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Summary fac2601 assignment 1 semester 2
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fac2601 assignment 1 semester 2
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Fac2601Assignment 1
Due date: 10 August 2022
Question 1
Which one of the following statements is incorrect?
1. Inconsistencies in the measurement of financial statements can have an effect on
whether financial statements can provide faithful representation.
2. In order to select a measurement basis the nature of the information in both the
statement of financial position and the statement of financial performance must
be considered.
3. Relevance of information provided by a measurement basis is affected by the
characteristics of the asset or the liability and contribution to future cash flows.
4. A legal entity is an example of a Reporting Entity.
THE ANSWER IS 4
Question 2
When payment to purchase property, plant and equipment item is deferred for six
months, the cash price equivalent of the asset will be calculated as the total amount
payable reduced by interest for the whole six months. In this manner the asset is
recorded at its?
1. Historical cost
2. Value in use
3. Current cost
4. Fair value
THE ANSWER IS 3
Question 3
The purpose of an Integrated Report Framework is to establish guiding principles and
content elements that govern the overall content of an integrated report and to explain
the fundamental concepts that underpin them.
Which one of the following is NOT a purpose of the framework for integrated reporting?
1. Specify the information required to help stakeholders assess the value creation of
an organisation.
2. Specify benchmark of information
3. Recognise the key uniqueness of different organisations
, 4. A guideline for use by for-profit organisations of any size.
THE ANSWER IS 2
Question 4
The following balances regarding the shares issued was extracted from the accounting
records of I-Stores Ltd on 28 February 2019:
R
600 000 Ordinary shares 1 400 000
20 000 10% non-cumulative preference shares
10 000 12% cumulative preference shares 110 000
50 000
Included in the capital structure above are the following two transactions that took place
during the current financial year (these were the only transactions that occurred since
incorporation):
a. A capitalisation issue that the directors made on 28 February 2019 of one
ordinary share for every five shares held at R4,00 per share.
b. The issue of 2 000 12% cumulative preferences shares at R5 per share on 1
January 2019.
Dividends on ordinary shares was declared at 5c per share on 27 February 2019. No
dividends were declared or paid during the previous financial year.
The number of capitalisation shares issued is?
1. 280 000
2. 233 000
3. 120 000
4. 100 000
THE ANSWER IS 4
Question 5
The following balances regarding the shares issued was extracted from the
accounting records of I-Stores Ltd on 28 February 2019:
R
600 000 Ordinary shares 1 400 000
20 000 10% non-cumulative preference shares 110 000
10 000 12% cumulative preference shares 50 000
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