VCE Accounting Question Thread!

[sin0001]

Can someone explain why the Capital contribution for the current R.P. will be already included in the 'Capital' balance, in a Post-adjusted trial balance. I thought it is included only when calculating profit + its balance for the upcoming R.P.? o.O

[Kuroyuki]

Ahhh.....Okay!

Ermmm...Yeah, I think that is a mistake in the Examiner's Reports.  abcdqdxD, would you agree?

It seems like an error to me. It should have been amended tho...

Can someone explain why the Capital contribution for the current R.P. will be already included in the 'Capital' balance, in a Post-adjusted trial balance. I thought it is included only when calculating profit + its balance for the upcoming R.P.? o.O

  I thinks it like, you record the ledgers after you have posted the journals. You then foot the accounts in order to prepare the preadjusted trial balance. After pl summary and bdas we then formally balance the accounts.

[sin0001]

I thinks it like, you record the ledgers after you have posted the journals. You then foot the accounts in order to prepare the preadjusted trial balance. After pl summary and bdas we then formally balance the accounts.

Oh so even in a PRE-Adjusted T.B., the Capital balance will include any contributions?
Thanks Kuroyuki, seems like you were correct- my teacher said the same thing:
"When any capital contribution is made, whether it be cash or otherwise, it will be recorded in the journal and then posted to ledger at the end of the month.  At the end of the reporting period, the amounts will be in the ledger account which then can be footed to prepare a pre-adjustment TB, and once profit or loss is calculated, balanced for the next RP for the Post-adjustment TB.  It will already be included."

[Kuroyuki]

Oh so even in a PRE-Adjusted T.B., the Capital balance will include any contributions?
Thanks Kuroyuki, seems like you were correct- my teacher said the same thing:
"When any capital contribution is made, whether it be cash or otherwise, it will be recorded in the journal and then posted to ledger at the end of the month.  At the end of the reporting period, the amounts will be in the ledger account which then can be footed to prepare a pre-adjustment TB, and once profit or loss is calculated, balanced for the next RP for the Post-adjustment TB.  It will already be included."

np
yep they would be.
So if they ask you to prepare the capital account after adjustments and they say a capital contribution was made. Make sure you deduct the contribution from pre adjusted balance to find capital at the start.

[Lucho23]

When a business is beginning and you're establishing the books of the business, Cash contributed by the owner/financed by a loan is recorded in CRJ?

And when establishing double entry do you record Cash at Bank in the General Journal with a DR balance?

Thanks!

[abcdqdxD]

When a business is beginning and you're establishing the books of the business, Cash contributed by the owner/financed by a loan is recorded in CRJ?

And when establishing double entry do you record Cash at Bank in the General Journal with a DR balance?

Thanks!

yes

[Damoz.G]

When a business is beginning and you're establishing the books of the business, Cash contributed by the owner/financed by a loan is recorded in CRJ?

And when establishing double entry do you record Cash at Bank in the General Journal with a DR balance?

Thanks!

Yup and yup.

The only 2 times Bank is even mentioned in the GJ is for the commencing of Double Entry and if there is a correcting Entry required. At no other point, should Bank even be mentioned in the GJ.

EDIT: Beaten by abcdqdxD by 21 seconds! 

[Lucho23]

Thanks guys

[nikil.v]

where does the receipt of a 6 month term deposit go in the CFS (principal part, not interest)?
also, where are term deposits classified in the Balance Sheet, current assets or non current assets (if the question doesn't state when it is to be received) ?

[Damoz.G]

where does the receipt of a 6 month term deposit go in the CFS (principal part, not interest)?
also, where are term deposits classified in the Balance Sheet, current assets or non current assets (if the question doesn't state when it is to be received) ?

Recording the receiving of Term Deposits in the CFS has become quite controversial. In my opinion and the Cambridge Textbook's opinion, its a Investing Cash Inflow.

Term Deposits are usually recorded under Non-Current Assets if the business is going to receive the Term Deposit sometime beyond 12 months. However, your example says its for 6 months, so it would go under Current Assets because the firm will receive it within the next 12 months, and is thus recorded as a Current Asset.

[Kuroyuki]

We will never be asked to report the receipt of a term deposit in the cfs.
I would go with operating myself,  because it explicilty doesnt fit in the investing definition when it is received.
And anything that doesn't fit in financing and investing goes in operating.

[abcdqdxD]

We will never be asked to report the receipt of a term deposit in the cfs.
I would go with operating myself,  because it explicilty doesnt fit in the investing definition when it is received.
And anything that doesn't fit in financing and investing goes in operating.

Yeah, can't see VCAA giving that question to be honest. Personally, I would put it in operating as well.

It can't be a non-current asset if you're receiving the Term Deposit.

[Damoz.G]

Yeah, can't see VCAA giving that question to be honest. Personally, I would put it in operating as well.

It can't be a non-current asset if you're receiving the Term Deposit.

I understand what you mean. But, if the Term Deposit is for 2 years, its recorded as a NCA. So when the two years is up, your now receiving the Term Deposit which was recorded as a NCA. Technically it should be an Operating Inflow, but the Cambridge Textbook says Investing Outflow because of these reasons.

[abcdqdxD]

You only record the inflow when the cash is received (obviously). At the point of receiving the cash, the term deposit would be a current asset as the inflow of economic benefit is expected within 12 months.

It would only be treated as a non-current asset if you're expecting to receive the term deposit in >12 months. If that was the case, we wouldn't be asked to record the receipt of the term deposit.

So if VCAA does make you record it, it can only occur if the Term deposit has become a current asset.

[Damoz.G]

You only record the inflow when the cash is received (obviously). At the point of receiving the cash, the term deposit would be a current asset as the inflow of economic benefit is expected within 12 months.

It would only be treated as a non-current asset if you're expecting to receive the term deposit in >12 months. If that was the case, we wouldn't be asked to record the receipt of the term deposit.

So if VCAA does make you record it, it can only occur if the Term deposit has become a current asset.

Ahh...yep! I see what you mean now.