FAC2601 Question Bank 2022/23

FAC2601/QUESTION BANK




DEPARTMENT OF FINANCIAL ACCOUNTING

FAC2601: FINANCIAL ACCOUNTING FOR COMPANIES


FAC2601 QUESTION BANK
(SEMESTER 1 & SEMESTER 2)




Mr F Montgomery
Mr A Eysele
Mr C Mkefa
Mrs F Aboo
Mr M Mokgobinyane


Module Telephone Number: 012 429 4238
Module E-mail Address:




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CONTENTS


LU 1: Introduction to company financial statements...................................................... 3
LU 2: The Framework of accounting .................................... Error! Bookmark not defined.
LU 3: Presentation of annual financial statements – IAS 1 Error! Bookmark not defined.
LU 4: Inventory – IAS 2 ......................................................... Error! Bookmark not defined.
LU 5: Property, Plant and equipment – IAS 16 .................... Error! Bookmark not defined.
LU 6: Investment Property – IAS 40 ..................................... Error! Bookmark not defined.
LU 7: Leases – IFRS 16.......................................................... Error! Bookmark not defined.
LU 8: Financial instruments – IFRS 9, IAS 32, IAS 39 ......... Error! Bookmark not defined.
LU 9: Revenue from contracts with customers – IFRS 15.. Error! Bookmark not defined.




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LU 1: INTRODUCTION TO COMPANY FINANCIAL STATEMENTS
MULTIPLE CHOICE QUESTIONS

Answer the following multiple choice questions. Indicate your choice by selecting only 1, 2, 3 or 4
for each question answered.

1. Which one of the following statements with regards to the Companies Act 71 of 2008 is
incorrect?

1. The Memorandum of Association was previously (Companies Act 61 of 1973) known as
the Memorandum of Incorporation.
2. The capital of a company is not divisible and it is therefore impractical to open a capital
account for each member.
3. A company is a legal entity that is incorporated in terms of the Companies Act 71 of 2008
and it is independent of its owners.
4. Public companies may be listed on the Johannesburg Stock Exchange which promotes
the marketability of their shares.

2. The authorised share capital is:

1. The total number of shares issued to shareholders.
2. The total amount of paid up share capital by shareholders.
3. The maximum share capital mentioned in the Memorandum of Incorporation.
4. Always equal to the ordinary share capital.

SHARE TRANSACTIONS
Questions 3 to 5 are based on the following information:

The following information regarding share capital in the accounting records of Mulan Ltd was
obtained on 28 February 2014:
R
Ordinary share capital at date of incorporation...................................................................... 3 000 000
Proceeds on 1 000 000 ordinary shares issued – 31 August 2013 ....................................... 1 300 000
10 000 12% Cumulative preference shares .......................................................................... 200 000

Additional information:
a) 2 400 000 Ordinary shares were issued at incorporation on 1 March 2011, while the
cumulative preference shares were issued on 1 March 2012.

b) The following decision was made by the directors and must still be recorded:

A capitalisation issue of shares must be made on 31 December 2013 to ordinary shareholders
in the ratio of one ordinary share, at R1.50, for every 5 ordinary shares held.

c) An ordinary dividend of 10c per share was declared by the company to shareholders
registered on 28 February 2014. No dividends were declared or paid by the company in the
previous financial year.

3. The number of ordinary shares issued to the public before the capitalisation issue is:

1. 1 000 000 shares
2. 4 000 000 shares
3. 3 400 000 shares
4. 3 000 000 shares


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4. The number of ordinary shares capitalised is:

1. 200 000 shares
2. 800 000 shares
3. 680 000 shares
4. 600 000 shares

5. The amount of ordinary shares capitalised is as follows:

1. R 300 000
2. R1 200 000
3. R1 020 000
4. R 900 000

6. Which one of the following statements with regards to the Conceptual Framework for Financial
Reporting is correct?

1. The scope of the Framework is broader than that of the Conceptual Framework for
Financial Reporting.
2. Fundamental qualitative characteristics in the Conceptual Framework for Financial
Reporting are less critical than the enhancing qualitative characteristics.
3. For information to be useful it must be both relevant and faithfully represented.
4. Special purpose financial reports are not in the scope of the Conceptual Framework for
Financial Reporting.

LU 1: Solutions:
1.1 1 (Refer to par. 1.2 of Learning unit 1 – MO001)
1.2 3 (Refer to par. 1.5.2 of Learning unit 1 – MO001)
1.3 3 3 400 000 shares
1.4 3 680 000 shares
1.5 3 1 020 000
1.6 3 (Refer to par. 7.1.3 of Chapter 1 – Introduction to IFRS, 6th edition)

CALCULATIONS:
R
3. (2 400 000 + 1 000 000) = 3 400 000 shares
4. (3 400 000/5) = 680 000 shares
5. (680 000 x 1,5) = 1 020 000




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