FAC1601 PREPARATION TEST 2026
QUESTIONS AND CORRECT ANSWERS
GRADED A+
● International Financial Reporting Standards. Answer: A set of rules
developed to make sure that financial statements are prepared
consistently for companies so that users can compare the financial
results and performance from the current year to prior years to the same
company. Additionally, making it possible for users to compare the
financial position and performance of one company with another.
● Profit Company. Answer: A company that is incorporated for the
purpose of financial gain for its shareholders. Include: state-owned
companies (SOC Ltd), private companies [(Pty) Ltd], personal liability
companies [Inc], and public companies [Ltd].
● Purpose of Conceptual Framework. Answer: a) assist the IASB in
developing IFRS that is consistent concepts
b) aid the prepares of financial statements to develop consistent
accounting policies in the absence of a standard.
c) assist all parties to understand and interpret IFRS.
● Objective of General Purpose Financial Reporting. Answer: To
provide financial information about a reporting entity to its existing and
potential investors , lenders and other creditors.
QUESTIONS AND CORRECT ANSWERS
GRADED A+
● International Financial Reporting Standards. Answer: A set of rules
developed to make sure that financial statements are prepared
consistently for companies so that users can compare the financial
results and performance from the current year to prior years to the same
company. Additionally, making it possible for users to compare the
financial position and performance of one company with another.
● Profit Company. Answer: A company that is incorporated for the
purpose of financial gain for its shareholders. Include: state-owned
companies (SOC Ltd), private companies [(Pty) Ltd], personal liability
companies [Inc], and public companies [Ltd].
● Purpose of Conceptual Framework. Answer: a) assist the IASB in
developing IFRS that is consistent concepts
b) aid the prepares of financial statements to develop consistent
accounting policies in the absence of a standard.
c) assist all parties to understand and interpret IFRS.
● Objective of General Purpose Financial Reporting. Answer: To
provide financial information about a reporting entity to its existing and
potential investors , lenders and other creditors.
