Exam (elaborations)
FAC1601 EXAM PACK 2023
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- University Of South Africa
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FAC1601 EXAM PACK 2023UPDATED QUESTIONS WITH ELABORATE
ANSWERS
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Contents
Study & Exam Pack for FAC1601 © 2014 ...................................................................................................... 1
CHAPTER 1: INTRODUCTION ......................................................................................................................... 4
FINANCIAL STATEMENTS OF A PARTNERSHIP .............................................................................................. 7
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME .............................................. 7
OCTOBER-NOVEMBER 2011.................................................................................................................... 11
B. PARTNERSHIPS ........................................................................................................................................ 18
STATEMENT OF CHANGES IN EQUITY ......................................................................................................... 18
OCTOBER-NOVEMBER 2010.................................................................................................................... 18
MAY-JUNE 2012 ...................................................................................................................................... 22
MAY-JUNE 2011 ...................................................................................................................................... 28
Classification of Components ................................................................................................................. 29
Rationale - Why the balance sheet always balances? ............................................................................ 30
Purpose & Importance ............................................................................................................................ 31
MAY- JUNE 2011 ..................................................................................................................................... 32
OCTOBER-NOVEMBER 2012.................................................................................................................... 39
CHAPTER THREE : PARTNERSHIP CHANGES AND LIQUIDATION ................................................................. 45
MAY-JUNE 2011 ...................................................................................................................................... 49
OCTOBER TO NOVEMBER 2012 .............................................................................................................. 51
NOVEMBER 2010 .................................................................................................................................... 56
CHAPTER 4: FINAL ACCOUNTS OF A CLOSE CORPORATION ....................................................................... 62
MAY –JUNE 2011 QUESTION 3 ................................................................................................................ 68
OCTOBER-NOVEMBER 2011 QUESTION 3............................................................................................... 70
OCTOBER – NOVEMBER 2011 ................................................................................................................ 72
OCTOBER-NOVEMBER 2012.................................................................................................................... 78
CHAPTER 4 .................................................................................................................................................. 82
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OCTOBER- NOVEMBER 2010 ................................................................................................................... 87
MAY-JUNE 2011 ...................................................................................................................................... 89
OCTOBER- NOVEMBER 2011 ................................................................................................................... 91
OCTOBER-NOVEMBER 2012.................................................................................................................... 94
MAY-JUNE 2012 ...................................................................................................................................... 98
CHAPTER 6 INTRODUCTION TO COMPANY ACCOUNTS............................................................................ 100
MAY-JUNE 2010 .................................................................................................................................... 100
MAY – JUNE 2010 .................................................................................................................................. 101
CHAPTER 7: BRANCH ACCOUNTS .............................................................................................................. 104
MAY-JUNE 2010 .................................................................................................................................... 104
OCTOBER-NOVEMBER 2012.................................................................................................................. 107
CHAPTER 8: INTERPRETATION OF FINAL ACCOUNTS ................................................................................ 110
OCTOBER-NOVEMBER 2010 QUESTION 5............................................................................................. 110
OCTOBER – NOVEMBER 2010 ............................................................................................................... 111
OCTOBER-NOVEMBER 2012.................................................................................................................. 112
CHAPTER 8: TIME VALUE OF MONEY ........................................................................................................ 114
OCTOBER-NOVEMBER 2011.................................................................................................................. 114
SOLUTION .................................................................................................................................................. 115
OCTOBER – NOVEMBER 2011 ................................................................................................................... 115
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CHAPTER 1: INTRODUCTION
This study guide provides brief notes on the topics covered in FAC1601. The topics covered
include the following:
Preparation of Financial Statements of Partnerships;
Changes in the ownership structure of Partnerships;
Liquidation of Partnerships;
Financial Statements of Close Corporations;
Introduction to Company Accounts;
Statement of Cash Flows;
Analysis and Interpretation of Financial Statements;
Branches;
Time value of money.
Financial Accounting
This course mainly covers the Financial Accounting side of broad Accounting. The two main
branches of Accounting are Financial Accounting and Management Accounting. Management
Accounting is mainly used for internal purposes whilst Financial Accounting is mainly produced
for external purposes.
Users of Financial Statements
In this course, focus will mainly be based on the preparation of Financial Statements. These are
supposed to be prepared in terms of International Financial Reporting Standards (IFRSs) as set
out by the International Accounting Standards Board (IASB), of which the South African Institute
of Chartered Accountancy is a member. IFRs are the generally accepted accounting practices by
Accountants throughout the whole world. The final accounts which shall be the main focus are
prepared in terms of International Accounting Standards (IAS) 1.
These accounts are prepared for various users who have differing needs. Examples of users and
their needs are as follows:
1. Investors: to assess the profitability of the entity in order to make a decision on whether to
invest or divest from the entity.
2. Management: to evaluate their performance as guardians of the owners wealth and
sometimes to measure their rewards where there are performance based bonuses.
3. Employees: to gauge the security of their jobs and assess the ability of the entity to pay. The
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