VCE Accounting Question Thread!

[Jason12]

what qualitative characteristics and accounting principles does the cash flow statement fulfil?

[Jason12]

with cash vs profit questions if you get a question like "Explain how a business can have a cash surplus even with a net loss", are you only allowed to use examples that decrease profit and don't affect/increase cash or can you use examples that don't affect profit but make cash higher?

[chasej]

with cash vs profit questions if you get a question like "Explain how a business can have a cash surplus even with a net loss", are you only allowed to use examples that decrease profit and don't affect/increase cash or can you use examples that don't affect profit but make cash higher?

You can use both.
A good thing to do is to work out essentially what has happened. So if cash was in surplus but there a net loss, this means Change in cash has exceeded net profit/loss, this means you can use examples which caused either receipts>revenue or payments<expenses, as these would cause the difference. Always be aware of limiting phrases in the questions however, for example, sometimes it may say why operational activities was in surplus but net loss occured, meaning you can only discuss items relevant to operational activities.

[Eugenet17]

was doing some unit 3 practice exams and want to clarify something:

Caruso's Store paid 9000 for 6 months of advertising contract on 1 March 2015. Contract covers the months from March to the end of August. The reporting period ends on 30 June each year. Complete the general ledger of the relevant entries.

In the Prepaid advertising ledger, they debited Bank 9000 and recorded the date as 1 March. Shouldnt this date be the 30th of june as we record in  our general ledgers during the end of the reporting period, or am I forgetting something?

[Valyria]

Caruso's Store paid 9000 for 6 months of advertising contract on 1 March 2015. Contract covers the months from March to the end of August. The reporting period ends on 30 June each year. Complete the general ledger of the relevant entries.

In the Prepaid advertising ledger, they debited Bank 9000 and recorded the date as 1 March. Shouldnt this date be the 30th of june as we record in  our general ledgers during the end of the reporting period, or am I forgetting something?

If you were making a BDA on the 30th of June, then the entry could have been for the 31st of March with the cross reference being the bank or the 1st of June with the cross reference being balance. It depends when the the ledger accounts are posted since they can be posted monthly or once a reporting period. Usually the question won't specify when they're posted so you can choose accordingly. However you can't for example have the entry on the 1st of June with the cross reference being the bank.

Hope this sheds some light on your issue

[Eugenet17]

Yeah i know that but this question states that the RP is between March and June, and it's just a debit entry to record the purchase of the advertising contract, so would i be right in recording the debit as June 30th with the cross-ref being bank?

[Valyria]

Yeah i know that but this question states that the RP is between March and June, and it's just a debit entry to record the purchase of the advertising contract, so would i be right in recording the debit as June 30th with the cross-ref being bank?

Yes you would be right.

[Eugenet17]

Thanks!

[chasej]

was doing some unit 3 practice exams and want to clarify something:

Caruso's Store paid 9000 for 6 months of advertising contract on 1 March 2015. Contract covers the months from March to the end of August. The reporting period ends on 30 June each year. Complete the general ledger of the relevant entries.

In the Prepaid advertising ledger, they debited Bank 9000 and recorded the date as 1 March. Shouldnt this date be the 30th of june as we record in  our general ledgers during the end of the reporting period, or am I forgetting something?

It is my understanding that the journals (and hence transactions) can only be posted into the general ledger each month, regardless of reporting period length (unless the reporting period goes for less than a month obviously). So the dates would be 31 mar. They probably made a mistake.

Ledgers are balanced/closed at the end of the reporting period.

So the "prepaid advertising expense" ledger account would look like:

----------------------------------------------------------------------------------
31 mar   bank    9000                |  30 june        advertising           6000
                                                | 30 june        balance                3000
                        --------                                                             --------
                        9000                                                                9000
1 july    balance  3000

[chasej]

If you were making a BDA on the 30th of June, then the entry could have been for the 31st of March with the cross reference being the bank or the 1st of June with the cross reference being balance. It depends when the the ledger accounts are posted since they can be posted monthly or once a reporting period. Usually the question won't specify when they're posted so you can choose accordingly. However you can't for example have the entry on the 1st of June with the cross reference being the bank.

Hope this sheds some light on your issue

You cannot balance a ledger during a reporting period. Balancing separates reporting periods from another, not unlike closing, but in balancing the actual balance of the ledger is carried forward. If you ever want to know the balance of an account during a reporting period it is footed, which essentially does the same thing as balancing in a less formal way.

The journals can only be posted monthly (check my post above).

[lmnop]

It would be greatly appreciated if you could help address some of the inconsistencies in question 6.8 of NEAP 2013.

1) Interest expense paid, as shown per question, is recorded as $2300. Instead, the answers seem to suggest that $1200 was transferred from GST Payments to Interest expense, raising the total of the transaction to $3500. Is it a mistake on NEAP's part? Or am I just overlooking some minor detail?
2) I've calculated the Depreciation of the Motor Vehicle for the year to be $2450, but the answer is $2200 somehow. 

Apologies for the wonky scanning and the light font. Thanks          

[Valyria]

1) Interest expense paid, as shown per question, is recorded as $2300. Instead, the answers seem to suggest that $1200 was transferred from GST Payments to Interest expense, raising the total of the transaction to $3500. Is it a mistake on NEAP's part? Or am I just overlooking some minor detail?
2) I've calculated the Depreciation of the Motor Vehicle for the year to be $2450, but the answer is $2200 somehow. 

1) I'm not understanding your qn, are you saying they regarded $1200 of the GST payment as an interest expense? Does this tie up with a question?
2) I calculated the depn expense to be $2450 as well. Was there any information provided above the 'additional information' about the length of the reporting period? Or have they provided a post trial balance?

[lmnop]

Nope, that's all there is to the question. No trial balances and the Reporting Period seems to cover the year starting from 1 July. I've attached the answers for the question, hopefully this will provide some clarity as to what I'm trying to say. As you can see, the Cash Flow Statement records the Interest payment as $3500 and GST Payments as $4200. This does not line up with the info presented in the question which lists the payments as $2300 and $5400 respectively. There's probably some sneaky detail in the question which explains this inconsistency, but otherwise I'm not too sure.

[anna.xo]

Can someone please help me with exercise 14.8 ? I got the NRV as higher than the cost price, what do I do now ?
Thanks

[Jason12]

how do you record a period cost? Essentials Book says it's recorded it it's own ledger account but in the exercises they put a period cost in the general journal

How does using a period cost affect the accounting equation? As the period cost is assigned in its entirety, regardless of how many stock items were sold, does this mean it overstates the cost of goods sold or cost of sales? Again textbook says it understates cost of goods sold which I don't understand