Didn't realise there have been so many unanswered questions here. Thought I'd answer a few.
Do discounts on credit purchases reduce the cost of stock? And if so, would that be a period or product thing?
Nope. The cost of the stock won't change, all a discount is doing is reducing our liability to creditors, it doesn't actually change how much the stock is worth.
Luke has stated that he would reduce his profit as much as possible as he doesn't want to pay too much tax this year. In order to do so he has stated that he will record the whole amount of Prepaid Rent Expense as an expense in the reporting period.
Discuss, ref to AP (OTHER THAN reporting period), why this is inappropriate.
I could only think of going concern that could fit, but can't come to the conclusion as to why. Any one got any suggestions?
Conservatism: If you treat all the rent expense as an expense in the current period, there's going to be zero rent expense allocated to the next 'x' periods. This means you're acutally overstating your profit in future periods. It's better to spread out the expense.
I've been seeing in a couple of practice papers/Checkpoints questions relating to internal control mechanisms. I know it was somewhat covered briefly in Unit 1/2, but I can't see anything about it in the Study Design or in the Textbook. Will it ever/Has it ever come up on any actual VCAA exams or am I wasting my time doing questions on it?
I think it came up once a while ago - but I don't think it has come up since. I wouldn't worry too much about it.
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can you combine the entries for disposal of van?
It's fine to do boths. If you combine them you'll still get the same overall effect on the general ledger. So combining them will make the ledger look neater while separating them could make it slightly easier to understand.