VCE Accounting Question Thread!

[abcdqdxD]

1) there are times you don't have to break it up (I forgot when) but it's safer to break it up
4) Hmm I wouldn't go down that path. If I was explaining why prepaid revenue is an asset, I'd argue that its a resource controlled by the entity transactions which results in an inflow of economic benefit as it provides the entity access to the premises for business operations for <length of time>. I think the only time you'd use reduction in an outflow of economic benefits (expenses payable) as far as I can remember is discount revenue and note that this is classified as a revenue not an asset

Can't really answer q2 and 3 as I haven't seen the questions

[Damoz.G]

Have a few exam questions:

• When we are reporting Wages expense in the income statement/cash flow statement, should we break it up into Wages expense/Accrued Wages expense/Prepaid Wages expense or will a single figure for Wages suffice?
• Q3 of Practice Exam 1 from the ATARNotes study guide: I understand why the labelling cost is immaterial and thus, a period cost. But why isn't the Prepaid Insurance included as a product cost? The transaction is only for one line of stock, so I thought it can be assigned to each unit
• For Q4 of this exam, the answers have only reffered to profitability from the owner's perspective, but is it also valid to mention that the business might not be earning discount revenue from its creditors, so it's less profitable in this sense. Also the question asks for the 'movement of Debt Ratio', I've just mentioned the scenario where it increases, do I have to also talk about it decreasing?
• For Q8c, when explaining how Prepaid expenses are current assets, is it acceptable to say that economic benefits inflows are expected in the form of 'reduction in the expense payable'?

Thanks!

* You have to break it up in the CFS (Payment for two different Reporting Periods), but not in the Income Statement (Add together for the one Reporting Period).

I don't have the book, but:
* Insurance is an ongoing payment. Whilst it can be allocated on a logical basis, when the contract ends, another payment will be made. Only one-off payments for modifications are included as a Product Cost - No ongoing Prepaid Contracts, etc.

* I'd have to see the question.

* No, its a future inflow of economic benefits, but not a reduction in an expense (Doesn't relate to the definition of a Current Asset). Here's my answer that I would usually give: Prepaid _____ Expense is reported as a Current Asset in the Balance Sheet of the business because it is a resource that is controlled by the entity, as a result of past events, from which a future inflow of economic benefits is expected to occur within the next 12 months (when the _______ is consumed).

[BoredSatan]

The insurance is at a per annum cost which means that the business may purchase other items at a later date but don't need to pay more insurance, therefore it is regarded as a period cost

[Kayte]

I need help on question 3b of the 2012 Unit 4 exam.

Can someone explain to me how to calculate the cost of: Depreciation of Equipment, Office expenses and Interest Expense(Where did it come from?)

Thank you! 

[Damoz.G]

Kayte, I'm just coming home from Graduation Mass. I did it yesterday so I'll explain when I get home

[Kuchiki]

I need help on question 3b of the 2012 Unit 4 exam.

Can someone explain to me how to calculate the cost of: Depreciation of Equipment, Office expenses and Interest Expense(Where did it come from?)

Depreciation of Equipment
Details given:

• 15% per annum straight line method
• $120,000 of equipment at 30 June 2012
• $20,000 new equipment purchased on 1 March 2013 (depreciate for 4 months only)

Depreciaton = 0.15 x 120,000 (for old equipment) + 0.15 x 20,000 x 4/12 (for new equipment) = 19,000


Office expenses
Details given:

• $30,800 paid including GST; $30,800 x 10/11 = $28,000 paid excluding GST
• $800 Prepaid Office Expenses at 30 June 2012
• $2,000 Prepaid Office Expenses at 30 June 2013

I think it's easiest if you draw the Prepaid Office Expenses ledger on the side of the page and reconstruct it (with the opening balance of 800 and the bank (amount paid) of 28,000 on the debit side, and the closing balance of 2,000 on the credit side, leaving 26,800 on the credit side as the expense incurred).

Basically:
Office expenses = 28,000 (paid) + 800 (prepaid in earlier period, incurred in this period) - 2,000 (paid this period but incurred in later period) = 26,800


Interest expense
Details given:

• $4,000 loan settled in February
• $4,200 paid in total

Therefore, the $200 difference must be interest on the loan.


Oh, just saw your post, Damoz. I'll leave this here, but feel free to explain it better than I did. ^^"

[Damoz.G]

Well explained, Kuchiki. I think you have covered everything that I would have explained.

However, this is irrelevant to the original question, but I don't agree with the Wages Expense answer. I know how it was calculated, but I don't agree with it. Obviously I don't have the power to do anything about it, but do you disagree with the answer for Wages Expense as well?

[Kuchiki]

However, this is irrelevant to the original question, but I don't agree with the Wages Expense answer. I know how it was calculated, but I don't agree with it. Obviously I don't have the power to do anything about it, but do you disagree with the answer for Wages Expense as well?

Which part don't you agree with? I think it makes sense (though they do seem to have gone out of their way to confuse people in that question).

[Damoz.G]

Which part don't you agree with? I think it makes sense (though they do seem to have gone out of their way to confuse people in that question).

Well the Accrued Expense at the end the 2012 Year and the 2013 Budget are two different figures. I think the difference off the two should be accounted for in the calculation of the Wages Expense for the Budget.

[Kuchiki]

Well the Accrued Expense at the end the 2012 Year and the 2013 Budget are two different figures. I think the difference off the two should be accounted for in the calculation of the Wages Expense for the Budget.

How so? That was indeed a tricky thing for them to include (since they already gave you all the information to calculate the expense incurred in the Income Statement section), but it wouldn't affect the calculation; it just means that the business paid less in wages during the period than they incurred ($163,250 paid vs. $164,750 incurred, which is why the balance of Accrued Wages increased by the difference of $1,500). Hope that makes sense.

[Damoz.G]

How so? That was indeed a tricky thing for them to include (since they already gave you all the information to calculate the expense incurred in the Income Statement section), but it wouldn't affect the calculation; it just means that the business paid less in wages during the period than they incurred ($163,250 paid vs. $164,750 incurred, which is why the balance of Accrued Wages increased by the difference of $1,500). Hope that makes sense.

Yeah, I guess that's true. Thank you for explaining that - Actually understand it now.

I mean if I was doing that exam last year, I would've included that $1500 difference from the two figures in the Wages Expense. I guess getting 100% would be AWESOME, but I was still happy that I got the rest of it all correct except for that. I must say that Exam made me think a lot about what I was doing and paying attention to the very fine details (Such as the Interest Expense that a lot of people omitted).   

[Mafioso]

I'm starting VCAA papers today. Which ones are relevant/similar to the current study design?
I've seen a few that don't have GST and a few with different templates etc.

[BoredSatan]

I'm starting VCAA papers today. Which ones are relevant/similar to the current study design?
I've seen a few that don't have GST and a few with different templates etc.

Only the 2012 exam will have GST in budgeting and also reducing balance method of depreciation

other than that you could probably go back until 2008 and unit 3 will be almost identical (except no discussion questions)

[dreambig]

Hi guys!
What transactions do NOT attract GST?

[Damoz.G]

Hi guys!
What transactions do NOT attract GST?

Loan Repayments, Interest Expense, Drawings.

It will usually tell you though.