Exam (elaborations)
FAC2601 Assessment 4 Q&A Semester 2 2023
- Course
- FAC2601
- Institution
- University Of South Africa (Unisa)
FAC2601 Assessment 4 Q&A Semester 2 2023
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UNISA 2023 FAC2601-23-S2 Welcome to FAC 2601 - Financial Accounting For Companies Assessment 4QUIZ
Started on Wednesday, 8 November 2023, 5:45 PM
State Finished
Completed on Wednesday, 8 November 2023, 6:57 PM
Time taken 1 hour 11 mins
Marks 16/20
Grade 80 out of 100
, Question 1
Incorrect
Mark 0 out of 2
MULTIPLE CHOICE QUESTION ASSIGNMENT
Answer the following multiple choice questions. Indicate your choice by selecting only one option from the four options given
for each question answered.
Use the following information to answer question 1 and 2:
Air Fry Ltd is a manufacturer of specialised pots that reduces the time it takes to cook a meal, resulting in electricity
consumption also being lower. During March 2022, however, a competitor introduced a better product on the market, thereby
reducing the demand for Air Fry‘s products. Air Fry Ltd immediately decreased their selling price from R500 per pot to R300
per pot to try and compensate for this. This selling price reduction, however, did not have any effect on the going concern of
the company. On 28 February 2022, 2 000 pots were on hands. The previous accountant was not certain whether this
inventory should be written down to the selling price of R300 per pot, as it is lower than the cost of R350 per pot. The
financial statements were authorised for issue during April 2022.
REQUIRED:
Question 1:
Which one of the following statements are correct based on the information provided above?
1. Air Fry Ltd will not have to adjust their financial statements as this event occurred after the reporting date, however, a
disclosure of the nature of the event is required.
2. Since the event occurred between the reporting date and the date the financial statements were authorised for
issue, this is an adjusting event.
3.
The event is indicative of circumstances that occurred during the financial period and thus this represents an
adjusting event.
4. Air Fry Ltd will not have to adjust their financial statements as this event occurred after the reporting date and no
disclosure thereof is required.
Your answer is incorrect.
The correct answer is:
Air Fry Ltd will not have to adjust their financial statements as this event occurred after the reporting date, however, a
disclosure of the nature of the event is required.
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