FAC1502 UPDATED ACTUAL QUESTIONS
AND CORRECT ANSWERS
COMPREHENSIVE STUDY GUIDE
●● 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 informations 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 networth 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 comittments.
AND CORRECT ANSWERS
COMPREHENSIVE STUDY GUIDE
●● 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 informations 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 networth 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 comittments.
