FAC1601 Study Unit 1 Exam 2026
Questions and Answers Graded A+
IFRS - Correct answer-International Financial Reporting Standards
IAS - Correct answer-International Accounting Standards
APB - Correct answer-Accounting Practices Board
FRSC - Correct answer-Financial Reporting Standards Council
SAICA - Correct answer-South African Institute of Chartered Accountants.
Purpose of Conceptual Framework Overview - Correct answer-Develop future
accounting standards; keeps legislation standardized and reduces number of
alternative accounting treatments; foundation of all IFRS; guides accounting
standards, policies and interpretation
Objective of Conceptual Framework - Correct answer-Provide financial info for
investors, lenders, creditors to make resource allocation decisions
Qualitative Characteristics of Useful Financial Information - Correct answer-
Relevance: Info must influence decisions (materiality is key).
, Faithful Representation: Info must reflect substance, not just legal form; must be
complete, neutral, and free from error.
Enhancing - Correct answer-Comparability, verifiability, timeliness, and
understandability
Assets - Correct answer-Present economic resources controlled by the entity due to
past events.
Liabilities - Correct answer-Present obligations to transfer resources due to past
events.
Equity - Correct answer-Residual interest after deducting liabilities from assets.
Income - Correct answer-Increases in assets/decreases in liabilities (excluding
owner contributions).
Expenses - Correct answer-Decreases in assets/increases in liabilities (excluding
distributions to owners).
Recognition criteria - Correct answer-a. They meet the definition (asset, liability,
etc.)
b. Future economic benefits probable.
c. Amount can be reliably measured.
Questions and Answers Graded A+
IFRS - Correct answer-International Financial Reporting Standards
IAS - Correct answer-International Accounting Standards
APB - Correct answer-Accounting Practices Board
FRSC - Correct answer-Financial Reporting Standards Council
SAICA - Correct answer-South African Institute of Chartered Accountants.
Purpose of Conceptual Framework Overview - Correct answer-Develop future
accounting standards; keeps legislation standardized and reduces number of
alternative accounting treatments; foundation of all IFRS; guides accounting
standards, policies and interpretation
Objective of Conceptual Framework - Correct answer-Provide financial info for
investors, lenders, creditors to make resource allocation decisions
Qualitative Characteristics of Useful Financial Information - Correct answer-
Relevance: Info must influence decisions (materiality is key).
, Faithful Representation: Info must reflect substance, not just legal form; must be
complete, neutral, and free from error.
Enhancing - Correct answer-Comparability, verifiability, timeliness, and
understandability
Assets - Correct answer-Present economic resources controlled by the entity due to
past events.
Liabilities - Correct answer-Present obligations to transfer resources due to past
events.
Equity - Correct answer-Residual interest after deducting liabilities from assets.
Income - Correct answer-Increases in assets/decreases in liabilities (excluding
owner contributions).
Expenses - Correct answer-Decreases in assets/increases in liabilities (excluding
distributions to owners).
Recognition criteria - Correct answer-a. They meet the definition (asset, liability,
etc.)
b. Future economic benefits probable.
c. Amount can be reliably measured.
