VCE Accounting Question Thread!

[abcdqdxD]

I got 32450 as well

[unfamila]

The business purchased their vehicle in 2013 for $30,000. However the owner went to the shop in 2014 and seen they were selling the same model for $28,000.
The answer said to record the vehicle $28,000, is this correct?
Do I just look at it like an agreed value?

[abcdqdxD]

The business purchased their vehicle in 2013 for $30,000. However the owner went to the shop in 2014 and seen they were selling the same model for $28,000.
The answer said to record the vehicle $28,000, is this correct?
Do I just look at it like an agreed value?

No in VCE we always record NCA at either historical cost or agreed value. Fair value (which is the $28000) is not in the VCE course.

[Sach1_K]

The business purchased their vehicle in 2013 for $30,000. However the owner went to the shop in 2014 and seen they were selling the same model for $28,000.
The answer said to record the vehicle $28,000, is this correct?
Do I just look at it like an agreed value?

just to add to what abcdqdxd was saying. You record it at 30,000 in 2013 maybe in the next year thru depreciation or outdated model etc it went down to 28k. But since you bought it in 2013 for 30k you record it at 30k.

[sin0001]

I thought agreed value could only be estimated at the time of the vehicle's contribution and then depreciation is adjusted over the rest of the vehicle's useful life? The owner can't just change the vehicle's Historical Cost, right?

[abcdqdxD]

Sin is right. you can't change the historical cost.. if you changed it then it's no longer verifiable by source documents (and therefore wouldn't be called the historical cost)

[unfamila]

Thanks guys!!!!!!!

[saidw]

Discuss the importance of classifications in accounting reports. With reference to one qualitative characteristic and one accounting principle. (6 marks)

I'm having trouble with this question as the answer is apparently understandability and consistency, although i cant see why?

[Sach1_K]

Discuss the importance of classifications in accounting reports. With reference to one qualitative characteristic and one accounting principle. (6 marks)

I'm having trouble with this question as the answer is apparently understandability and consistency, although i cant see why?

Understanability Becuase classifying assets and liabilities makes reports easier to understand for the users for decision making for example which assets provide economic benefit for 12 months and which ones provide economic benefit for more than 12 months.
Answer: Reports should be prepared in a manner that makes it easy for the user to comprehend their meaning.
Classifying Assets and Liabilities in the Balance Sheet allows users with little accounting knowledge to understand the basics of the report.
(VCAA 2007)
I'm not really sure about the consistency sorry.

[saidw]

Understanability Becuase classifying assets and liabilities makes reports easier to understand for the users for decision making for example which assets provide economic benefit for 12 months and which ones provide economic benefit for more than 12 months.
Answer: Reports should be prepared in a manner that makes it easy for the user to comprehend their meaning.
Classifying Assets and Liabilities in the Balance Sheet allows users with little accounting knowledge to understand the basics of the report.
(VCAA 2007)
I'm not really sure about the consistency sorry.

thanks anyway

[sin0001]

Business might have used the method of classifying items on their previous reports, so they must remain consistent in applying this method in the current reporting period as well, otherwise not classifying would breach the characteristic of Consistency.

[abcdqdxD]

Discuss the importance of classifications in accounting reports. With reference to one qualitative characteristic and one accounting principle. (6 marks)

I'm having trouble with this question as the answer is apparently understandability and consistency, although i cant see why?

Hi

First of all, we must realise there is more than one answer. VCE Accounting is known to be quite narrow, but really you could apply a whole set of QCs/APs to this question.

Some that come to mind are:

- Understandability (as previously mentioned)
- Going concern (more so for the classification of NCA and NCL on the balance sheet than other reports as they reflect future economic benefit/obligations in the long term)
- Reporting period (classification of accrued/prepaid revenues and expenses)

I'm not sure if Consistency should be one of the answers. The principle itself doesn't really specify why it's important to classify items, but rather requires the same accounting methods to be used from period to period (or maybe I'm being too pedantic).

Also not sure if that is really a 6 mark question. Perhaps they could've said, "referring to QCs and APs, explain why..." instead of placing a restriction on how many you can use.

What do you reckon abcdqd?

[sin0001]

When you're allocating the value of stock, why don't we record the expense of cartage in separately to the cost of sales? Don't we need to report 'Cartage In' seperately on the Income Statement? o.0

[abcdqdxD]

When you're allocating the value of stock, why don't we record the expense of cartage in separately to the cost of sales? Don't we need to report 'Cartage In' seperately on the Income Statement? o.0

Cartage in is reported separate of cost of sales under the heading "cost of goods sold" if treated as a period cost. If it is a product cost then it is included in cost of sales if I remember correctly.

But yeah, I'm real rusty on this so I may not be 100% correct.

[Sach1_K]

Cartage in is reported separate of cost of sales under the heading "cost of goods sold" if treated as a period cost. If it is a product cost then it is included in cost of sales if I remember correctly.

But yeah, I'm real rusty on this so I may not be 100% correct.

it seems right. In unit 3 I think we assume everything is a period cost.