FAC1601 - FINANCIAL ACCOUNTING & REPORTING QUESTIONS WITH COMPLETE SOLUTIONS.

FAC1601 - FINANCIAL ACCOUNTING &
REPORTING QUESTIONS WITH
COMPLETE SOLUTIONS.

IFRS – ANSWER: International Financial Reporting Standards
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International Financial Reporting Standards - ANSWER: A set of rules developed to
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make sure that financial statements are prepared consistently for companies so that
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users can compare the financial results and performance from the current year to
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prior years to the same company. Additionally, making it possible for users to
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compare the financial position and performance of one company with another.
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Profit Company - ANSWER: A company that is incorporated for the purpose of
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financial gain for its shareholders. Include: state-owned companies (SOC Ltd),
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private companies [(Pty) Ltd], personal liability companies [Inc], and public
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companies [Ltd].
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Purpose of Conceptual Framework – ANSWER: a) assist the IASB in developing
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IFRS that is consistent concepts
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b) aid the prepares of financial statements to develop consistent accounting policies
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in the absence of a standard.
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c) assist all parties to understand and interpret IFRS.
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Objective of General Purpose Financial Reporting – ANSWER: To provide financial
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information about a reporting entity to its existing and potential investors , lenders
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and other creditors.
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Financial Statements - ANSWER: A specific form of financial reporting. They portray
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information about assets, liabilities, equity, income, and expenses. Based on
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Accrual Method of accounting.
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Accrual Basis Accounting - ANSWER:reporting income when it is earned and
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expenses when they are incurred
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Qualitative Characteristics of Useful Financial Information - ANSWER:
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Fundamental Qualitative Characteristics - ANSWER:a) Relevance : Materiality
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b) Faithful representation
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Enhancing Qualitative Characteristics - ANSWER:a) Comparability
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