VCE Accounting Question Thread!

[Jason12]

does 5/7 credit terms mean 5% discount if payed within 7 days or other way round?

[lisax3]

does 5/7 credit terms mean 5% discount if payed within 7 days or other way round?

Yes, it means if it is paid within 7 days a 5% discount will be given

[Valyria]

On reporting day (30th of june) if it is found that a transaction such as a cash payment that occurred earlier for example on the 16th on june has not been recorded. Do we record it in the cash payment on the day it occurred (16th of june) or the day the transaction was found 30th of june?

30/06.

If you think about it, if you write 16/06 in the general journal, you'll most likely disrupt the chronology of entries already in the general journal because there's bound to be entries on the 30/06 for balance day adjustments. Secondly, even if you say 16/06, the general journal will be posted at the end of the month (or however frequently) so the general ledgers won't reflect when you actually found the transaction.

[Valyria]

Hey,

Which unit cost price would you need to adjust for the following transactions and why?

[student1122]

heyy
could you guys help me with a couple of questions i have?
1) if i were to get a question such as "Discuss the changes in profitability of the business between 2012 and 2011" or "Explain the trend in the Working Capital Ratio", do i have to explicitly define the terms profitability and working capital ratio before answering the question
2) for a budgeted report do we have to include GST Settlement/GST Refund in the budgeted cash flow statement?
for example if at 31 Dec 2012 there was a GST liability of 1480, do we have to include this amount  in the budgeted cash flow statement for the year ended 21 Dec 2013?
thankyou in advance 

1. No you do not have to to define profitability if it asks you to discuss regarding to a business however with any ratio given you need to describe what the numbers actually mean. So for example, if the business had 0.8:1 (2011) and 1:1 (2012) as their WCR figures then you need to state that the working capital ratio increased from 0.8 (2011) to 1(2012) which is a favourable trend as the business now has more current assets available for its current liabilities. So you need to embed the definition in your answer which is a very common thing that is required in accounting.
2. Yes the budgeted reports do need to include GST, previous years they did not have this however the new study design requires the addition of GST, so do not forget about it!
Hope this helped

[student1122]

Hey,

Which unit cost price would you need to adjust for the following transactions and why?

•   Memo 24: stock loss of 3 units @ $55 (because of FIFO)
•   Memo 25: stock write down of 5 units @ $55 (because of FIFO)
•   Memo 26: stock write down of the remaining 4 units @ 55 and 30 units @ 50 to $40 each
tell me if any of it does not make sense

[lisax3]

Which date should you use to record prepaid sales revenue in the general journal once it has reached the end of the reporting period? The end of the reporting period where the revenue has not been earned yet or the date of when it was earned?
Because in the study design pg 40-41 it records prepaid sales revenue when it was earned even though it is not the end of the month
http://www.vcaa.vic.edu.au/documents/vce/account/accountingsd-2013.pdf and also in the 2010 vcaa exam 2
However in the 2012 exam question 4
http://www.vcaa.vic.edu.au/Documents/exams/account/2012/accounting_assessrep12.pdf
It was recorded at the end of the month where the revenue has not been earned yet.

[Valyria]

•   Memo 24: stock loss of 3 units @ $55 (because of FIFO)
•   Memo 25: stock write down of 5 units @ $55 (because of FIFO)
•   Memo 26: stock write down of the remaining 4 units @ 55 and 30 units @ 50 to $40 each
tell me if any of it does not make sense

Sigh I didn't realise the 12 units at $55 preceded the 30 units at $50. Thanks for that

[student1122]

Which date should you use to record prepaid sales revenue in the general journal once it has reached the end of the reporting period? The end of the reporting period where the revenue has not been earned yet or the date of when it was earned?
Because in the study design pg 40-41 it records prepaid sales revenue when it was earned even though it is not the end of the month
http://www.vcaa.vic.edu.au/documents/vce/account/accountingsd-2013.pdf and also in the 2010 vcaa exam 2
However in the 2012 exam question 4
http://www.vcaa.vic.edu.au/Documents/exams/account/2012/accounting_assessrep12.pdf
It was recorded at the end of the month where the revenue has not been earned yet.

I am pretty sure it is recorded at the date it is earnt in the general journal and that is probably a mistake? I am not too sure :/

[Jason12]

is the DR side of GST clearing account for assets and the credit side for a liability? So If A GST refund or a GST settlement from ATO happens which side does it go on?

[kk.08]

is the DR side of GST clearing account for assets and the credit side for a liability? So If A GST refund or a GST settlement from ATO happens which side does it go on?

So the DR side represents a decrease in GST liability which is achieved when stock is bought from creditors on cash or credit. The CR side represents an increase in GST liabilty which is achieved when debtors buy your stock and you collect GST.

A GST settlement is recorded on the DR side because you're reducing GST liabilty and the GST refund from the ATO goes on the CR.

Also, does anyone know how to do question 4a) and b) of the image attached below? It's actually driving me crazy!! I've also attached the answers from the examiner's report.

Thanks in advance

[Zealous]

Also, does anyone know how to do question 4a) and b) of the image attached below? It's actually driving me crazy!! I've also attached the answers from the examiner's report.

Thanks in advance

One way of doing it is to look at each individual month, remembering that they pay in advance:

Jul (2011): Original contract payment for Aug, 1200
Aug: Original contract payment for Sep, 1200
Sep: Very first payment on new contract for Oct costing 1200x1.2=1440
Oct: Payment for Nov, 1440
Nov: Payment for Dec, 1440
Dec: Payment for Jan, 1440
Jan (2012): Payment for Feb, 1440
Feb: Payment for Mar, 1440
Mar: Payment for Apr, 1440
Apr: Payment for May, 1440
May, Payment for Jun, 1440
Jun, Payment for Jul, 1440

So we end up with 10 payments of 1440 and 2 payments of 1200 which equates to 16800.

For part b, you can do the exact same method, or you can alternatively think about it like this: The original advertising cost at $1200/month applies to Jul, Aug and Sep 2011, and the new advertising cost of $1440/month applies to October onwards, so we have 3 months of the old 1200, and 9 months of the new 1440 which is 16560. Even though there was a payment for 1440 in September (above), this was a prepayment in advance so the actual expense for the month was still 1200.

[TheWackyCheese]

Do accrued wages go in the income statement?

[kk.08]

Ohhh that makes sense now!!! Thanks so much, I guess I should try and write it out next time haha

Do accrued wages go in the income statement?

Accrued wages are wages that the are still owing to the employees and is therefore a liability. The income statement only consists of revenues and expenses, while the balance sheet consists of liabilities, assets and owners equity. Therefore, accrued wages would be recorded in the balance sheet not the income statement

[anna.xo]

I know that this is probably irrelevant here, and I do apologise but I really need some help.
So I've done like 5 practice exams, and I'm only getting like 70. I'm losing marks on prac and theory and I don't know how to get better. Does anyone have any actually helpful tips ? TIA.