VCE Accounting Question Thread!

[MeLucky]

Can someone answer this question in detail:

"What is the purpose of calculating a return on owner's investment if the return on assets has already been determined?"

[teodora]

What are the ways of reducing sales return?

[wqx1995]

How would you explain why the carrying value is used to calculate profit or loss on disposal of a nca, instead of the Historical Cost? (3marks)

[laree_23]

Could someone please explain how to record this in the Cash Payments

VS Vehicles agreed on a $12000 trade-in value for the old vehicle, and a $2000 cash deposit was paid to VS Vehicles on the day of purchase (Cheque 425)

[BoredSatan]

Could someone please explain how to record this in the Cash Payments

VS Vehicles agreed on a $12000 trade-in value for the old vehicle, and a $2000 cash deposit was paid to VS Vehicles on the day of purchase (Cheque 425)

1. record all the disposals as per usual
2. record the credit purchase as per usual
3. record the payment in the cash payment journal with the date as the date of purchase just like a normal sundry creditor repayment

How would you explain why the carrying value is used to calculate profit or loss on disposal of a nca, instead of the Historical Cost? (3marks)

the carrying value represents the most accurate cost of the NCA at the time of its disposal based on the calculation of depreciation therefore it is more relevant to use it to calculate the profit of loss on the disposal so profit will be more accurate.

What are the ways of reducing sales return?

buy better quality stock from suppliers

[nacho]

1. Referring to one accounting principle, explain why it may be necessary to prepare a schedule of receipts from debtors when preparing a budgeted cash flow statement.

[Moni.brew]

Hello, i need help with these questions:

With recording of the expiration of the term deposit on the CRJ, why do we split the interest with the original term deposit?

And the classification of termdeposit?

thanks

[BoredSatan]

so that reports contain useful information for decision making since interest will be used to calculate profit

[nacho]

cambridge accounting chapter 18, exercise 18.4
suggest two strategies the owner could adopt to improve net profit in 2010 without changing the Asset turnover
suggested answers are:
- cheaper supplier
- reduce stock loss / better control over advertising, wages

I am unsure about how either of these reasons work.
Actually, upon trying to justify my thoughts on why a cheaper supplier wouldnt work, i got even more confused because i though id find out why it was a valid answer.    <---- wtf?? idk what that was
My initial line of thought was that, if we buy from a cheaper supplier, won't our assets decrease, as our stock is worth less that it was before? But then i thought, 'bank would also decrease, but it would decrease less than if we had bought the expensive stock'. then i thought these two factors would cancel each other out and the answer is valid for that reason.

HOWEVER, when you think about it, assets will still change, and therefore so will asset turnover, shouldnt the answer be something which has nothing to do with buying?
edit/; okay nvm, the key part i was missing was that assets will not change if we buy more stock. my bad
As for the stockloss, if we are reducing the amount of stock we lose, wouldn't that also effect asset turnover?


tl;dr justify why the suggested answers provided by the textbook work.
Thanks.

and also, someone please answer the quesiton i asked a few posts above, please

[nacho]

Explain what is measured by the stock turnover rate and state two ways by which the
business can improve this ratio.

I put 'Buying stock from a cheaper supplier.'
as this would..in some way decrease the average stock on hand, would it not?

[nacho]

okay.. just did the unit 4 2009 vcaa exam
the hardest part of unit 4 for me  is knowing when to and when not to include GST.. i swear some of the templates were screwed........................................................

[nacho]

And they were stuffed.
Anyway:
would one consider 'disposal of equipment' as an expense account?
if not, then what would you consider it as?

[abzzzz]

Can someone guide me on Disposals and trade-ins? can you go through it step by step for the general journal entries please?

[nacho]

Can someone guide me on Disposals and trade-ins? can you go through it step by step for the general journal entries please?

Disposal of a NCA is three steps:

- transfer the carrying value of the nca
- record proceeds from the sale/trade-in
- transfer profit/loss from disposal

first step : carrying value          -  FOUR ENTRIES    [ CR NCA ACCOUNT, DR DISPOSAL OF NCA         +      DR ACC DEP'N OF NCA  , CR DISPOSAL OF NCA ]

You will CREDIT the non-current asset you are disposing of, so as to set its balance to zero
consequently, you will DEBIT "Disposal of noncurrent asset" by the amount you credited the non-current asset account.

However, you have to note that most of the time, you will have already consumed some of your non-current asset account, i.e it has been depreciated.
therefore, you have not disposed of the whole value, only some of it.
to show this: you have to DEBIT the "Accumulated Depreciation of non current asset'' account, TO SET the balance to ZERO.
                       and you have to CREDIT the 'disposal of non current asset' account, by the same amount you debited the 'accumulated depreciation account' (im sure your familiar with double entry rules ! )

STEP 2:
this step can vary, depending of whether u are dealing with trade-ins or sales.
Ill cover both:
For sales
you will be receiving money. Thus, this is not recorded in the general journal, but cash receipts journal
Date:                   Details:                                      Rec.                  Bank                                                                             Sundry
Month/#         Disposal of Non-current asset          x                       $500                                                                               $500                      ($500 is just an example)


For trade in     -      FIVE  ENTRIES   (two for reduction in liability, and 3 for purchasing the non-current asset off of your sundry creditor)
this is a REDUCTION IN LIABILITY TO YOUR SUNDRY CREDITOR.
there is no cash payment involved, so it is recorded in the general journal.

Firstly, reduction in liability:
DEBIT 'SUNDRY CREDITOR - ..... ' by the amount that they are taking the asset for. it will generally say (traded in NCA for $500 reduced debt) or something along those lines.. it will always be specified how much your trade in is worth. CREDIT Disposal of noncurrent asset by the amount you debited sundry creditor by..

SECONDLY, the purchase of NCA.
if you are having a trade in, it obviously involves a sale. (I think that it may be possible that this isnt always the scenario, ill have to check up with someone else, HOWEVER, ive not come across a scenario as of yet)
Purchase of NCA has three entries:

DEBIT Non current asset
DEBIT GST Clearing
Credit  Sundry Creditor .....

Step 3: Transferring profit or loss.

will complete later, must leave right now

[abzzzz]

Thanks so much!
Can you also explain product and period costs? i always have trouble with them two