1. Objective of Financial Accounting
Question: What is the primary objective of general‐
purpose financial accounting?
A. To provide information primarily for internal
management decision-making
B. To provide financial information useful to external users
in making economic decisions
C. To measure physical assets and liabilities only
D. To record only cash transactions
Answer: B. To provide financial information useful to
external users in making economic decisions.
Rationale: The module FAC1502 emphasizes that the
primary purpose of financial accounting is to prepare
general‐purpose financial statements that meet the needs
of a wide range of users for economic decision-making
(Financial Accounting Principles, Concepts and
Procedures - FAC1502).
2. Going Concern Assumption
Question: Which underlying assumption states that an
entity will continue its operations in the foreseeable future?
A. Monetary unit
B. Going concern
C. Accrual basis
D. Periodicity
, Answer: B. Going concern.
Rationale: IAS 1 and the IFRS Conceptual Framework
require that financial statements are prepared on the going
concern basis unless liquidation is imminent (Going
concern).
3. Accounting Equation
Question: What is the basic accounting equation?
A. Assets + Liabilities = Equity
B. Assets = Liabilities + Equity
C. Liabilities = Assets + Equity
D. Equity = Assets – Liabilities
Answer: B. Assets = Liabilities + Equity.
Rationale: This fundamental equation underpins double-
entry bookkeeping and shows that resources controlled by
the entity (assets) are financed by creditors (liabilities) and
owners (equity) (Accounting Equation: What It Is and How
You Calculate It).
4. Fundamental Qualitative Characteristics
Question: According to the IFRS Conceptual Framework,
which of these is not a fundamental qualitative
characteristic of useful financial information?
A. Relevance
B. Faithful representation
Question: What is the primary objective of general‐
purpose financial accounting?
A. To provide information primarily for internal
management decision-making
B. To provide financial information useful to external users
in making economic decisions
C. To measure physical assets and liabilities only
D. To record only cash transactions
Answer: B. To provide financial information useful to
external users in making economic decisions.
Rationale: The module FAC1502 emphasizes that the
primary purpose of financial accounting is to prepare
general‐purpose financial statements that meet the needs
of a wide range of users for economic decision-making
(Financial Accounting Principles, Concepts and
Procedures - FAC1502).
2. Going Concern Assumption
Question: Which underlying assumption states that an
entity will continue its operations in the foreseeable future?
A. Monetary unit
B. Going concern
C. Accrual basis
D. Periodicity
, Answer: B. Going concern.
Rationale: IAS 1 and the IFRS Conceptual Framework
require that financial statements are prepared on the going
concern basis unless liquidation is imminent (Going
concern).
3. Accounting Equation
Question: What is the basic accounting equation?
A. Assets + Liabilities = Equity
B. Assets = Liabilities + Equity
C. Liabilities = Assets + Equity
D. Equity = Assets – Liabilities
Answer: B. Assets = Liabilities + Equity.
Rationale: This fundamental equation underpins double-
entry bookkeeping and shows that resources controlled by
the entity (assets) are financed by creditors (liabilities) and
owners (equity) (Accounting Equation: What It Is and How
You Calculate It).
4. Fundamental Qualitative Characteristics
Question: According to the IFRS Conceptual Framework,
which of these is not a fundamental qualitative
characteristic of useful financial information?
A. Relevance
B. Faithful representation
