CIMA CIMAPRA19-F01-1 Exam Questions Instant Access

Question 1

BBB has been experiencing liquidity problems and currently has an overdraft with the bank.

Which THREE of the following would be appropriate measures to help address this problem?

AReduce the selling price of goods to reduce the holding of stock.

BOffer early settlement discounts to encourage debtors to pay more quickly.

CSell some surplus fixed assets.

DInvest in a short term deposit with the bank.

EShorten the time taken to pay creditors.

FPay a dividend to shareholders.

Answer : A, B, C

Question 2

In accordance with IFRS 3 Business Combinations, acquisition accounting of an investment in another entity within the consolidated statement of financial position means that the:

AParent's and 100% of the other entity's assets and liabilities are added together line by line.

BGroup's share of the net assets of the other entity are shown as one line under non-current assets.

CParent's and group share of the other entity's assets and liabilities are added together line by line.

DGroup's share of the net assets of the other entity are shown as one line within equity.

Answer : A

Question 3

While conducting their audit, auditor 0 did not encounter issues which significantly limited the scope of their audit, however they did run into problems in that they disagreed with the management on facts in the statements.

These disagreements were somewhat material, but they did not affect the auditor's overall opinion of the business. Which of the following statements should auditor 0 issue?

AEmphasis of matter

BUnqualified report

C'Except for' qualification

DAdverse audit opinion

EDisclaimer of opinion

Answer : A

Question 4

Which of the following is a feature of value added tax (VAT)?

AOnly registered entities can charge VAT on sales or recover VAT paid on purchases.

BThe value of all supplies must be taken into account when determining whether the registration threshold has been exceeded.

CEntities cannot register for VAT if the value of their taxable supplies is below the registration threshold.

DEntities that make only standard-rated or zero-rated supplies have their right to recover input tax restricted.

Answer : A

Question 5

Mr AM is the owner of Waxco Ltd. Mr AM was born in India, but currently resides in the US

AHe has gained dual Indian and American citizenship.
Mr AM first registered Waxco Ltd in the USA when he started the company ten years ago. However, because of lower costs, the company moved its central management station to Germany two years ago. Waxco Ltd has other smaller offices such as call centres across Asia, in locations such as Pakistan and Cambodia, however Waxco Ltd only currently sell goods in the USA.
Which of the countries mentioned are relevant for determining Waxco Ltd's competent jurisdiction?

AThe USA

BGermany

CIndia

DPakistan

ECambodia

Answer : A, A, B

Question 6

The following information relates to ABC.

Which of the following would be a reason for the movement in the trade receivable days?

AA new credit controller was appointed during the year ended 30 June 20X3 who has been chasing customers for payment.

BA system of early settlement discount was introduced during the year ended 30 June 20X3 which was taken up by quite a few customers.

COne customer who regularly took 120 days to pay their invoices stopped buying goods from ABC during the year ended 30 June 20X3.

DIt was decided during the year ended 30 June 20X3 to stop undertaking credit checks on new customers.

Answer : D

Question 7

In most developed countries employers deduct the tax from employees' pay each month and then pay the tax to the tax authorities on behalf of the employee on a monthly basis.

Which THREE of the following are advantages of this system to the employee?

AThe tax is collected earlier than systems that assess earnings at the end of the year.

BThe payment of tax is easier as the tax is deducted before the net salary is paid to the employee.

CMost of the administration costs are borne by the employees.

DThe responsibility for the tax calculations rests with the employer and therefore there is less chance of mistakes being made.

EThere is less chance of interest and penalties being levied on the employee by the tax authorities.

Answer : B, D, E

CIMA F1 Financial Reporting CIMAPRA19-F01-1 Exam Questions