FFMA 2025/2026 UPDATED EXAM QUESTIONS
AND CORRECT ANSWERS
accounting - CORRECT ANSWERS The process of planning, recording, analyzing, and
interpreting financial and economic information and make decisions of the data
accounts - CORRECT ANSWERS financial statements that report performance and
outcomes of firms each year
annual report - CORRECT ANSWERS a yearly statement of the financial condition,
progress, and expectations of an organization
- for those who want to understand the financial information
- aka corporate report
ethical behaviour - CORRECT ANSWERS requires: integrity, objectivity, professional
competence and due care, confidentiality and professional behaviour
financial accounting vs management accounting - CORRECT ANSWERS financial aims to
meet the needs of owners and lenders whereas management accounting is for information
within the business fir management and internal uses only , there are more specialised needs
conceptual framework - CORRECT ANSWERS a statement of principles providing generally
accepted guidance for the development of new reporting practices and for challenging and
evaluating the existing practices
What makes financial information useful? - CORRECT ANSWERS Relevance and Faithful
representation; these qualitative characteristics of useful financial information are guiding
concepts that apply throughout the revised conceptual framework
,relevance - CORRECT ANSWERS -information is relevant if it is capable of making a
difference to the decisions made by users
- has predictive value or confirmatory value
faithful representation - CORRECT ANSWERS information must faithfully represent the
substance of what it purports to represent
- to the maximum extent possible: complete, neutral and free from error
- affected by level of measurement uncertainty
enhancing qualitative characteristics - CORRECT ANSWERS - comparability
- verifiability
- timeliness
- understandability
comparability - CORRECT ANSWERS Ability to compare the accounting information of
different companies because they use the same accounting principles.
verfiability - CORRECT ANSWERS a consensus among different measures
timeliness - CORRECT ANSWERS having information available to decision-makers before it
loses its capacity to influence decisions
understandability - CORRECT ANSWERS Information presented in a clear and concise
fashion so that users can interpret it and comprehend its meaning.
cost constraint - CORRECT ANSWERS the benefit of providing the information needs to
justify the cost of providing and using the information
,prudence - CORRECT ANSWERS neutrality is supported by the exercise ofprudence
- prudence is the exercise of caution when making judgements under conditions of uncertainty
- it does not allow for overstatement or an understatement of assets, liabilities, income or
expenses
substance over form - CORRECT ANSWERS in many circumstances, the substance of an
economic phenomenon and it legal form are the same. if they are not the same, providing
information only about the legal form would not faithfully represent the economic
phenomenon
measurement uncertainty - CORRECT ANSWERS does not prevent information from being
useful
- in some cases the most relevant information may have such a high level of measurement
uncertainty that the most useful information is information that is slightly less relevant but is
subject to lower measurement uncertainty
accounting principles - CORRECT ANSWERS within the companies ac t 2006:
going concern
accruals
consistency
prudence
going concern - CORRECT ANSWERS financial statements are prepared with the
expectation that a business will remain in operation indefinitely
it is assumed that the entity has neither the intention nor the need to enter liquidation or to
cease trading
, accrual accounting - CORRECT ANSWERS depicts the effects of transactions and ither
events and circumstances on a reporting entity's economic resources and claims in the periods
in which those effects occur, even if the resulting cash receipts and payments occur in a
different period
materiality - CORRECT ANSWERS - misstatements, including omissions, are considered to
be material if they, individually or in the aggregate, could reasonably be expected to influence
the economic decsions of users taken on the basis of financial statements
whether an item is large enough to likely influence the decision of an investor or creditor
importance of accounting - CORRECT ANSWERS fpr medium and large sized businesses
accounting information will be very important for the shareholders as it shows how well the
directors have run the company
Accounting is an information and measurement system that identifies, records, and
communicates an organization's business activities.
