FAC1602 Exam pack 2025(Elementary Financial Accounting and Reporting

FAC1602 EXAM PACK
2025

QUESTIONS AND
ANSWERS
FOR ASSISTANCE CONTACT
EMAIL:

, lOMoARcPSD|46589353




FAC1602/501/3/2023


LEARNING UNIT



1
Introduction to the preparation of financial statements


Learning outcomes .............................................................................................................................2
Key concepts .......................................................................................................................................3
1.1 Introduction ................................................................................................................................4
1.2 Conceptual framework for financial reporting .......................................................................5
1.3 Applicable International Financial Reporting Standards ...................................................10
1.4 Presentation of financial statements: IAS 1 ........................................................................10
1.5 Financial instruments .............................................................................................................14
1.6 Practical applications of IAS 1 and financial instruments ................................................. 17
1.7 Exercises and solutions .........................................................................................................17
Self-assessment ................................................................................................................................22




1

Downloaded by Gabriel Musyoka ()

, lOMoARcPSD|46589353




Learning outcomes

After studying this learning unit, you should be able to:

 explain the acronyms IFRS, IAS, APB, FRSC and SAICA, and know what they entail
 describe what the concept "Conceptual Framework" entails
 list the specific purposes of the Conceptual Framework regarding the preparation
and presentation of financial statements
 explain the main objectives of financial statements per the Conceptual Framework
 explain the underlying assumption when preparing financial statements per the
Conceptual Framework
 discuss the qualitative characteristics of financial statements per the Conceptual
Framework
 explain what the Conceptual Framework implies when it refers to the constraints in
preparing financial statements
 discuss the elements of financial statements as explained in the Conceptual Framework
and indicate which elements pertain to the statement of financial position and which to
the statement of profit or loss and other comprehensive income
 discuss the concepts of recognition and disclosure of the elements incorporated in
financial statements, as explained in the Conceptual Framework
 explain what is meant by the measurement of the elements of financial statements by
referring to the measurement methods discussed in the Conceptual Framework
 explain what type of business ownership must comply with IFRS
 define each of the following terms per IAS 1:
 fair presentation
 going concern
 accrual basis of accounting
 materiality and aggregation
 offsetting
 frequency of reporting
 comparative information
 consistency of presentation
 list the individual statements that, per IAS 1, together form the complete set of
financial statements of a reporting entity
 explain what is meant by the identification of financial statements
 explain what is meant by reporting period
 explain which items comprise current assets and current liabilities per IAS 1
 list the items that must be presented on the face of the Statement of Financial Position
and the Statement of Profit or Loss and Other Comprehensive Income respectively by
referring to IAS 1
 list the items that can be presented on either the face of the Statement of Financial
Position and the Statement of Profit or Loss and Other Comprehensive Income or in the
notes to these statements for the particular reporting period per IAS 1
 discuss the purpose of notes, by referring to IAS 1
 discuss, according to IAS 1, the order in which items are disclosed as notes to financial
statements
2

, lOMoARcPSD|46589353




FAC1602/501/3/2023



 explain or define the following:
 a financial instrument
 a financial asset
 a financial liability
 fair value
 a contract
 distinguish between financial instruments, financial assets and financial liabilities
 recognise, measure and present certain financial assets and liabilities in the financial
statements



Key concepts

 Conceptual Framework
 Underlying assumption
 Qualitative characteristics
 Components of financial statements
 Elements of financial statements
 Recognition
 Measurement of elements
 Capital
 Capital maintenance
 Reporting period
 Financial instruments
 Financial assets
 Financial liabilities
 Fair value




3