FAC1601 – Financial Accounting and Reporting
(UNISA) Exam Guide 2025/2026 | 300+ Verified
Questions, Test Bank, Practice Problems, and
Detailed Solutions for Finance & Accounting Success
QUESTION1:
What is the primary purpose of financial accounting? $%%^&*%^
$%#$#%^&
A) To provide information for internal decision-making ^$%%^#$%
B) To prepare tax returns ^$%^*%&^
C) To provide financial information to external users $&^$%^$%
D) To track employee performance *&^
CORRECT: C) To provide financial information to external users.
Rationale: Financial accounting focuses on providing relevant financial information to
external users such as investors, creditors, and regulators.
QUESTION2:
Which of the following is an example of a liability?
A) Cash
B) Accounts Payable
C) Inventory
D) Common Stock
CORRECT: B) Accounts Payable.
Rationale: Accounts payable represents money owed to suppliers for goods or services
received, thus qualifying as a liability.
QUESTION3:
What does the accounting equation state?
A) Assets = Liabilities + Owner's Equity
B) Assets = Liabilities - Owner's Equity
C) Assets + Owner's Equity = Liabilities
D) Liabilities = Assets + Owner's Equity
CORRECT: A) Assets = Liabilities + Owner's Equity.
Rationale: The accounting equation reflects the relationship between a company's
resources (assets) and the claims against those resources (liabilities and equity).
,FAC1601 – Financial Accounting and Reporting
(UNISA) Exam Guide 2025/2026 | 300+ Verified
Questions, Test Bank, Practice Problems, and
Detailed Solutions for Finance & Accounting Success
QUESTION4:
Which financial statement provides a snapshot of a company's financial position at a $%%^&*%^
specific point in time? $%#$#%^&
^$%%^#$%
A) Income Statement ^$%^*%&^
B) Statement of Cash Flows $&^$%^$%
*&^
C) Balance Sheet
D) Statement of Changes in Equity
CORRECT: C) Balance Sheet.
Rationale: The balance sheet presents a company's assets, liabilities, and equity as of
a specific date, reflecting its financial position.
QUESTION5:
What is the main purpose of the income statement?
A) To show cash inflows and outflows
B) To summarize revenues and expenses over a period
C) To report the financial position at a specific date
D) To track capital contributions
CORRECT: B) To summarize revenues and expenses over a period.
Rationale: The income statement details a company's profitability by listing revenues
and expenses over a specified period.
QUESTION6:
Which of the following is NOT a component of equity?
A) Retained Earnings
B) Common Stock
C) Accounts Payable
D) Additional Paid-in Capital
CORRECT: C) Accounts Payable.
Rationale: Accounts payable is a liability, not an equity component, as it represents
obligations to creditors.
QUESTION7:
What does a company's gross profit represent?
,FAC1601 – Financial Accounting and Reporting
(UNISA) Exam Guide 2025/2026 | 300+ Verified
Questions, Test Bank, Practice Problems, and
Detailed Solutions for Finance & Accounting Success
A) Net income before taxes
B) Revenue minus cost of goods sold $%%^&*%^
$%#$#%^&
^$%%^#$%
^$%^*%&^
$&^$%^$%
*&^
, FAC1601 – Financial Accounting and Reporting
(UNISA) Exam Guide 2025/2026 | 300+ Verified
Questions, Test Bank, Practice Problems, and
Detailed Solutions for Finance & Accounting Success
C) Total assets minus total liabilities
D) Operating income $%%^&*%^
$%#$#%^&
CORRECT: B) Revenue minus cost of goods sold. ^$%%^#$%
^$%^*%&^
Rationale: Gross profit measures the profit a company makes after deducting the costs $&^$%^$%
directly associated with producing its goods. *&^
QUESTION8:
Which accounting principle requires expenses to be recognized in the same period as
the revenues they help to generate?
A) Revenue Recognition Principle
B) Matching Principle
C) Cost Principle
D) Full Disclosure Principle
CORRECT: B) Matching Principle.
Rationale: The matching principle ensures that expenses are recognized in the same
period as the related revenues, providing a clearer picture of profitability.
QUESTIONG:
What is the primary characteristic of a liability?
A) It represents ownership in the company.
B) It is an obligation to pay cash or provide services in the future.
C) It is a form of revenue.
D) It increases equity.
CORRECT: B) It is an obligation to pay cash or provide services in the future.
Rationale: Liabilities represent debts or obligations that a company must fulfill in the
future, typically involving cash payments.
QUESTION10:
Which of the following is considered an operating activity in the statement of cash
flows?
