FAC2602 – Financial Accounting Exam
Pack | Key Concepts, Definitions, and
Exam Practice
Ordinary shares - ANSWER-Equity shares representing ownership in a company.
Retained earnings - ANSWER-Cumulative profits retained for reinvestment.
Trade payables - ANSWER-Liabilities to suppliers for goods/services.
Accumulated depreciation - ANSWER-Total depreciation expense recorded over
time.
Revaluation reserve - ANSWER-Equity reserve from asset revaluation increases.
Interest bearing borrowings - ANSWER-Loans that incur interest over time.
Bank overdraft - ANSWER-Negative bank balance due to withdrawals.
Land and buildings - ANSWER-Real estate assets recorded at valuation.
Plant and equipment - ANSWER-Tangible assets used in production.
Trade receivables - ANSWER-Amounts owed by customers for sales.
Inventories - ANSWER-Goods available for sale in business.
Loan to ABC Limited - ANSWER-Debt owed by ABC Limited to XYZ Limited.
Investment in ABC Limited - ANSWER-Equity stake in another company at cost.
Consolidated statement - ANSWER-Combined financial statement of parent and
subsidiary.
Companies Act, 1973 - ANSWER-Legislation governing company operations in
South Africa.
,Generally Accepted Accounting Practice - ANSWER-Standard accounting
principles for financial reporting.
Unrealised profit - ANSWER-Profit not yet realized through sale.
Closing inventories - ANSWER-Ending stock value at financial period's close.
Depreciation method - ANSWER-Systematic allocation of asset cost over time.
Financial year - ANSWER-12-month period for financial reporting.
Multiple choice questions - ANSWER-Assessment format with several answer
options.
Trial balance - ANSWER-Summary of all ledger balances at a point.
Acquisition date - ANSWER-Date when ownership of an asset is obtained.
Profit on sale - ANSWER-Earnings from selling an asset above cost.
Retained earnings - ANSWER-Cumulative profits not distributed as dividends.
Non-controlling interest - ANSWER-Equity in a subsidiary not owned by parent.
Land and buildings - ANSWER-Real estate assets in financial position.
Plant and equipment - ANSWER-Tangible fixed assets used in operations.
Trade and other receivables - ANSWER-Amounts owed by customers and other
parties.
Inventories - ANSWER-Goods available for sale or production.
Cash and cash equivalents - ANSWER-Liquid assets available for immediate use.
Bank overdraft - ANSWER-Negative bank balance exceeding available funds.
Trade and other payables - ANSWER-Amounts owed to suppliers and creditors.
Investment in ABC Limited - ANSWER-Equity stake held in ABC Limited.
, Goodwill - ANSWER-Intangible asset from acquiring a business.
Long-term borrowing - ANSWER-Debt obligations due beyond one year.
Property, plant and equipment - ANSWER-Long-term physical assets for
operations.
Investments - ANSWER-Financial assets held for income generation.
Inventory (2006) - ANSWER-R50,000 value of unsold goods.
Trade and other receivables (2006) - ANSWER-R300,000 owed by customers.
Prepaid expenses - ANSWER-Payments made for future expenses.
Dividends receivable - ANSWER-Expected income from shares held.
Cash and cash equivalents (2005) - ANSWER-R85,000 in liquid assets.
Cost of sales - ANSWER-Expenses directly related to production.
Administrative expenses - ANSWER-Costs related to general management.
Distribution expenses - ANSWER-Costs incurred to deliver products.
Finance cost - ANSWER-Interest and charges on borrowed funds.
Income tax expense - ANSWER-Tax liability for the financial period.
Dividends declared and paid - ANSWER-Total dividends distributed to
shareholders.
Long-term loan - ANSWER-Debt repayable over more than one year.
Deferred tax - ANSWER-Tax liability postponed to future periods.
Accumulated depreciation - ANSWER-Total depreciation expense over asset's life.
Short-term loan - ANSWER-Debt due within one year.
