it just loan repayment ?? or something else ?

It's just "Loan repayment".

just a bunch of last minute questions:
- explain the role of stock cards in an accounting system

Stock cards detail the movement of stock coming in-and-out of the business. It shows which stocks sell the best, which ones don't. It can also show when levels of stock are low; re-ordering points.

I think in the journals, you must strictly write ledger account names. Hence, you would have to write "Loan - <name> "

[eeps]

I think in the journals, you must strictly write ledger account names. Hence, you would have to write "Loan - <name> "

My bad. That's correct. @ruchika5, disregard what I said.

All the best for tomorrow guys! I hope for everyone's sake, there are no mistakes on the exam like they had last year. I'm sure everyone's hard-work and effort will be worth it. My advice for tomorrow; read the questions carefully. Underline key dates in the question. Do the questions which you think are easy, first. Remember "IDL" when answering theory questions. Other than that, good luck to everyone.

[benrattray]

sorry EPL, but why are correcting entries for Relevance?
i always thought it was Reliability

[Angelz369]

Hi , wondering if you could explain this to me.
During times of rising prices, explain the effect that it has on net profit.

i was thinking that even though the stock will be more expensive, your net profit won't be affected as your old stock is still being sold.
seeing as it is your old stock that was being sold before rising prices, your net profit shouldn't actually change in relativity to your old
net profit as you are still selling the old stock and not the new, cheaper stock.

however, the answers still seem to point towards your net profit decreasing as the expensive stock is being sold and it doesn't seem very realistic to me.
Can someone explain? or would vcaa accept different responses as long as they are justified well?

In times of rising prices, Fifo assumes that cheaper stock is sold first, understating cost of sales, and thus overstating net profit.  It assumes that the more expensive stock is still on hand therefore overstating stock control and assets.

It was in one of my summary notes, but I forgot where I got it from ^^"

[eeps]

sorry EPL, but why are correcting entries for Relevance?
i always thought it was Reliability

You could argue both to be honest. I think it's more-so relevance because by correcting entries, it's giving the owner of the business a more accurate determination of the business's financial position. For example, wages paid was incorrectly recorded; instead of it being $400 - it was recorded as $200. By correcting that entry and including it in the reports, it becomes useful for decision-making in the future for the business. Hopefully that makes some sense.

[benrattray]

yeah they both work
ill go with your explanation though

another question : if the current dates the 30th of june (end of the reporting period), and you find a document that hasnt been recorded, and its from say the 15th of may, what date do you record it as in the journal?