ACCOUNTING VCE UNITS 3&4 NEVILLE BOX WORKBOOK
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Accounting VCE Units 3 & 4
Workbook
Seventh edition
Neville Box
Publisher: Olive McRae
Proofreader: Katie Lawry
Cover design: Nikki M. Group
Text: design: Paul Ryan/Nikki M. Group
Typesetter: Straive
Warning: It is recommended that Aboriginal and Torres Strait Islander peoples exercise caution when viewing this publication as it may contain images of deceased persons.
First published in 2024 by Matilda Education Australia, an imprint of Meanwhile Education Pty Ltd
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Copyright © Neville Box, 2024
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Publication data
Author: Neville Box
Title: AccountingVCEUnits3&4Workbook
ISBN: 9780655094265
Printed in Malaysia by Vivar Printing, July-2024
Chapter
Chapter
Accounting formulae
Refer back to your Student Book for additional explanation.
Chapter 1
Assets = liabilities + owner’s equity
A = L + OE
Owner’s equity = assets – liabilities
OE = A – L
Chapter 7
Cost price = Selling price × 100 100 + Mark-up
Chapter 11
Owner’s equity = capital + profit – drawings
Revenue – expense = profit
Chapter 12
Inventory turnover = Average inventory × 365 Cost of goods sold
Accounts receivable turnover = Average accounts receivable × 365 Net credit sales + GST
Accounts payable turnover = Average accounts payable × 365 Net credit purchases + GST
Chapter 15
Depreciation per annum = Cost – Residual value Useful life
Chapter 22
Gross profit margin = Gross profit Net sales × 100
Net profit margin = Net profit Net sales × 100
Expense ratio = Expense item Net sales × 100
Return on assets = Net profit Average total assets × 100
Return on investment = Net profit Average capital × 100
Inventory turnover = Average inventory × 365 Costs of goods sold
Accounts receivable turnover = Average accounts receivable × 365 Net credit sales + GST
Cash cycle = Inventory turnover + Accounts receivable turnover
Accounts payable turnover = Average accounts payable × 365 Net credit purchases + GST
Asset turnover = Net sales Average total assets
Net profit margin = Net profit Net sales
Return on assets = Net sales Total assets × Net profit Net sales = Net profit Total assets
Chapter 23
Working capital = Current assets – Current liabilities
Working capital ratio = Current assets
Current liabilities
Quick asset ratio = Current assets – (Inventory + Prepaid expenses) Current liabilities
Cash flow cover = Net cash flows from operating activities
Average current liabilities
Debt ratio = Total liabilities
Total assets × 100
Sales returns ratio = Sales returns Total sales
Purchases returns ratio = Purchases returns Total purchases
Profit per hour = Net profit for the period
Hours worked by the owner
Financial indicators
There are many financial indicators used to evaluate business performance, but only the following are used on VCE Accounting exams.
Chapter 12
Inventory turnover
Accounts receivable turnover
Accounts payable turnover
Chapter 22
Average inventory × 365
Cost of goods sold = x days
Average accounts receivable × 365 Net credit sales + GST
Average accounts payable × 365 Net credit purchases + GST
Gross profit margin = Gross profit Net sales × 100 = x %
Net profit margin = Net profit Net sales × 100 = x %
Return on assets = Net profit Average total assets × 100 = x %
Return on investment = Net profit
Average capital × 100 = x %
Asset turnover = Net sales
Average total assets = times per period
Chapter 23
Working capital ratio
Quick asset ratio
Cash flow cover
Debt ratio
Current assets
Current liabilities = ratio : 1
Current assets – (Inventory + Prepaid expenses)
Current liabilities = ratio : 1
Net cash flows from operating activities
Average current liabilities = x times p.a.
Total liabilities
Total assets × 100 = x%
Total cash held
Accounting assumption:
Explanation:
Accounting elements
Justification for treating the item as revenue
Justification for treating the item as a liability
Argument to write off $99 000 in 2028
Argument to write off $99 000 over three years
Accounting elements and qualitative characteristics
a Difference between an asset and an expense
b One reason to treat all items as assets
c One reason to treat some items as expenses
d Application of relevance
Qualitative characteristics and accounting assumptions
a Brunswick Party Hire
Foods
b Melissa’s Health
d Gleeson’s Hardware
e Donna Davies
c Talia Liberatore
ETHICAL CONSIDERATIONS
In favour of taking on all three clients:
Identifying and acknowledging a conflict of interest
EXAM-STYLE QUESTIONS
Question 1a (3 marks)
Understated / Overstated / No effect Assets Liabilities
Owner’s equity
Question 1b (2 marks)
Assumption:
Question 2 (2 marks)
Question 3 (2 marks)
Revenue earned:
Justification:
Question 4 (2 marks)
Question 5 (2 marks)
Classifying balance sheet items
Item Classification
a Office furniture
b Cash on hand
c Office equipment
d Inventory of games
e Land & buildings
f Display cabinets
g Owner’s personal vehicle
h Amount owing to suppliers
Classifying balance sheet items
Item Classification
a Bank overdraft
b Amounts owing by credit customers
c GST refund due from the ATO
d GST owing to the ATO
e 12-month loan
f Mortgage loan
g Two-year term deposit in the business name
h Three-year loan taken out by the owner’s husband
i Amount invested by the owner to commence business
b Statement of accounting equation
Owner’s equity
Preparing balance sheets
a Vintage Vinyl: Balance sheet as at 31 August 2028
assets
b Explanations of treatment of:
i Vehicle – private
ii Personal home loan
c Statement of accounting equation
Assets
Liabilities
Owner’s equity
Preparing balance sheets
a Cicconi’s Car Yard: Balance sheet as at 30 September 2028
$ $
b Explanations of treatment of:
i Retained profits
ii Offer of $3500 for equipment
iii Computer system $2000
1 Owner deposited $375 000 cash to commence business
2 Bought an office desk for $2000, plus $200 GST
3 Purchased inventory for $10 000 cash, plus GST of $1000
4 Bought office computer for $5000 cash from City Computers (plus GST of $500)
5 Sold goods that had cost $4500 for $8500 cash, plus GST of $850
6 Paid advertising $1000, plus GST of $100
1 May: Owner contributed $95 000 cash, $15 000 inventory and a $25 000 vehicle
2 May: Sold inventory for cash $9000, plus GST of $900 (cost price $4 000)
3 May: Bought laptop for $2200 cash (including GST)
4 May: Sold goods on credit $2000, plus GST of $200 (cost price $1 200)
5 May: Paid wages for week $500
6 May: Purchased inventory on credit $8000 plus $800 GST
7 May: Owner withdrew $1000 for personal use
8 May: Paid advertising $100, plus GST of $10
