VCE Accounting Question Thread!

[peter.g15]

Don't quite understand this question. Is someone able to explain this fully in response to this question?? Explain the effect on net profit of using the FIFO cost assignment method at a time when suppliers’ prices are falling.

Okay, so when supplier's price is falling, the old stock is more expensive than the new stock, correct?

So, with FIFO, you always use the oldest stock price according to your stock card, however, you must remember that FIFO does NOT guarantee that your oldest stock is the one being purchased, for all we know, it could be the stock that came in 5 minutes ago.

So therefore, the oldest (and therefore most expensive) stock is considered to be sold as part of FIFO. Therefore, this will have the greatest cost of sales. However, this could overstate cost of sales (and therefore understate net profit) if the stock that is being purchased is actually a lot newer (and therefore cheaper).

I hope that was clear If not, I think the best way to understand it is to draw up a stock card with falling stock prices and see what happens

[brickm]

"Balance day adjustments ensure that revenues and expenses are not understated"
- do balance day adjustments also ensure that revenues and expenses are not overstated? Is so, what are some examples?

In the Cambridge textbook:

Ex 10.5 Qa)
what is the difference between what a is asking and what question b is asking?
Where in the question does it refer to determining the total rent of 2014 and 2015 together, isn't it asking for total rent for year that ends at 30th June 2015?


Mod edit: merged double post

[livio]

Hi I'm having trouble on getting the dates right for the general ledger balance accounts I know you put the last date of the month for posting, but then sometimes you put the 1st date of the month for "Balance" and sometimes you put the last date for "balance". Why is that?

Thanks

If the ledger is an ongoing asset, liability or capital account, it would already have a 'Balance' with the first day of the reporting period. At the end of the reporting period, after all the recording of the transactions using the last date of the month, you would balance the ledgers and still use the date of the month.
Say the Bank ledger. it would have a balance on the debit side. at the start of the month. Then after all the recording, the credit side would hopefully be less than the debit side, thus the need of the balance on the same date, to make the ledger balance. then in order to have your ledgers ready for the next reporting period, you will need to transfer that balance to the debit side, with the date of the next day, which is the first day of the next month/ reporting period.

[DoctorTwo]

Why do we use agreed values and which APs/QCs does it relate to?

[recess]

Hey there,

We use agreed value (as opposed to historical cost) because it is more RELEVANT. This is because assuming that it's an asset purchased by the owner prior to opening the business, it won't be relevant if its historical cost is reported since it wasn't purchased by the business ENTITY, but instead, by the owner him/herself. Therefore, to answer your question, it is related to the entity accounting principle and the relevance qualitative characteristic.

[DoctorTwo]

Thank you!

[georgina qiu]

Hey I was wondering if I should get an Accounting 3/4 tutor as I kind of failed my first SAC but I don't know if it would be helpful and what the tutor would do with me. Also if anyone is willing to tutor me for accounting that would be greatttt xx thank youuuu

[Cranium002]

It’s definitely worth talking with your teacher first before you spend money on a tutor. They should be able to better your understanding of accounting. If not, a tutor might be worth looking into to improve the SAC marks. The tutor would probably go through the theory component of accounting because in turn that will improve the practical component.

Good luck with it
Hope that helps 😊

That's just the job of the teacher. Talk to your teacher, stay back after school, do whatever you need to do with them. At the end of vce, your teacher should be like thank god, cranum is gone. Watch edrolo, andy is pretty good there.

[m2121]

How to work out question 10.8 a and b??

[S200]

Random question. What is the legal obligation that is fulfilled by completing an Income statement and a profit and loss statement?

Would it be to just know what the financial health of the business is at? I don't actually think this is a legal thing, but yeah

[gamma032]

Random question. What is the legal obligation that is fulfilled by completing an Income statement and a profit and loss statement?

Would it be to just know what the financial health of the business is at? I don't actually think this is a legal thing, but yeah

Public companies need to submit financial reports for shareholders

For all reports:
- Helps in paying GST/tax.You need to lodge a business activity statement, and all the info for that can be found on the reports. So you kinda need to do them.
- Reports are imperative for financial auditing. Without them it can be hard to track employee fraud/theft ect.

[Springyboy]

How to work out question 10.8 a and b??

So for this, as payment is only made on 30 April and balance day is 30 June, then there would be some accrued interest between 1 May and 30 June i.e. 2 months accrued interest.

Therefore,
1. Calculate interest expense per annum = 24000*0.08 = 1920
2. See how many months have passed between the 1 November 2014 and 30 June 2015 = 8 months
3. Then times annual interest expense by 8/12 to get the amount incurred = 1920*8/12 = $1280
for part a

For part b you just need the general journal entry. Remember that accrued interest expense is a liability which increases on the credit side of the ledger. Also, since part of the annual interest expense has been paid off in cash then only the remaining 2 months left over is accrued.

So to calculate the accrued figure, work out how much is half a years payment and subtract that from the interest incurred for the entire year
This equals 1280 - 1920*0.5 = $320

Therefore, the journal entry is:
DR Interest Expense 1280
       CR  Accrued Interest Expense 320
       CR  Bank 960

Or you can do the bank entry separately and then instead just write out
DR Interest Expense 320
     CR Accrued Interest Expense 320

Hope that makes sense,

James

[skrt skrt]

Hey people, could someone please post the neville box solutions, my teacher is on leave and our sub doesn't have them, really need to check my answers.

Thanks

[DoctorTwo]

Hi, I was just wondering when we were supposed to split credit sales and cash sales in the income statement with net sales below them. I've seen them split with net sales below in budgeted income statements, but does that only apply if there are both credit and cash sales? What if there are only credit or only cash sales? Also what about if the question is asking you to report 'sales' (not split) and there are sales returns? Do you just write sales, then less sales returns below it with the total beside it? Or do you do sales, less sales returns, and under it net sales? This question probably looks a bit confusing but I hope I explained it well enough. Any help or opinions are appreciated! Thanks

[Maddyv11]

Hi, I was just wondering when we were supposed to split credit sales and cash sales in the income statement with net sales below them. I've seen them split with net sales below in budgeted income statements, but does that only apply if there are both credit and cash sales? What if there are only credit or only cash sales? Also what about if the question is asking you to report 'sales' (not split) and there are sales returns? Do you just write sales, then less sales returns below it with the total beside it? Or do you do sales, less sales returns, and under it net sales? This question probably looks a bit confusing but I hope I explained it well enough. Any help or opinions are appreciated! Thanks

Hi!

For the splitting of credit and cash sales, I would split the two in the income statement, and have the total of sales on the right column on the income statement.

Then I would deduct sales returns and have net sales in the right column next to the value for the sales returns.

if there is only cash or only credit sales, just put sales in there.

I hope this helps and makes sense