In VCE Accounting, the structure of your answers, especially for theory-based questions, is critical to achieving high marks. In part 1 of this VCE Accounting blog series, we will guide you through effective strategies for structuring answers to theoretical questions, beginning with explanation questions, a fundamental component of the VCE Accounting assessment.
Using Qualitative Characteristics and Assumptions to Master VCE Accounting Responses
Many explanation questions in VCE Accounting require you to invoke a qualitative characteristic or assumption (or both) to explain aspects of accounting recording, reporting, or analysis. In such answers, you must demonstrate knowledge of the chosen qualitative characteristic or assumption and be able to show your understanding of how it explains the aspect in question. Adopting the right answer structure is crucial to doing this.
A great opening sentence is to state the name of the qualitative characteristic or assumption you're discussing, alongside a restatement of the issue in question. Rephrasing the question will help you understand its meaning. Avoid merely reciting definitions; instead, you can weave a well-targeted concise explanation of the qualitative characteristic or assumption into your answer that directly addresses the accounting aspect in question. Consider the following example:
| Question: With reference to a qualitative characteristic, explain the importance of recording information from source documents.
Source documents should serve as the basis for recording financial information in order to satisfy the verifiability qualitative characteristic. Using source documents ensures that independent, knowledgeable observers can reach a consensus that the financial information disclosed in transactions is faithfully represented. Moreover, source documents are retained for cross-checking and audit purposes.Key:
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This sample answer makes clear reference to the relevant qualitative characteristic in the opening sentence. It also rephrases the question, not only for the sake of proving understanding of it, but also for the benefit of the writer in understanding the meaning of the question. It then integrates the definition to explain the subject of the question and answer the question directly. Finally, the answer provides some additional insight to demonstrate a strong understanding of the connection between the subject in question and the chosen qualitative characteristic.
Answering "Effect on Accounting Equation" Questions
In VCE Accounting, students are frequently required to explain the impact of transactions on the accounting equation's elements: assets, liabilities, and owner's equity. The key to successfully answering such questions is to first recognise that there are explanation questions, as opposed to the more basic "state" questions. To earn full marks in these questions, students must explain how the transaction interacts with various line items, or accounts, in the balance sheet. These questions often involve relatively complicated transactions and planning is essential.
To help you plan your answer to these sorts of questions, consider the following approach:
- Identify the nature of the transaction.
- Write down the line items affected by the transaction.
- Determine whether these line items are increasing or decreasing and by what amount.
- Write down the corresponding accounting element for each line item (i.e., asset, liability or owner's equity).
- Group the affected line items by element to determine the overall impact on each element.
To demonstrate how to use the above approach, let's consider the following example question and plan an answer accordingly.
| On 3 June, Company A purchased $1,000 plus GST worth of inventory on credit from XYZ Ltd (Inv. 1). Explain the impact of this transaction on the accounting equation.
1. Identify the nature of transaction Credit purchase of inventory. 2. Write down the line items affected by the transaction. Inventory; GST Clearing; Account Payable - XYZ Ltd 3. Determine whether these Lin items are increasing or decreasing and by what amount. Inventory increases by $1,000; GST Clearing decreases by $100, Account Payable - XYZ Ltd increases by $1,100. 4. Write down the corresponding accounting element for each line item (i.e., asset, liability or owner's equity) Inventory (current asset); GST Clearing (current liability); Account Payable - XYZ Ltd (current liability) 5. Group the affected line items by element to determine the overall impact on each element Assets: Inventory increases by $1,000 => Assets increase by $1,000. Liabilities: Account Payable - XYZ Ltd increases by $1,100; GST Clearing decreases by $100 => Liabilities increase by $1,000. Owner’s equity: N/A => No effect on owner’s equity. Remember! The credit purchase of inventory on 3rd June increases assets by $1,000 (as inventory increases by $1,000). It also increases liabilities by $1,000. Although GST clearing decreases by $100, Account Payable - XYZ Ltd increases by $1,100. Furthermore, the transaction has no effect on owner’s equity. |
Deep Dive into VCE Accounting: Tips to Succeed
Final Tips for Answering VCE Accounting Theory Questions
- Remember to address both macro (accounting elements) and micro (line items) elements.
- Always reference dollar amounts in your answer.
- Be sure to adopt an explanatory style, rather than using shorthand to show understanding.
- If there is no effect on an accounting element, be sure to state this explicitly to get full marks.
In Conclusion
Mastering the art of structuring your theory responses is a critical skill to doing well in VCE Accounting but is just one skill you need to master to do well this year. This blog is the first in a series dedicated to uncovering the essential skills and strategies necessary for excelling in VCE Accounting. Stay tuned as we continue to explore more facets of this subject, aiming to equip you with a comprehensive toolkit for success.
Ready to Elevate Your VCE Accounting game this year? Connect with Expert VCE Accounting Tutors at Learnmate to enhance your understanding and confidence in tackling theory questions. Share this guide with your peers and together, step forward on your path to VCE Accounting success. Feel free to leverage other free resources on Learnmate or dive into other insights, tips, tricks and strategies by heading to our blog.
This blog was written by Ari A, a highly sought after VCE Accounting and VCE Maths Methods tutor on Learnmate. Ari achieved an ATAR of 99.10 and is currently studying a Bachelor of Commerce and Diploma in Mathematical Sciences. He is a highly experienced tutor who has been helping VCE students achieve their potential since graduating.
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