Fac1502: Financial Accounting Concepts; Procedures And Concepts Questions & Answers 2024/2025

FAC1502: FINANCIAL ACCOUNTING CONCEPTS; PROCEDURES AND CONCEPTS Questions & Answers 2024/2025 ACCOUNTING - ANSWER-Planning; Recording; Analyzing; Interpreting financial information. PLANNING DECISIONS - ANSWER-Financial information is used to determine future actions. Historical information provided by the accounting process serves as a basis for forecasting. CONTROL - ANSWER-Using financial information to evaluate the results of financial activities. THE FUNCTION OF ACCOUNTING - ANSWER-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 - ANSWER-Sole traders; Partnerships; Close Corporations; Companies NON-PROFIT ENTITES - ANSWER-Clubs; Charitable Organisations; Churches; Educational Institutions; Trusts PUBLIC SECTOR - ANSWER-The Government; Provinces; Departments; Boards and Commissions; Municipalities USERS OF FINANCIAL INFORMATION - ANSWER-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 information’s 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 - ANSWER-Financial results -- Financial Performance (financial period) --- Financial Position STATEMENT OF CHANGES IN EQUITY - ANSWER-Reflects the profit or total comprehensive income and reflects the capital or equity. STATEMENT OF FINANCIAL POSITION - ANSWER-Reflects the net worth 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 - ANSWER-The ability to generate cash will determine whether the entity will be able to meet its economic commitments. DOMAINS OF ACCOUNTING - ANSWER-1. Financial accounting: External users - Creditors; Clients; Banking institutions. 2. Management accounting: Internal users - Management; Personnel ACCOUNTING PRINCIPLES - ANSWER-The techniques used in the practice of accounting. Conceptual and Theoretical. ACCOUNTING POLICY - ANSWER-A set of decisions about how the entity will handle the same type of transaction in order to achieve consistency. INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) - ANSWER-A general framework and accounting concepts; principles; methods and procedures. ACCOUNTING STANDARDS AND STATEMENTS - ANSWER-Aim to encourage widespread use of particular standards to eliminate bad alternatives. GOING CONCERN ASSUMPTION - ANSWER-assumes an entity will remain in operation for the foreseeable future. QUALITIVE CHARACTERISTICS OF FINANCIAL STATEMENTS - ANSWER-Attributes that make the information provided in financial statements useful. Relevance; Faithful Presentation; Comparability; Verifiability; Timeliness; Understandability ELEMENTS OF FNANCIAL STATEMENTS - ANSWER-Financial Position - Assets; Liabilities; Equity; Financial Performance - Income; Expenses Continues.....