FAC1601 Assignment 2 Complete Answers 2025/2026 ||
Verified Accounting Solutions
Description:
FAC1601 Assignment 2 complete study guide updated for 2025/2026. Includes verified answers
covering financial accounting concepts.
FAC1601 assignment 2 answers accounting exam
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prep 2025 FAC1601 verified solutions FAC1601 study
guide FAC1601 complete answers
FAC1601 Assignment 2 - Comprehensive Study Guide (100 Q&A)
Theme 1: The Conceptual Framework & Financial Reporting
1. What is the primary objective of general-purpose financial reporting?
a) To compute a company's tax liability.
b) To provide financial information that is useful to existing and potential investors,
lenders, and other creditors in making decisions about providing resources to the entity.
c) To track the daily transactions of a business.
d) To replace the need for an internal audit.
2. Which of the following is a fundamental qualitative characteristic of useful financial
information according to the Conceptual Framework?
a) Timeliness
b) Relevance and Faithful Representation
c) Prudence
d) Materiality
,3. What does the qualitative characteristic 'Relevance' imply?
a) Information must be free from error.
b) Information must be capable of making a difference in the decisions of users.
c) Information must be presented clearly and concisely.
d) Information must be based on historical cost.
4. Faithful representation means that information must be:
a) Relevant, timely, and understandable.
b) Complete, neutral, and free from error.
c) Conservative, consistent, and comparable.
d) Material, predictable, and verifiable.
5. What are the enhancing qualitative characteristics of financial information?
a) Relevance and Faithful Representation
b) Completeness, Neutrality, and Freedom from error
c) Comparability, Verifiability, Timeliness, and Understandability
d) Going concern and Accrual basis
6. The assumption that a company will continue in operation for the foreseeable future is
the:
a) Economic entity assumption.
b) Monetary unit assumption.
c) Periodicity assumption.
d) Going concern assumption.
7. The accounting principle that requires expenses to be recorded in the same period as
the revenues they helped to generate is the:
a) Matching principle.
b) Cost principle.
c) Full disclosure principle.
d) Revenue recognition principle.
8. When should revenue from the sale of goods be recognized?
a) When the order is received.
b) When the cash is received.
c) When the significant risks and rewards of ownership have been transferred to the
buyer.
d) When the production process is complete.
, 9. The historical cost principle states that assets should be recorded:
a) At their estimated market value.
b) At their replacement cost.
c) At the amount of cash or cash equivalents paid to acquire them.
d) At their net realizable value.
10. What is the purpose of the notes to the financial statements?
a) To provide management's opinions on the economy.
b) To replace the statement of cash flows.
c) To provide additional information and disclosures required by IFRS.
d) To list all the company's employees.
Theme 2: Accounting Equation and Double-Entry System
11. The basic accounting equation is:
a) Assets + Liabilities = Owner's Equity
b) Assets = Liabilities + Owner's Equity
c) Assets = Revenue - Expenses
d) Owner's Equity = Assets + Liabilities
12. If a company purchases a vehicle for R50,000 on credit, what is the effect on the
accounting equation?
a) Assets increase by R50,000; Liabilities decrease by R50,000.
b) Assets increase by R50,000; Liabilities increase by R50,000.
c) Assets decrease by R50,000; Liabilities increase by R50,000.
d) There is no change in the total assets.
13. An owner invests R100,000 cash into the business. The effect is:
a) Assets increase, Owner's Equity decreases.
b) Assets increase, Owner's Equity increases.
c) Assets decrease, Liabilities increase.
d) Liabilities increase, Owner's Equity increases.
14. Paying a creditor R5,000 in cash will:
a) Increase assets and increase liabilities.
b) Decrease assets and decrease liabilities.
c) Increase assets and decrease owner's equity.
d) Decrease liabilities and increase owner's equity.
15. The double-entry system requires that for every transaction:
a) Debits must equal credits.
Verified Accounting Solutions
Description:
FAC1601 Assignment 2 complete study guide updated for 2025/2026. Includes verified answers
covering financial accounting concepts.
FAC1601 assignment 2 answers accounting exam
Keywords:
prep 2025 FAC1601 verified solutions FAC1601 study
guide FAC1601 complete answers
FAC1601 Assignment 2 - Comprehensive Study Guide (100 Q&A)
Theme 1: The Conceptual Framework & Financial Reporting
1. What is the primary objective of general-purpose financial reporting?
a) To compute a company's tax liability.
b) To provide financial information that is useful to existing and potential investors,
lenders, and other creditors in making decisions about providing resources to the entity.
c) To track the daily transactions of a business.
d) To replace the need for an internal audit.
2. Which of the following is a fundamental qualitative characteristic of useful financial
information according to the Conceptual Framework?
a) Timeliness
b) Relevance and Faithful Representation
c) Prudence
d) Materiality
,3. What does the qualitative characteristic 'Relevance' imply?
a) Information must be free from error.
b) Information must be capable of making a difference in the decisions of users.
c) Information must be presented clearly and concisely.
d) Information must be based on historical cost.
4. Faithful representation means that information must be:
a) Relevant, timely, and understandable.
b) Complete, neutral, and free from error.
c) Conservative, consistent, and comparable.
d) Material, predictable, and verifiable.
5. What are the enhancing qualitative characteristics of financial information?
a) Relevance and Faithful Representation
b) Completeness, Neutrality, and Freedom from error
c) Comparability, Verifiability, Timeliness, and Understandability
d) Going concern and Accrual basis
6. The assumption that a company will continue in operation for the foreseeable future is
the:
a) Economic entity assumption.
b) Monetary unit assumption.
c) Periodicity assumption.
d) Going concern assumption.
7. The accounting principle that requires expenses to be recorded in the same period as
the revenues they helped to generate is the:
a) Matching principle.
b) Cost principle.
c) Full disclosure principle.
d) Revenue recognition principle.
8. When should revenue from the sale of goods be recognized?
a) When the order is received.
b) When the cash is received.
c) When the significant risks and rewards of ownership have been transferred to the
buyer.
d) When the production process is complete.
, 9. The historical cost principle states that assets should be recorded:
a) At their estimated market value.
b) At their replacement cost.
c) At the amount of cash or cash equivalents paid to acquire them.
d) At their net realizable value.
10. What is the purpose of the notes to the financial statements?
a) To provide management's opinions on the economy.
b) To replace the statement of cash flows.
c) To provide additional information and disclosures required by IFRS.
d) To list all the company's employees.
Theme 2: Accounting Equation and Double-Entry System
11. The basic accounting equation is:
a) Assets + Liabilities = Owner's Equity
b) Assets = Liabilities + Owner's Equity
c) Assets = Revenue - Expenses
d) Owner's Equity = Assets + Liabilities
12. If a company purchases a vehicle for R50,000 on credit, what is the effect on the
accounting equation?
a) Assets increase by R50,000; Liabilities decrease by R50,000.
b) Assets increase by R50,000; Liabilities increase by R50,000.
c) Assets decrease by R50,000; Liabilities increase by R50,000.
d) There is no change in the total assets.
13. An owner invests R100,000 cash into the business. The effect is:
a) Assets increase, Owner's Equity decreases.
b) Assets increase, Owner's Equity increases.
c) Assets decrease, Liabilities increase.
d) Liabilities increase, Owner's Equity increases.
14. Paying a creditor R5,000 in cash will:
a) Increase assets and increase liabilities.
b) Decrease assets and decrease liabilities.
c) Increase assets and decrease owner's equity.
d) Decrease liabilities and increase owner's equity.
15. The double-entry system requires that for every transaction:
a) Debits must equal credits.