Pack | Key Concepts, Definitions, and
Exam Practice
Ordinary shares - ANSWER-Equity shares representing ownership in a company.
Retained earnings - ANSWER-Cumulative profits retained for reinvestment.
Trade payables - ANSWER-Liabilities to suppliers for goods/services.
Accumulated depreciation - ANSWER-Total depreciation expense recorded over
time.
Revaluation reserve - ANSWER-Equity reserve from asset revaluation increases.
Interest bearing borrowings - ANSWER-Loans that incur interest over time.
Bank overdraft - ANSWER-Negative bank balance due to withdrawals.
Land and buildings - ANSWER-Real estate assets recorded at valuation.
Plant and equipment - ANSWER-Tangible assets used in production.
Trade receivables - ANSWER-Amounts owed by customers for sales.
Inventories - ANSWER-Goods available for sale in business.
Loan to ABC Limited - ANSWER-Debt owed by ABC Limited to XYZ Limited.
Investment in ABC Limited - ANSWER-Equity stake in another company at cost.
Consolidated statement - ANSWER-Combined financial statement of parent and
subsidiary.
Companies Act, 1973 - ANSWER-Legislation governing company operations in
South Africa.
,Generally Accepted Accounting Practice - ANSWER-Standard accounting
principles for financial reporting.
Unrealised profit - ANSWER-Profit not yet realized through sale.
Closing inventories - ANSWER-Ending stock value at financial period's close.
Depreciation method - ANSWER-Systematic allocation of asset cost over time.
Financial year - ANSWER-12-month period for financial reporting.
Multiple choice questions - ANSWER-Assessment format with several answer
options.
Trial balance - ANSWER-Summary of all ledger balances at a point.
Acquisition date - ANSWER-Date when ownership of an asset is obtained.
Profit on sale - ANSWER-Earnings from selling an asset above cost.
Retained earnings - ANSWER-Cumulative profits not distributed as dividends.
Non-controlling interest - ANSWER-Equity in a subsidiary not owned by parent.
Land and buildings - ANSWER-Real estate assets in financial position.
Plant and equipment - ANSWER-Tangible fixed assets used in operations.
Trade and other receivables - ANSWER-Amounts owed by customers and other
parties.
Inventories - ANSWER-Goods available for sale or production.
Cash and cash equivalents - ANSWER-Liquid assets available for immediate use.
Bank overdraft - ANSWER-Negative bank balance exceeding available funds.
Trade and other payables - ANSWER-Amounts owed to suppliers and creditors.
Investment in ABC Limited - ANSWER-Equity stake held in ABC Limited.
, Goodwill - ANSWER-Intangible asset from acquiring a business.
Long-term borrowing - ANSWER-Debt obligations due beyond one year.
Property, plant and equipment - ANSWER-Long-term physical assets for
operations.
Investments - ANSWER-Financial assets held for income generation.
Inventory (2006) - ANSWER-R50,000 value of unsold goods.
Trade and other receivables (2006) - ANSWER-R300,000 owed by customers.
Prepaid expenses - ANSWER-Payments made for future expenses.
Dividends receivable - ANSWER-Expected income from shares held.
Cash and cash equivalents (2005) - ANSWER-R85,000 in liquid assets.
Cost of sales - ANSWER-Expenses directly related to production.
Administrative expenses - ANSWER-Costs related to general management.
Distribution expenses - ANSWER-Costs incurred to deliver products.
Finance cost - ANSWER-Interest and charges on borrowed funds.
Income tax expense - ANSWER-Tax liability for the financial period.
Dividends declared and paid - ANSWER-Total dividends distributed to
shareholders.
Long-term loan - ANSWER-Debt repayable over more than one year.
Deferred tax - ANSWER-Tax liability postponed to future periods.
Accumulated depreciation - ANSWER-Total depreciation expense over asset's life.
Short-term loan - ANSWER-Debt due within one year.
