CIMA CIMAPRA19-F01-1 Exam Practice Test Instant Access

Question 1

Which of the following is correct?

The primary purpose of a cash budget prepared on a monthly basis is to determine:

Anext month's sales volumes.

Bthe amount of inventory to purchase in the following month.

Cwhen to pay employees salaries.

Dwhether there will be sufficient cash in the bank to meet requirements.

Answer : D

Question 2

An entity has an inventory holding period of 52 days.

This means that the inventory:

Atakes 52 days to arrive after it has been ordered.

Bstays in the entity's warehouse for an average of 52 days before it is sold.

Ctakes 52 days to manufacture.

Dtakes 52 days to be paid for.

Answer : B

Question 3

Which TWO of the following would improve a company's short term cash flow position?

APostponing non essential capital expenditure

BIncreasing the working capital cycle by making payments to suppliers early

CTaking advantage of bulk discounts offered on inventory purchases

DReducing levels of inventory by implementing a just in time system for purchasing

EPaying a bonus to staff for exceptional performance

Answer : A, D

Question 4

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 5

In accordance with IAS 16 Property, Plant and Equipment, in which of the following situations would subsequent expenditure on a non-current asset be capitalised?

AAn entity purchased an aircraft five years ago, when its engines were separately identified in the accounting records. The engines now need to be replaced at a cost of $2 million each. When the engines are replaced the aircraft is expected to be airworthy for a further 5 years.

BAn entity's head office building suffered a major fire, the upper floors and roof were completely destroyed. The entity proposes to restore the building at a cost of $1 million and move back in to the building to use it as a head office again.

CAn entity's delivery vehicle was in a car park when the car park was flooded. The engine and interior of the vehicle needed extensive repair and renovation costing $25,000.

DA manufacturing entity closes its factory for two weeks each summer for routine maintenance and repairs. The current year's cost of maintenance and repairs was $62,000.

Answer : A

Question 6

An entity acquires 100% of the equity shares in another entity.

The consideration paid for the shares is less than the fair value of the net assets acquired.

Which of the following is the correct accounting treatment for the difference between the consideration paid and the fair value of the net assets acquired, in accordance with IFRS 3 Business Combinations?

ARecognise as a gain in the consolidated statement of profit or loss.

BRecognise as a deferred credit and release to consolidated profit or loss over its useful economic life.

CRecognise as a deduction from goodwill in the consolidated statement of financial position.

DRecognise as a gain in the statement of changes in equity.

Answer : A

Question 7

LM is preparing its cash forecast for the next three months.

Which of the following items should be left out of its calculations?

ATax payment due, that relates to last year's profits.

BReceipt of a new bank loan raised for the purpose of purchasing new machinery.

CExpected loss on the disposal of a piece of land.

DRental payment on a leased vehicle.

Answer : C

CIMAPRA19-F01-1 F1 Financial Reporting Exam Practice Test