VCE Accounting Question Thread!

[dreambig]

Thank you BoredSatan!

When the business pays for advertising using a personal cheque, why is it an increase in Owners Equity? Shouldnt it be a decrease...?

[abcdqdxD]

Depends.

Has the advertising been consumed?

Prepaid advertising (not consumed) : Increase in OE because the owner made a capital contribution

[Sach1_K]

Quick question
Sort of made it up from the question above. And realised I don't know if I can answer it myself. XD


On jan 1 A business pays for advertising of 1500 dollars plus gst using a personal cheque. The business consumes advertising at the end of every month at 100 dollars. What is the effect on the acc eq.
The answer I got was 1500 in pre adv and decrease gst by 150 and increase oe by 1650.
Is that right ?

[abcdqdxD]

Quick question
Sort of made it up from the question above. And realised I don't know if I can answer it myself. XD


On jan 1 A business pays for advertising of 1500 dollars plus gst using a personal cheque. The business consumes advertising at the end of every month at 100 dollars. What is the effect on the acc eq.
The answer I got was 1500 in pre adv and decrease gst by 150 and increase oe by 1650.
Is that right ?

That question doesn't make sense? You can't state the effect of a BDA question without being given dates

[Sach1_K]

No I shouldn't have typed it more clearly. I mean just the first transaction not the Bda. So just the prepaid advertising.

[abcdqdxD]

If the advertising contributed by the owner hasn't been consumed it would be:

Assets increase (Prepaid Advertising) 1500
Lia.                         No effect
OE increase (Capital) 1500

GST liability is not included as the GST is incurred by the owner not the business (remember entity principle - owner is a separate entity from the firm) and neither does represent an economic benefit and so is not included in the value of pp.adv.

[Sach1_K]

Didn't think of it like that. I tried to think of it as a contribution of cash then the payment for advertising.
Thanks 

[sam.utute]

Just a quick question:

What do people find most difficult about Accounting (be specific - I'm writing a few new exercises and worksheets and wanted to make them as relevant as possible)?

I have "discuss" questions at the top of my list.

[abcdqdxD]

Just a quick question:

What do people find most difficult about Accounting (be specific - I'm writing a few new exercises and worksheets and wanted to make them as relevant as possible)?

I have "discuss" questions at the top of my list.

really complex BDA questions can be quite challenging (can't believe they weren't on the end of year exam!!)

other than that I think people have more trouble with higher level theory q's (such as analysis)

[Sach1_K]

Just a quick question:

What do people find most difficult about Accounting (be specific - I'm writing a few new exercises and worksheets and wanted to make them as relevant as possible)?

I have "discuss" questions at the top of my list.

I find budgeting reports the hardest part of accounting for me. I just don't like them. Other then that bdas and the hardest report for me is the cash flow statement. 
Try include questions that the answers aren't directly rote learned responses.
Like discuss if a business should offer credit to customers?
Or why would a business use FIFO?
At least for me when I got asked these questions I had to think not spit out rote Learned answers with a link.

[sin0001]

When depreciation expense is recorded to the general ledger, why is a credit entry made to the account-'accumulated depreciation', instead of just crediting the account of the asset (i.e.Van)

[Sach1_K]

When depreciation expense is recorded to the general ledger, why is a credit entry made to the account-'accumulated depreciation', instead of just crediting the account of the asset (i.e.Van)

I don't think I can answer ur question particularly well but ill try.
Accumulated depreciation is a negative asset. And in the balance sheet the asset for example van is shown at is agreed value then it says less acc dep then shows the carrying value.
Doing that shows the going concern principle and improves understandability and it shows the relevant negative asset of depreciation.

[sin0001]

I don't think I can answer ur question particularly well but ill try.
Accumulated depreciation is a negative asset. And in the balance sheet the asset for example van is shown at is agreed value then it says less acc dep then shows the carrying value.
Doing that shows the going concern principle and improves understandability and it shows the relevant negative asset of depreciation.

Same subjects!
Hmm, but even when you credit, let's say, the Van's account in the GL, the balance would still reflect the carrying value of this asset plus this way is kinda simpler too. But i think showing acc. Dep. Expense on the Balance sheet  might be more relevant, maybe thats why

[abcdqdxD]

You can't just credit the original asset account (van in this case). In the balance sheet we have to show the historical cost, so if we credited van this would breach the historical cost principle. Instead, we show the carrying value of the van by creating acc. dep'n of van, a negative asset account, which helps give the carrying value once we subtract acc depn of van from the historical cost of van.

Note: acc depn is NOT an expense, its a negative asset account

[Sach1_K]

Same subjects!
Hmm, but even when you credit, let's say, the Van's account in the GL, the balance would still reflect the carrying value of this asset plus this way is kinda simpler too. But i think showing acc. Dep. Expense on the Balance sheet  might be more relevant, maybe thats why

Had my answer all written out then abc steals it lol.