VCE Accounting Question Thread!

[sin0001]

Thanks for the clear explanation

[sin0001]

One more question, suppose an owner contributes a car that has an agreed value of 20k, but a different market value, why does the car need to recorded at the agreed value?

[abcdqdxD]

Eh.. I'm a bit rusty but I'll try:

The vehicle is valued at its agreed value at the time of the vehicle's contribution at $20k. Although Historical Cost demands the vehicle to be valued at its original cost to ensure it is free from bias and error, the economic benefit represented by the vehicle has been partially consumed, and hence the future economic benefit provided by the vehicle is no longer indicated by its cost price. Therefore, the historical cost of the vehicle is no longer relevant to the firm. Instead, the vehicle should be valued at its 'agreed value' of 20k, as this amount is more useful for management decision-making by offering a more accurate reflection of the vehicle's future economic benefit to the firm.

[BoredSatan]

Eh.. I'm a bit rusty but I'll try:

The vehicle is valued at its agreed value at the time of the vehicle's contribution at $20k. Although Historical Cost demands the vehicle to be valued at its original cost to ensure it is free from bias and error, the economic benefit represented by the vehicle has been partially consumed, and hence the future economic benefit provided by the vehicle is no longer indicated by its cost price. Therefore, the historical cost of the vehicle is no longer relevant to the firm. Instead, the vehicle should be valued at its 'agreed value' of 20k, as this amount is more useful for management decision-making by offering a more accurate reflection of the vehicle's future economic benefit to the firm.

Actually its cause the agreed value is more RELEVANT to the business and therefore its decision making

[abcdqdxD]

Yes, that's what I said!

[dreambig]

Hey, does anyone know the effect of drawings and capital contribution on the accounting equation?

[abcdqd]

Hey, does anyone know the effect of drawings and capital contribution on the accounting equation?

drawings decrease assets (cash or stock) and decrease OE
capital contribution increases assets (cash/nca/stock) and increase OE
no effect on liabilities for both

[dreambig]

Thank you so much!!!

[sin0001]

So one question that has been haunting me (not really...):
The general ledger are very frequently used in this course, but what is its purpose? Aren't the other records/reports enough?

[BoredSatan]

So one question that has been haunting me (not really...):
The general ledger are very frequently used in this course, but what is its purpose? Aren't the other records/reports enough?

Well it kinda groups all the accounts together really neatly rather than having to search through your records (ie journals) which may have 100 entries and then make reports out of them.

[abcdqdxD]

Well it kinda groups all the accounts together really neatly rather than having to search through your records (ie journals) which may have 100 entries and then make reports out of them.

Hmm, but the purpose of journals is to summarise similar transactions as well, so totals can be posted to ledgers more easily..

Since ledgers are only used in double entry accounting (to my understanding anyway), perhaps ledgers are required so that you can see the individual 'two-fold effect' of each transaction? It also groups transactions by item, so it makes it easier for the stakeholders to trace back past transactions relating to a particular item?

Those are just some things that come to mind, but I'm not 100% sure..

In terms of the general ledger, it simply refers to the main group of ledger accounts.

[sin0001]

@liverpool: Out of curiosity, how was Uni Accounting? like what were you taught and is it much harder than VCE Acc. or similiar?

[abcdqdxD]

haven't done it yet, starting it this year

[sin0001]

Hahahahaha omg, feel like the biggest idiot
I guess it seems like you've already finished vce cos you're aiming for a specific atar, whereas most people just aim for study scores lol

[unfamila]

why should a vehicle contributed by the owner be recorded at its agreed value?
I thought it should be recorded at HC principal, or depreciation value.
Never heard of agreed value.