FAC1502 ASSIGNMENT 1 QUESTIONS AND ANSWERS OF 2024 SEM 1

ACCOUNTING - Correct Answers Planning; Recording; Analyzing; Interpreting financial information. PLANNING DECISIONS - Correct Answers Financial information is used to determine future actions. Historical information provided by the accounting process serves as a basis for forecasting. CONTROL - Correct Answers Using financial information to evaluate the results of financial activities. THE FUNCTION OF ACCOUNTING - Correct Answers 1. The value added to the networth of a person/entity during a particular period. 2. The accumulated networth of that person/entity PROFIT ENTITIES - Correct Answers Sole traders; Partnerships; Close Corporations; Companies NON-PROFIT ENTITES - Correct Answers Clubs; Charitable Organisations; Churches; Educational Institutions; Trusts PUBLIC SECTOR - Correct Answers The Government; Provinces; Departments; Boards and Commissions; Municipalities USERS OF FINANCIAL INFORMATION - Correct Answers 1. Investors - Providers of capital. Concerned with the risk involved in their investment. Need information to decide whether to invest, hold, or withdraw funds. 2. Employees - Interested in entity's stability and profitability for benefits and job security. 3. Lenders - Use financial information to determine if loans can be paid back with interest. 4. Suppliers and other trade creditors - Use informations for assurance that amounts owed are paid on time. 5. Customers - Need to know the state of the entity for reliability. 6. Government and their agencies - Use financial information for taxation, policies, and statistical purposes. 7. Public - Entities often contribute to the local economy by employing people and local structures: STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME - Correct Answers Financial results -- Financial Performance (financial period) --- Financial Position STATEMENT OF CHANGES IN EQUITY - Correct Answers Reflects the profit or total comprehensive income and reflects the capital or equity. STATEMENT OF FINANCIAL POSITION - Correct Answers Reflects the networth of the entity at a specific time. Determined in terms of assets and interests. Affected by the entity's economic resources, structure, liquidity, solvency, capacity to adapt to economic changes. STATEMENT OF CASH FLOWS - Correct Answers The ability to generate cash will determine whether the entity will be able to meet its economic comittments. DOMAINS OF ACCOUNTING - Correct Answers 1. Financial accounting: External users - Creditors; Clients; Banking institutions. 2. Management accounting: Internal users - Management; Personnel ACCOUNTING PRINCIPLES - Correct Answers The techniques used in the practice of accounting. Conceptual and Theoretical. ACCOUNTING POLICY - Correct Answers A set of decisions abut how the entity will handle the same type of transaction in order to achieve consistency. INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) - Correct Answers A general framework and accounting concepts; pricinciples; methods and procedures. ACCOUNTING STANDARDS AND STATEMENTS - Correct Answers Aim to encourage widespread use of particular standards to eliminate bad alternatives. GOING CONCERN ASSUMPTION - Correct Answers assumes an entity will remain in operation