VCE Accounting Question Thread!

[Eugenet17]

Can anyone help with Exercise 2.7 of the Cambridge textbook? I keep getting $91,300 for my total assets but the answer says $91,700 :/

[angelicachee]

Can anyone help with Exercise 2.7 of the Cambridge textbook? I keep getting $91,300 for my total assets but the answer says $91,700 :/

Current Assets
Debtors              3000
Stock                 35000
Prepaid rent        1200

Non-Current Assets
Fixtures and Fitting      12500
Fridges                        40000

Total Assets           91700

I hope it's correct 

[Eugenet17]

Current Assets
Debtors              3000
Stock                 35000
Prepaid rent        1200

Non-Current Assets
Fixtures and Fitting      12500
Fridges                        40000

Total Assets           91700

I hope it's correct 

It is! Awesome, thanks alot

[Eugenet17]

Can i get some help on Exercise 3.6 in the Cambridge Textbook? It's 'Opening balances in the General Ledger', the debit side of my Trial balance is correct but my credit side isnt? Am i supposed to add in the remainder as Capital or something?

[Kuroyuki]

Can i get some help on Exercise 3.6 in the Cambridge Textbook? It's 'Opening balances in the General Ledger', the debit side of my Trial balance is correct but my credit side isnt? Am i supposed to add in the remainder as Capital or something?

I haven't looked at the specific exercise but, the accounting equation is A = L + OE. So in the trial balance after you have included all the Assets and Liabilities, you do A -L to calculate the capital and record it as the last entry on the trial balance. This will also make the trial balance balance. Its quite a common error to not include capital.
Hope this helps somewhat.

[Eugenet17]

I haven't looked at the specific exercise but, the accounting equation is A = L + OE. So in the trial balance after you have included all the Assets and Liabilities, you do A -L to calculate the capital and record it as the last entry on the trial balance. This will also make the trial balance balance. Its quite a common error to not include capital.
Hope this helps somewhat.

Oh okay, do i record it under the capital ledger under Balance?

[Kuroyuki]

Oh okay, do i record it under the capital ledger under Balance?

Yep, I just had a look at the question, because the business is just adopting the double entry system it is recorded as balance.

[Eugenet17]

Yep, I just had a look at the question, because the business is just adopting the double entry system it is recorded as balance.

awesome, thanks alot!

[smile+energy]

Can anyone please explain the relationship between accrual accounting and reporting period for me?
And where can I get the answers of Cambridge accounting workbook for free? Sometimes I want to check the answers.
Thanks a lot

[Eugenet17]

Just need some clarification on something that I forgot about from a few weeks ago, what is discount revenue and how should it be classified?

[Kuroyuki]

Just need some clarification on something that I forgot about from a few weeks ago, what is discount revenue and how should it be classified?

Discount revenue is the reduction in outflows of economic benefit in the form of decrease in creditors control, which increase owner's equity in the form of net profit.
And it should be classified as revenue is that what you mean?

Can anyone please explain the relationship between accrual accounting and reporting period for me?
And where can I get the answers of Cambridge accounting workbook for free? Sometimes I want to check the answers.
Thanks a lot

I cant really remember how I would word this. But Reporting Period states the business' life must be divided into intervals of time so reports can be prepared and profit can be calculated. Profit is calculated under the the accrual accounting method. Which states profit is determinedby matching revenues earned in the period with the expenses incurred. Reporting Period ensures that only relevant revenues and expenses are included for the calculation of accurate profit.
^ say something like that, sorry I cant be of more help. But hopefully i gave you a starting point.

[p.taaa]

Discount revenue is as stated by the name, classified as a revenue, or for the income statement, it goes under 'other revenues'.
It is earned when the firm pays back their trade creditor within the discount credit terms and gets a discount from them.
But a textbook definition would be, " A discount revenue is a saving in an outflow of economic benefits (cash) in the form of a decrease in liabilities (creditors control) that increases owners equity"

[smile+energy]

 I cant really remember how I would word this. But Reporting Period states the business' life must be divided into intervals of time so reports can be prepared and profit can be calculated. Profit is calculated under the the accrual accounting method. Which states profit is determinedby matching revenues earned in the period with the expenses incurred. Reporting Period ensures that only relevant revenues and expenses are included for the calculation of accurate profit.
^ say something like that, sorry I cant be of more help. But hopefully i gave you a starting point.

Your explanation is very clear, better than the textbook. Thanks

[smile+energy]

I don't really understand the accounting principle Conservatism, the definition is losses should be recorded when probable but gains should only be recorded when certain, so that liabilities and expenses are not understated and assets and expenses are not overstated. Can you explain further for me?
The accounting principle Consistency states that accounting methods should be applied..., what does the term "accounting methods" means?
I will appreciate your help, thanks

[Kuroyuki]

I don't really understand the accounting principle Conservatism, the definition is losses should be recorded when probable but gains should only be recorded when certain, so that liabilities and expenses are not understated and assets and expenses are not overstated. Can you explain further for me?
The accounting principle Consistency states that accounting methods should be applied..., what does the term "accounting methods" means?
I will appreciate your help, thanks

So for conservatism, accountants are meant to be prudent, like always on the safe side. For example, when a debt is unlikely to be recovered, like the loss is probable we write it off as a bad debt, this ensures that we are not overstating our profit for the period and the amount debtors owe us as an asset. Likewise we record our stock at cost price and only recognise the selling price after the stock has actually being sold, when the gain is certain in other words.
Accounting methods refer to how the business does accounting like using FIFO. The business shouldn't change from FIFO to any other cost assignment method, if it did reports would be inaccurate. Another example of different accounting methods is depreciation methods such as reducing balance or straight line.