VCE Accounting Question Thread!

[TazzyGirl]

I am SO confused with ledger accounts.
I understood it in the first place when I began with analysing charts...but as the exercises progressed I just began to struggle.
Should I make my own analysing charts before I put entries in the ledgers? Or is there another way to do it that isn't so time-wasting?

[abcdqdxD]

I am SO confused with ledger accounts.
I understood it in the first place when I began with analysing charts...but as the exercises progressed I just began to struggle.
Should I make my own analysing charts before I put entries in the ledgers? Or is there another way to do it that isn't so time-wasting?

Think of analysing charts as 'training wheels' in accounting. Some people may need them for longer than others. If you're struggling, it may be a good idea like you suggested to do an analysing chart before doing the ledgers.

[chasej]

I am SO confused with ledger accounts.
I understood it in the first place when I began with analysing charts...but as the exercises progressed I just began to struggle.
Should I make my own analysing charts before I put entries in the ledgers? Or is there another way to do it that isn't so time-wasting?

What do you find confusing about the ledgers? Or are they just hard in general?

I take an approach differently to ledgers so it might help you, but basically instead of rote learning what side increases or decreases an item, I simply tried to understand the rules of the ledgers (always balance and one dr and cr entry). And from there after wrote learning one rule (dr up and cr down for assets), and then understanding the opposite happens for liabilities (as liabilities are essentially the opposite to assets), I was able to learn how to use ledgers by understanding the way in which they operate instead of rote learning whether to write things on the dr or cr side.

Sorry if that didn't help. I just find the way I did it was a different process to others so a different process may be helpful to you (I never used an analysing chart, just followed the above steps).

[TheWackyCheese]

I used to find general ledgers confusing without an analysing chart. But I just practised and practised and practised and now I find them really easy and not too difficult at all. It's sort of hard to explain how to do it in a reply like this but maybe just ask your teacher to go through it with you because they're really not that hard once you get the hang of it. You just have to basically make sure that both sides of the ledgers total to be the same and you have to put the transactions in that affect.
A good way to remember it is the acronym ↓O↑A↓L↑E↓R↑. Owners Equity, Asset, Liability, Expense, Revenue.
For example, On January 1, if a business purchased $7000 stock plus GST, Stock Control (asset) would increase by 7000 as that amount of stock was purchased, GST clearing (Liability) would decrease 700 (As the business no longer owes that money to the ATO but the business they purchased from now do) and Bank (Asset) will decrease by 7700 as the business now just spent $7700 of their bank money on the stock.
I'll attach a word document to try and explain it a bit better from here.
I hope I sort of help 

[TazzyGirl]

Thank you to all of you! This is actually really helpful. I'm kind of beginning to understand now by actually practicing over and over and trying to understand where each thing is entered. I like the acronym too, it's a good way to remember. 
Now I just have to get the hang of GST!

[Jason12]

I'm not up to this part in the course (if it even is in the course) but how do accountants classify assets that are affected by depreciation but their value goes up instead of down. For example, rare car dealers or antiques or something. Do they just list their assets at an agreed value or what?

[Kuroyuki]

I'm not up to this part in the course (if it even is in the course) but how do accountants classify assets that are affected by depreciation but their value goes up instead of down. For example, rare car dealers or antiques or something. Do they just list their assets at an agreed value or what?

It's not in the accounting 3/4 course. Assets will never be appreciated or anything like that. Asset can only be depreciated down.

[TheWackyCheese]

Thank you to all of you! This is actually really helpful. I'm kind of beginning to understand now by actually practicing over and over and trying to understand where each thing is entered. I like the acronym too, it's a good way to remember. 
Now I just have to get the hang of GST!

Glad to hear that it helped! I've got some other fairly straight forward examples as well to help you get the hang of it so just send me a PM if you think you need them. 

[Jason12]

state the effect of the accounting equation on the following transactions:

the business purchased stock from l.davenport costing $4000 (plus $400 GST). A deposit of $500 was paid and the balance is due in 30 days.

the business paid creditors $3200 after receiving a $300 discount.

btw these are from the neap book and the answers don't make sense to me. a lot of these questions ask you do stuff which i don't recall being in the cambridge textbook

[Michael Scofield]

Hey guys, I'm a little confused as to why OE is debited in the following question.

Kim Swood took home stock worth $1500

I thought when drawing increases it's credited?

[abcdqdxD]

Hey guys, I'm a little confused as to why OE is debited in the following question.

Kim Swood took home stock worth $1500

I thought when drawing increases it's credited?

Owner's equity (capital) decreases due to drawings. Capital has a credit balance, so to decrease it a debit entry must be made.

[Fyrefly]

I am SO confused with ledger accounts.
I understood it in the first place when I began with analysing charts...but as the exercises progressed I just began to struggle.
Should I make my own analysing charts before I put entries in the ledgers? Or is there another way to do it that isn't so time-wasting?

I had to google it, because I had no idea what an analysing chart was... but I think if they're helping you learn and consolidate your understanding, then you should keep using them for as long as you feel you need to.

Do you guys know PALER? Not sure if they teach it in schools still, but even now it pops into my head occasionally when I'm at work.

                        DR            CR
Proprietor                          ↑
Asset                ↑
Liability                              ↑
Expense           ↑
Revenue                            ↑

"Proprietor" is another word for "Owner's Equity".
The up arrows indicate whether you need a debit or a credit entry to increase that account - e.g. an increase in an Expense requires a Debit entry.
You can put down arrows in the opposite, but I didn't to keep it clean and better illustrate it.

When I learned VCE Accounting, I found this easy to remember because it goes CR - DR - CR - DR - CR.
I pretty much scribbled that on the corner of every exam or SAC I did, so maybe it'll help some of you guys too.

[Fyrefly]

I'm not up to this part in the course (if it even is in the course) but how do accountants classify assets that are affected by depreciation but their value goes up instead of down. For example, rare car dealers or antiques or something. Do they just list their assets at an agreed value or what?

This isn't covered in the VCE course, but just to satisfy your curiosity...

In Australia, using Fair Value accounting you can increase the book value of the asset to above its original purchase price. The other side of the ledger entry goes to a special type of Owner's Equity account called an "Asset Revaluation Reserve".

e.g. Value of antique car increases from $10,000 to $15,000:

DR  Antique Car                                     $5,000
       CR   Asset Revaluation Reserve                       $5,000

I don't want to explain too much or it'll be confusing, but 'appreciating' the asset in this way isn't part of the depreciation system that you guys are learning... it's part of a system that works alongside depreciation.

Answering another point you questioned... they don't list their assets at an "agreed value" per se, but at "fair value". There are a lot of rules accountants have to follow in determining fair value, but you get the idea.


Really good questions
It's great to see you're already thinking about stuff that you don't learn until you get to university.

[Jason12]

explain why assets and liabilities are classified in the balance sheet. In your explanation identify one qualitative characteristic that supports your explanation.

[smile+energy]

Can someone please explain this for me?
At the end of reporting period, the GST account has a debit balance, the business will get a refund. While if the GST account has a credit balance, the business will pay for the money owed. I don't really understand it. Thanks in advance