VCE Accounting Question Thread!

[Lucid]

Wow, thanks Avo. Didn't expect you to do all of that :O

Instead of bank do we put cash? Our class exercises just put bank down for cash...and if it was credit etc it would be creditors or debtors.

Thanks again!

[_avO]

Wow, thanks Avo. Didn't expect you to do all of that :O

Instead of bank do we put cash? Our class exercises just put bank down for cash...and if it was credit etc it would be creditors or debtors.

Thanks again!

Yea you can use bank, cash at bank, cash or whatever is accepted for SACs. I think the only accepted one for the exams are Cash at Bank, as are Creditors Control and Debtors Control (you should be able to write just debtors/creditors for SACs, but make sure you check with your teacher, it's always good to write the proper way as practice)

[Lucid]

I have another exercise I need help with...(I'm not that great at Accounting).

Exercise 2.5
State the effect of each of the following transactions has on the Accounting equation:
1. A loan for $5000 was received from ANZ bank.
2. Purchased office furniture on credit from HP Enterprises worth $19,000.
3. Paid a creditor $450
4. The owner contributed a vehicle to the business worth $25,000
5. Repaid part of the principal of the loan - $1000.
6. Cash purchase of stock $3000
7. Received $800 from a debtor.


This is what I've done so far: https://docs.google.com/spreadsheet/ccc?key=0AqiRxK896d4gdDBrZGItdGJwZVBaYUlLSENOX1ctalE
I hope I'm on the right track...Thanks in advance!

[BoredSatan]

hmm not sure how much of the course changed but have they introduced sundry creditors into unit 3??

cause that is what i would use for no.2

no.3 bank should decrease as well since you are paying the creditor back with cash

no. 4 the capital should increase in OE not 'vehicle'

no. 5 'loan repayment' isnt an item in the balance sheet.. make sure you put 'loan' only

hope this helps

[Lucid]

 Thanks Saint. All good now.

I was wondering if anyone is able to help me understand general ledger accounts. I've filled out my analysing chart, but not sure how to add them into their ledgers...

For example, (Aug 1) Accounts affected are Stock, capital and bank. Do I add the stock amount in the bank credit ledger? I'm so confused. If chatting is easier, please PM and I'll let you add me on Facebook or msn or whatever.

Thanks!

[jaketownley]

hey, great thread and i hope you can help me!
We're dealing with stockcards and stuff at the moment in class and i was just wondering what description would suggest that stock is being used for advertising?
 Our school's got the simmon's 3/4 textbook and it says that "stock is donated to local school fete" should be recorded as stock used for advertising! i cant see how this would clearly suggest that its used for advertising and i was hoping you could give me as many eg's as possible that would mean stock is being used for advertising!

[sam.utute]

In VCE accounting, we assume that any and all stock that is donated to schools, fetes etc. is being donated for advertising purposes.
It's similar to the Royal Melbourne Hospital Raffle (or lottery) that the hospital runs. You have the chance to win cars, houses, holidays etc. It's very unlikely that Audi charges the hospital to use it's vehicle as a potential prize. The benefit Audi receives is the fact that its product is being heavily promoted (think about it: "You could win a brand new Audi A3!").

Other examples: Apple donating iPhones as prizes to a charity.... basically any company that donates its product doesn't just do it out of feeling like they need to give back to the community (corporate social responsibility). Every donation represents advertising benefits.

Hope that made sense.

[jaketownley]

thank you so much that does clear things up a lot!

[link125]

HELP!

Cambridge Accounting 3 & 4 Third Edition

Page 231 Exercise 10.3

Maxwell's Shoes presented the following extract from its balance sheet at 31 march 2015:

Current Assets: Prepaid insurance $1800

The yearly insurance premium was paid in advance on 1st january 2015. the business prepares reports monthly, and the next balance day occurs on 30th april 2015

b) Calculate insurance expense for April 2015

I did this:

1800/12 = 150

Jan 1 - April 30 = 4 months

4 * 150 = 600 = Insurance expense for april 2015

Answer is actually $200

I must be missing out on something, or not fully understanding...

[Somye]

Okay, so the business prepares reports monthly, meaning that it's already accounted for the indurance for 3 months (jan,feb,mar)
therefore, the 1800 remaining represents the insurance for the next 9 months (12-3). So, the expense for any given month, for example april, is 1800 / 9 = 200

[link125]

Okay, so the business prepares reports monthly, meaning that it's already accounted for the indurance for 3 months (jan,feb,mar)
therefore, the 1800 remaining represents the insurance for the next 9 months (12-3). So, the expense for any given month, for example april, is 1800 / 9 = 200

Ahhhh thank you!

[splash.of.colour]

hey, i wondering is someone could explain to me the whole thing about transferring drawings...

my book says: "drawings are recorded by the owner in a seperate ledger account so that the owner's transactions for a particular Reporting period can be isolated. However, at the end of the reporting period, the balance of the drawings account must be transferred to the capital account so that the capital account reflects the net effect of all transactions with the owner"

if someone could explain this to me in another way, that would be really helpful! im just having a little trouble getting my head around it 

[Somye]

okay, so within a period, the owner has several transactions with the business, be it withdrawal/deposit of stock/cash. Now, the withdrawal of goods (stock/cash) from the business plays no impact on the earning ability of the business, and should not be considered as an expense. So, we use a different ledger account, 'drawings', to classify these transactions. However,  much like expenses, we want to measure the level of drawings within a single period, and so in order to reset the account balance to 0, it is closed off to the OE account as negative owner's equity.

Hopefully that made sense:)

[jaketownley]

So i've done my first practice exam (2007) and came across a question we covered in class about, why assets and liabilities are classified in balance sheet with reference to one qualitative characteristic.

I understand that understandability is a relevant answer because "it helps readers with little knowledge to understand the basics of the report." (as stated in the examiners report http://www.vcaa.vic.edu.au/vce/studies/account/assessreports/2007/accounting1_assessrep_07.pdf question 1.1.3) The examiners report also stated that the question was poorly answered as a lot of student gave relevance with the explanation of how it helps classify the owner's equity.

 My answer consisted of 'relevance' but for a different reason: "Classifying assets and liabilities as current and non-current allows the business to calculate its short term liquidity"
This links in with the fact that relevance states that all useful information that is useful for decision making should be included in reports.

Right or wrong?

[splash.of.colour]

just wanted to say thanks Somye that really helped! sorry for the late response ive been bogged down with hw. thanks again!