VCE Accounting Question Thread!

[Eugenet17]

Could someone explain how i would go about recognising and recording a sundry creditor? Would i only record the creditor as a sundry creditor if i recognise that what im purchasing is a NCA and is infrequent? E.g purchase motor vehicle for firm, do i record it as a sundry creditor in the general journal, and do i record a sundry creditor seperately in their own ledger accounts and balance sheet?

[IT_Failure]

Could someone explain how i would go about recognising and recording a sundry creditor? Would i only record the creditor as a sundry creditor if i recognise that what im purchasing is a NCA and is infrequent? E.g purchase motor vehicle for firm, do i record it as a sundry creditor in the general journal, and do i record a sundry creditor seperately in their own ledger accounts and balance sheet?

The short answer is YES.
All sundry creditors appear in their own individual accounts in the general ledger and the balance sheet.
Let's assume a $10000 vehicle was bought on credit from Honda. The NCA Vehicle would be debited $10000 and Sundry Creditor Honda credited $10000 in the general ledger.

[BoredSatan]

SORRY IVE BEEN AWAY GUYS. I WILL ANSWER QUESTIONS FROM NOW ON I PROMISE

[TheWackyCheese]

Hey guys was just doing some practise sacs today and I was doing a question where the owner commenced business and contributed items. One of the items was: "Motor vehicle registration, which still has five months to run, with an annual cost of $840 (Memo 1)" Further down, it says "Identify and explain how the motor vehicle registration will be classified in the Balance Sheet of Bikes 4 Everyone." Would this be classified as a current asset and in the general journal as a debit of $350 (The price of the registration for the 5 months) and why? Thanks for any help.

[BoredSatan]

Hey guys was just doing some practise sacs today and I was doing a question where the owner commenced business and contributed items. One of the items was: "Motor vehicle registration, which still has five months to run, with an annual cost of $840 (Memo 1)" Further down, it says "Identify and explain how the motor vehicle registration will be classified in the Balance Sheet of Bikes 4 Everyone." Would this be classified as a current asset and in the general journal as a debit of $350 (The price of the registration for the 5 months) and why? Thanks for any help.

Yes it would be a current asset, because the motor vehicle registration will provide economic benefit to the business in the next 5 months since it provides the vehicle with registration and allow the vehicle to be used. Thus it is named "Prepaid Motor Vehicle Registration" and is a current asset.

It is debited in the General Journal because its contribution increases the amount of assets (hence debit) and increases the amount the owner has contributed to the business, increasing the owners equity (hence credit)

[william.woon]

Question guys: For example the owner of a business organised an advertisement to be run during June at a cost of $480, plus GST, but the paper has not sent an account to him yet. The owner thinks they'll send it during July.

Would the advertisement go into either statement of receipts and payments or income statement. Because I thought it wouldn't as its an liability as a creditor. Correct me please.

[chasej]

Question guys: For example the owner of a business organised an advertisement to be run during June at a cost of $480, plus GST, but the paper has not sent an account to him yet. The owner thinks they'll send it during July.

Would the advertisement go into either statement of receipts and payments or income statement. Because I thought it wouldn't as its an liability as a creditor. Correct me please.

When did the cash payment occur? Before during or after  advertising appeared?
If the advertisement occurred before or same time as payment.
I imagine it would be an expense as it would result in an outflow of economic benefit (cash) which decreases assets (bank) and resultingly decreases owners equity. Adhering to conversation expenses must be recorded when probable hence an account need not be sent by the newspaper, only a cheque recording the outflow of cash from payment be needed.

I could be wrong because the information you have isn't really sufficient to give a proper answer tbh.

[william.woon]

When did the cash payment occur? Before during or after  advertising appeared?
If the advertisement occurred before or same time as payment.
I imagine it would be an expense as it would result in an outflow of economic benefit (cash) which decreases assets (bank) and resultingly decreases owners equity. Adhering to conversation expenses must be recorded when probable hence an account need not be sent by the newspaper, only a cheque recording the outflow of cash from payment be needed.

I could be wrong because the information you have isn't really sufficient to give a proper answer tbh.

Sorry for the lack of information. So let's say in the month of July I was to have my business advertised, the company that advertises my business hasn't sent a bill to me by the end of 31st of July, I'm expecting it to be sent to me during August. Would I include it in the income statement for the month ended 31st of July?

[jonoz0r]

Sorry for the lack of information. So let's say in the month of July I was to have my business advertised, the company that advertises my business hasn't sent a bill to me by the end of 31st of July, I'm expecting it to be sent to me during August. Would I include it in the income statement for the month ended 31st of July?

This question is pretty ambiguous, but if the business was advertised in July, but won't be able to pay for the advertising until August, then I think that the expense would be recorded in the income statement ended 31st July as an Accrued Advertising Expense, as the expense has been incurred, but not yet paid for.

Hope this answers your question!

[william.woon]

This question is pretty ambiguous, but if the business was advertised in July, but won't be able to pay for the advertising until August, then I think that the expense would be recorded in the income statement ended 31st July as an Accrued Advertising Expense, as the expense has been incurred, but not yet paid for.

Hope this answers your question!

Thanks, I just thought you wouldn't put it in until the August income statement, but anyway thank you.

[chasej]

Thanks, I just thought you wouldn't put it in until the August income statement, but anyway thank you.

It couldn't be in the August income statement as to put an expense that was generated in July in the August income statement would understate net profit, thus decreasing relevance of accounting reports.

[Eugenet17]

From Cambridge Exercise 10.12:

Assess the sales mark-up applied by Maranelli Sports for the six months ended 31 Dec 2015.

How do i answer this? :x

Also, 'Yearly repayments of 12000 are made on Mortgage-xx, interest 6% p.a., payable on 28 Feb and 31 Aug each year' : Is this still a current liability of 12000?

[jonoz0r]

From Cambridge Exercise 10.12:

Assess the sales mark-up applied by Maranelli Sports for the six months ended 31 Dec 2015.

How do i answer this? :x

Also, 'Yearly repayments of 12000 are made on Mortgage-xx, interest 6% p.a., payable on 28 Feb and 31 Aug each year' : Is this still a current liability of 12000?

For your first question, if there was a considerable profit in the reporting period, I would say something like "The sales mark-up applied by the business for the six months ended 31 December 2015 is adequate as Gross Profit is able to cover all other expenses, whilst also yielding a significant profit". You could also mention the timeframe in which the profit was earned, i.e. if there was considerable profit in only a 6 month period

For your second question, the yearly repayments are still considered to be a current liability of $12000, however be careful of the remaining portion that is non-current, because this is usually the part where people lose marks

[Eugenet17]

For your first question, if there was a considerable profit in the reporting period, I would say something like "The sales mark-up applied by the business for the six months ended 31 December 2015 is adequate as Gross Profit is able to cover all other expenses, whilst also yielding a significant profit". You could also mention the timeframe in which the profit was earned, i.e. if there was considerable profit in only a 6 month period

For your second question, the yearly repayments are still considered to be a current liability of $12000, however be careful of the remaining portion that is non-current, because this is usually the part where people lose marks

Thanks!

@Second part: that's what i thought, solutions just recorded 24000 as a current liability so I guess it was just an error on their part

[tiadrops]

Hi all, just a question about SACs.
Are teachers required to give us all the templates? In our first SAC our teacher made us draw up all the ledgers, trial balance etc. which was quite time consuming. I mean in reality, we're going to be given all the templates in an exam.