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March 29, 2024, 01:51:21 am

Author Topic: Help with these three question pls (Accounting)  (Read 1776 times)  Share 

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Guideme

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Help with these three question pls (Accounting)
« on: July 19, 2016, 07:10:03 pm »
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State the effect on the Accounting Equation for the 2800 wages paid for the month of June for Kerrie's Gardening.

Explain the effect of the transaction on the balance sheet if Vincent the owner purchased 60 dollars for dinner in Mc Donald's.

Explain one way stock cards could be used to reduce stock loss.

Please help :3
:0 :)

RuiAce

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Re: Help with these three question pls (Accounting)
« Reply #1 on: July 19, 2016, 07:37:01 pm »
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State the effect on the Accounting Equation for the 2800 wages paid for the month of June for Kerrie's Gardening.

Explain the effect of the transaction on the balance sheet if Vincent the owner purchased 60 dollars for dinner in Mc Donald's.

Explain one way stock cards could be used to reduce stock loss.

Please help :3
1. Assets and owners equity decrease in A = L + OE as a cash outflow occurs to pay the wage, and the wage counts as an expense (which reduces profit, which reduces equity).

2. Under the accounting entity assumption, all records are strictly based off the company's transactions; not that of its individual members.
McDonalds collects $60 as cash (or accounts receivable but very likely cash). This means assets go up. Equity also goes up as this cash counts as a revenue.
(Depending on how the course is taught you could argue there's also a decrease in inventory and increase in cost of goods sold. However this should definitely not outweigh the revenue.)

I didn't learn what a stock card is
« Last Edit: July 19, 2016, 07:38:32 pm by RuiAce »

The Usual Student

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Re: Help with these three question pls (Accounting)
« Reply #2 on: July 19, 2016, 08:32:24 pm »
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State the effect on the Accounting Equation for the 2800 wages paid for the month of June for Kerrie's Gardening.

Explain the effect of the transaction on the balance sheet if Vincent the owner purchased 60 dollars for dinner in Mc Donald's.

Explain one way stock cards could be used to reduce stock loss.

Please help :3

a state the effect on the ACC eqn means to do the following --> EXPLICITLY state the effect on Assets, Liabilities and OE
so
Assets-->  Bank will decrease by 2800 ( since you paid them you loose 2800 in money)
Liabilities --> No effect ( important to mention there is no effect )
Owner's Equity --> Profit decrease by 2800 as your wages expenses increased by 2800.

For your second equation, you don't need to record anything UNLESS he used 60 dollars from the firm but that doesn't seem to be the case. This is because of the entity principle which states that the owner and the firm are considered two separate entities.

For the stock card questions i have two potential answers:
Stock cards can be used as a checking mechanism and can be compared to your physical stocktake to allow for any stock losses or gains to be picked up, this allows for the firm to pick up on stock losses and recognize the issue in the first place. They can then take direct action to help combat this and reduce the frequency of stock losses.

Or

Stock cards allow the firm to have an accurate value of stock on hand whilst accounting for the movement of stock in and out of the firm. This allows the firm to reduce the chance of a stock loss occurring as it reduces the chance of the stocktake value being different from the value in the stockcard ( assuming we use a different method of accounting for stock ) :/ idk tbh bit of a stretch

RuiAce

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Re: Help with these three question pls (Accounting)
« Reply #3 on: July 20, 2016, 12:19:57 am »
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For your second equation, you don't need to record anything UNLESS he used 60 dollars from the firm but that doesn't seem to be the case. This is because of the entity principle which states that the owner and the firm are considered two separate entities.
Exactly, so why is McDonalds not generating revenue from the transaction?

The Usual Student

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Re: Help with these three question pls (Accounting)
« Reply #4 on: July 20, 2016, 01:11:00 am »
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Exactly, so why is McDonalds not generating revenue from the transaction?

It is revenue for McDonald's, but we don't know who we are accounting for.

 these are are very typical question in VCE accounting, they usually are there for the student to demonstrate the entity principle and understand there would be no effect to accounting records. Ultimately, we don't know which firm we are accounting for but considering that we don't have enough information to record the transaction to do with McDonald's, but we do have adequate information to record it for the owners firm ( presuming he used the firms cash ) So yeah I figured McDonalds perspective on the transaction wasn't relevant .

Cranium002

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Re: Help with these three question pls (Accounting)
« Reply #5 on: March 05, 2017, 12:18:58 pm »
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State the effect on the Accounting Equation for the 2800 wages paid for the month of June for Kerrie's Gardening.

Explain the effect of the transaction on the balance sheet if Vincent the owner purchased 60 dollars for dinner in Mc Donald's.

Explain one way stock cards could be used to reduce stock loss.

Please help :3

Cash at Bank $2800 = Wages $2800 (Liability)

According to the Entity Princuple, the business is separate from the entity, therefore only if the $60 is the firm's money, then the firm's balance sheet will be affected.

Stock cards are a record that records each individual transaction which involves the movement in and out of of the business of a particular line of stock.