A) Issuing stock
B) Purchasing equipment
C) Collecting cash from customers
(UNISA) Exam Guide 2025/2026 | 300+ Verified
Questions, Test Bank, Practice Problems, and
Detailed Solutions for Finance & Accounting Success
QUESTION1:
What is the primary purpose of financial accounting? $%%^&*%^
$%#$#%^&
A) To provide information for internal decision-making ^$%%^#$%
B) To prepare tax returns ^$%^*%&^
C) To provide financial information to external users $&^$%^$%
D) To track employee performance *&^
CORRECT: C) To provide financial information to external users.
Rationale: Financial accounting focuses on providing relevant financial information to
external users such as investors, creditors, and regulators.
QUESTION2:
Which of the following is an example of a liability?
A) Cash
B) Accounts Payable
C) Inventory
D) Common Stock
CORRECT: B) Accounts Payable.
Rationale: Accounts payable represents money owed to suppliers for goods or services
received, thus qualifying as a liability.
QUESTION3:
What does the accounting equation state?
A) Assets = Liabilities + Owner's Equity
B) Assets = Liabilities - Owner's Equity
C) Assets + Owner's Equity = Liabilities
D) Liabilities = Assets + Owner's Equity
CORRECT: A) Assets = Liabilities + Owner's Equity.
Rationale: The accounting equation reflects the relationship between a company's
resources (assets) and the claims against those resources (liabilities and equity).
,FAC1601 – Financial Accounting and Reporting
(UNISA) Exam Guide 2025/2026 | 300+ Verified
Questions, Test Bank, Practice Problems, and
Detailed Solutions for Finance & Accounting Success
QUESTION4:
Which financial statement provides a snapshot of a company's financial position at a $%%^&*%^
specific point in time? $%#$#%^&
^$%%^#$%
A) Income Statement ^$%^*%&^
B) Statement of Cash Flows $&^$%^$%
*&^
C) Balance Sheet
D) Statement of Changes in Equity
CORRECT: C) Balance Sheet.
Rationale: The balance sheet presents a company's assets, liabilities, and equity as of
a specific date, reflecting its financial position.
QUESTION5:
What is the main purpose of the income statement?
A) To show cash inflows and outflows
B) To summarize revenues and expenses over a period
C) To report the financial position at a specific date
D) To track capital contributions
CORRECT: B) To summarize revenues and expenses over a period.
Rationale: The income statement details a company's profitability by listing revenues
and expenses over a specified period.
QUESTION6:
Which of the following is NOT a component of equity?
A) Retained Earnings
B) Common Stock
C) Accounts Payable
D) Additional Paid-in Capital
CORRECT: C) Accounts Payable.
Rationale: Accounts payable is a liability, not an equity component, as it represents
obligations to creditors.
QUESTION7:
What does a company's gross profit represent?
,FAC1601 – Financial Accounting and Reporting
(UNISA) Exam Guide 2025/2026 | 300+ Verified
Questions, Test Bank, Practice Problems, and
Detailed Solutions for Finance & Accounting Success
A) Net income before taxes
B) Revenue minus cost of goods sold $%%^&*%^
$%#$#%^&
^$%%^#$%
^$%^*%&^
$&^$%^$%
*&^
, FAC1601 – Financial Accounting and Reporting
(UNISA) Exam Guide 2025/2026 | 300+ Verified
Questions, Test Bank, Practice Problems, and
Detailed Solutions for Finance & Accounting Success
C) Total assets minus total liabilities
D) Operating income $%%^&*%^
$%#$#%^&
CORRECT: B) Revenue minus cost of goods sold. ^$%%^#$%
^$%^*%&^
Rationale: Gross profit measures the profit a company makes after deducting the costs $&^$%^$%
directly associated with producing its goods. *&^
QUESTION8:
Which accounting principle requires expenses to be recognized in the same period as
the revenues they help to generate?
A) Revenue Recognition Principle
B) Matching Principle
C) Cost Principle
D) Full Disclosure Principle
CORRECT: B) Matching Principle.
Rationale: The matching principle ensures that expenses are recognized in the same
period as the related revenues, providing a clearer picture of profitability.
QUESTIONG:
What is the primary characteristic of a liability?
A) It represents ownership in the company.
B) It is an obligation to pay cash or provide services in the future.
C) It is a form of revenue.
D) It increases equity.
CORRECT: B) It is an obligation to pay cash or provide services in the future.
Rationale: Liabilities represent debts or obligations that a company must fulfill in the
future, typically involving cash payments.
QUESTION10:
Which of the following is considered an operating activity in the statement of cash
flows?
A) Issuing stock
B) Purchasing equipment
C) Collecting cash from customers
