VCE Accounting Question Thread!

[abcdqdxD]

Couldn't it also be if the vehicle is expected to be sold/decommissioned within 12 months. As wouldn't a car seller list vehicles which it intends to sell as stock in the balance sheet?

Yep you're also right. As I previously said, Vehicle would fall under stock control if the firm is a car dealer but the vehicle in itself is still a current asset.

[smile+energy]

I am confused about this sentence, can someone explain it for me?
A vehicle purchased by the owner but then contributed to the business. The asset cannot be valued at the original price paid by the owner, as it is the cost to the business. 
And can you please explain the Going concern principle by using an example for me?
Thanks in advance.

[jono88]

 The going concern principle means that a business entity will continue to operate indefinitely, or at least for another twelve months.

Financial statements are prepared with the assumption that the entity will continue to exist in the future, unless otherwise stated.

The going concern assumption is the reason assets are generally presented in the balance sheet at cost rather that at fair market value. Long-term assets are included in the books until they are fully utilized and retired.

[chasej]

I am confused about this sentence, can someone explain it for me?
A vehicle purchased by the owner but then contributed to the business. The asset cannot be valued at the original price paid by the owner, as it is the cost to the business. 

Since the owner purchased the vehicle, the vehicle has probably gone down in value as the vehicle has been used by the owner. Therefore the value of the vehicle (capital contribution) must be recorded at the agreed value, which is an estimate of the vehicle's worth at the time of contribution. The figure is less reliable as there is no source document to verify the value, however the agreed value is far more relevant to the business as it represents the value of the vehicle, and hence the value of future economic benefit, the vehicle is to provide to the business. Essentially in this case relevance overrides reliability, no other time is that the case.

[Kuroyuki]

no other time is that the case.

hmm
Isn't always the case?  For example depreciation, it is an expense  based on two estimates (unreliable)  but we still do it because it is a relevant expense and will affect profit and decision making. 
From what I remember relevance always overrides reliability. 

[smile+energy]

Since the owner purchased the vehicle, the vehicle has probably gone down in value as the vehicle has been used by the owner. Therefore the value of the vehicle (capital contribution) must be recorded at the agreed value, which is an estimate of the vehicle's worth at the time of contribution. The figure is less reliable as there is no source document to verify the value, however the agreed value is far more relevant to the business as it represents the value of the vehicle, and hence the value of future economic benefit, the vehicle is to provide to the business. Essentially in this case relevance overrides reliability, no other time is that the case.

Thanks for your detailed explanation
I have another question: why the vehicle contributed by the owner is a cost of the business?

[smile+energy]

The going concern principle means that a business entity will continue to operate indefinitely, or at least for another twelve months.

Financial statements are prepared with the assumption that the entity will continue to exist in the future, unless otherwise stated.

The going concern assumption is the reason assets are generally presented in the balance sheet at cost rather that at fair market value. Long-term assets are included in the books until they are fully utilized and retired.

That makes sense, thanks

[chasej]

hmm
Isn't always the case?  For example depreciation, it is an expense  based on two estimates (unreliable)  but we still do it because it is a relevant expense and will affect profit and decision making. 
From what I remember relevance always overrides reliability.

Very true. I forgot about that.

[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.