trade receivable - CORRECT ANSWERS amount owed to a business by its customers who
bought goods on credit
sales invoice - CORRECT ANSWERS A document sent to customers recording a sale on
credit and requesting payment
credit purchase - CORRECT ANSWERS the business takes the goods and agrees to pay at a
future date
Account / Trade Payables - CORRECT ANSWERS amounts owed by the business due to the
suppliers
AND CORRECT ANSWERS
accounting - CORRECT ANSWERS The process of planning, recording, analyzing, and
interpreting financial and economic information and make decisions of the data
accounts - CORRECT ANSWERS financial statements that report performance and
outcomes of firms each year
annual report - CORRECT ANSWERS a yearly statement of the financial condition,
progress, and expectations of an organization
- for those who want to understand the financial information
- aka corporate report
ethical behaviour - CORRECT ANSWERS requires: integrity, objectivity, professional
competence and due care, confidentiality and professional behaviour
financial accounting vs management accounting - CORRECT ANSWERS financial aims to
meet the needs of owners and lenders whereas management accounting is for information
within the business fir management and internal uses only , there are more specialised needs
conceptual framework - CORRECT ANSWERS a statement of principles providing generally
accepted guidance for the development of new reporting practices and for challenging and
evaluating the existing practices
What makes financial information useful? - CORRECT ANSWERS Relevance and Faithful
representation; these qualitative characteristics of useful financial information are guiding
concepts that apply throughout the revised conceptual framework
,relevance - CORRECT ANSWERS -information is relevant if it is capable of making a
difference to the decisions made by users
- has predictive value or confirmatory value
faithful representation - CORRECT ANSWERS information must faithfully represent the
substance of what it purports to represent
- to the maximum extent possible: complete, neutral and free from error
- affected by level of measurement uncertainty
enhancing qualitative characteristics - CORRECT ANSWERS - comparability
- verifiability
- timeliness
- understandability
comparability - CORRECT ANSWERS Ability to compare the accounting information of
different companies because they use the same accounting principles.
verfiability - CORRECT ANSWERS a consensus among different measures
timeliness - CORRECT ANSWERS having information available to decision-makers before it
loses its capacity to influence decisions
understandability - CORRECT ANSWERS Information presented in a clear and concise
fashion so that users can interpret it and comprehend its meaning.
cost constraint - CORRECT ANSWERS the benefit of providing the information needs to
justify the cost of providing and using the information
,prudence - CORRECT ANSWERS neutrality is supported by the exercise ofprudence
- prudence is the exercise of caution when making judgements under conditions of uncertainty
- it does not allow for overstatement or an understatement of assets, liabilities, income or
expenses
substance over form - CORRECT ANSWERS in many circumstances, the substance of an
economic phenomenon and it legal form are the same. if they are not the same, providing
information only about the legal form would not faithfully represent the economic
phenomenon
measurement uncertainty - CORRECT ANSWERS does not prevent information from being
useful
- in some cases the most relevant information may have such a high level of measurement
uncertainty that the most useful information is information that is slightly less relevant but is
subject to lower measurement uncertainty
accounting principles - CORRECT ANSWERS within the companies ac t 2006:
going concern
accruals
consistency
prudence
going concern - CORRECT ANSWERS financial statements are prepared with the
expectation that a business will remain in operation indefinitely
it is assumed that the entity has neither the intention nor the need to enter liquidation or to
cease trading
, accrual accounting - CORRECT ANSWERS depicts the effects of transactions and ither
events and circumstances on a reporting entity's economic resources and claims in the periods
in which those effects occur, even if the resulting cash receipts and payments occur in a
different period
materiality - CORRECT ANSWERS - misstatements, including omissions, are considered to
be material if they, individually or in the aggregate, could reasonably be expected to influence
the economic decsions of users taken on the basis of financial statements
whether an item is large enough to likely influence the decision of an investor or creditor
importance of accounting - CORRECT ANSWERS fpr medium and large sized businesses
accounting information will be very important for the shareholders as it shows how well the
directors have run the company
Accounting is an information and measurement system that identifies, records, and
communicates an organization's business activities.
trade receivable - CORRECT ANSWERS amount owed to a business by its customers who
bought goods on credit
sales invoice - CORRECT ANSWERS A document sent to customers recording a sale on
credit and requesting payment
credit purchase - CORRECT ANSWERS the business takes the goods and agrees to pay at a
future date
Account / Trade Payables - CORRECT ANSWERS amounts owed by the business due to the
suppliers
