FAC1503
EXAM PACK
,FAC1503 2026
EXAM ANSWERS
FINANCIAL ACCOUNTING PRINCIPLES
SECTION 1: MULTIPLE CHOICE
1. D — To enable users to ascertain the financial results and financial position of an
entity.
2. A — Assets = Liabilities + Equity.
3. C — Computer equipment is debited and trade payables are credited.
4. B — Cash payments journal.
5. A — R933.91.
6. D — A list of general-ledger balances with equal debit and credit totals.
7A. C — It is trust money and is not the property of the law practice.
7B. C — R12 000.
8. A — R1 200.
9. A — Debit bank charges and credit bank.
10. A — Invoice.
11. A — Opening inventory + purchases − closing inventory.
12. B — Depreciation expense.
13. D — Transfer journal.
14. A — Statement of profit or loss and other comprehensive income.
,SECTION 2: SHORT ANSWERS
15. Purpose of internal controls
Internal controls are procedures established to safeguard assets, prevent and detect
errors and fraud, ensure accurate accounting records, and promote compliance
with policies and procedures.
16. Stationery purchased on credit for R2 350
Debit: Stationery expense R2 350
Credit: Trade payables R2 350
The stationery expense increases, while the amount owed to the supplier increases.
17. VAT-exclusive amount of the R7 160 printer
Assuming VAT is 15%:
VAT-exclusive amount=R7 1601.15VAT\text{-exclusive amount}=\frac{R7\,160}{1.15}
= R6 226.09
VAT = R7 160 − R6 226.09 = R933.91.
18. Bank account in the general ledger vs bank statement
The bank account in the general ledger records the entity's transactions from its
accounting records, while the bank statement records transactions from the bank's
perspective. Differences may arise from transactions recorded by one party but not yet
by the other.
19. Two sides of the accounting requirement
, Every transaction has at least two aspects: a debit and a credit. The total debits must
equal the total credits.
20. Periodic vs perpetual inventory
Periodic inventory: Inventory and cost of sales are determined/updated at the
end of the accounting period.
Perpetual inventory: Inventory records and cost of sales are updated
continuously after each purchase and sale.
21. Conditions before transferring trust money
Two important conditions are:
1. The money must have been earned by the law practice.
2. The transfer must not exceed the amount that may properly be transferred
from the client's trust ledger, with the client appropriately informed where
required.
22. What is posting?
Posting is the process of transferring information from the journals/books of first entry
to the relevant general-ledger and subsidiary-ledger accounts.
23. Define trust money
Trust money is money received or held by a law practice on behalf of a client or
another person, rather than money belonging to the practice itself.
24. Formula for profit
Profit=Income−Expenses\boxed{\text{Profit}=\text{Income}-\text{Expenses}}
SECTION 3: LONG ANSWERS
EXAM PACK
,FAC1503 2026
EXAM ANSWERS
FINANCIAL ACCOUNTING PRINCIPLES
SECTION 1: MULTIPLE CHOICE
1. D — To enable users to ascertain the financial results and financial position of an
entity.
2. A — Assets = Liabilities + Equity.
3. C — Computer equipment is debited and trade payables are credited.
4. B — Cash payments journal.
5. A — R933.91.
6. D — A list of general-ledger balances with equal debit and credit totals.
7A. C — It is trust money and is not the property of the law practice.
7B. C — R12 000.
8. A — R1 200.
9. A — Debit bank charges and credit bank.
10. A — Invoice.
11. A — Opening inventory + purchases − closing inventory.
12. B — Depreciation expense.
13. D — Transfer journal.
14. A — Statement of profit or loss and other comprehensive income.
,SECTION 2: SHORT ANSWERS
15. Purpose of internal controls
Internal controls are procedures established to safeguard assets, prevent and detect
errors and fraud, ensure accurate accounting records, and promote compliance
with policies and procedures.
16. Stationery purchased on credit for R2 350
Debit: Stationery expense R2 350
Credit: Trade payables R2 350
The stationery expense increases, while the amount owed to the supplier increases.
17. VAT-exclusive amount of the R7 160 printer
Assuming VAT is 15%:
VAT-exclusive amount=R7 1601.15VAT\text{-exclusive amount}=\frac{R7\,160}{1.15}
= R6 226.09
VAT = R7 160 − R6 226.09 = R933.91.
18. Bank account in the general ledger vs bank statement
The bank account in the general ledger records the entity's transactions from its
accounting records, while the bank statement records transactions from the bank's
perspective. Differences may arise from transactions recorded by one party but not yet
by the other.
19. Two sides of the accounting requirement
, Every transaction has at least two aspects: a debit and a credit. The total debits must
equal the total credits.
20. Periodic vs perpetual inventory
Periodic inventory: Inventory and cost of sales are determined/updated at the
end of the accounting period.
Perpetual inventory: Inventory records and cost of sales are updated
continuously after each purchase and sale.
21. Conditions before transferring trust money
Two important conditions are:
1. The money must have been earned by the law practice.
2. The transfer must not exceed the amount that may properly be transferred
from the client's trust ledger, with the client appropriately informed where
required.
22. What is posting?
Posting is the process of transferring information from the journals/books of first entry
to the relevant general-ledger and subsidiary-ledger accounts.
23. Define trust money
Trust money is money received or held by a law practice on behalf of a client or
another person, rather than money belonging to the practice itself.
24. Formula for profit
Profit=Income−Expenses\boxed{\text{Profit}=\text{Income}-\text{Expenses}}
SECTION 3: LONG ANSWERS
