CIMA CIMAPRA19-F01-1 Exam Questions Instant Access

Question 1

YZ has $40,000 of plant and machinery which was acquired on 1 June 20X1.Tax depreciation rates on plant and machinery are 25% reducing balance. All plant and machinery was sold for $24,000 on 1 June 20X3.

Calculate the tax balancing allowance or charge on disposal for the year ended 31 May 20X3 and state the effect on the taxable profit.

AA balancing allowance of $1,500 increases taxable profit.

BA balancing allowance of $1,500 reduces taxable profit.

CA balancing charge of $1,500 reduces taxable profit.

DA balancing charge of $1,500 increases taxable profit.

Answer : D

Question 2

Which of the following is NOT a principle in the CIMA Code of Ethics for Professional Accountants?

AIntegrity

BProfessional competence and due care

CTimeliness

DObjectivity

Answer : C

Question 3

The financial statements of JK for the year ended 31 August 20X4 were approved on 10 November 20X4.

Within these financial statements which of the following would have been treated as a non-adjusting event in accordance with IAS 10 Events After the Reporting Period?

AInventory which was originally valued at its cost of $45,000 being sold for $37,000 in September 20X4.

BA fire in JK's main warehouse on 3 September 20X4 destroying 60% of the inventory that had been held at the year end.

CNotification received on 31 August that one of JK's major customers had gone into liquidation and was unlikely to pay any outstanding invoices.

DThe completion of a court case on 5 November 20X4 in which JK was ordered to pay damages of $150,000.

Answer : B

Question 4

On 31 March 20X1 OP decided to sell a property. On that date this property was correctly classified as held for sale in accordance with IFRS 5 Non-Current Assets Held For Sale And Discontinued Operations.

In the draft financial statements of OP for the year ended 31 October 20X1 this property has been included at its fair value, which was $520,000 lower than its carrying value. This has resulted in a charge to profit or loss, the result of which is that the draft financial statements show a loss of $450,000 for the year to 31 October 20X1. When the management board of OP reviewed the draft financial statements it was unhappy about the loss and decided that the property should be reclassified as a non-current asset and reinstated to its original value, despite the fact that its plans for the property had not changed.

In accordance with the ethical principle of professional competence and due care, which THREE of the following statements explain how this property should be accounted for in the financial statements of OP for the year ended 31 October 20X1?

AThe property should be treated as a non-current asset held for sale from 31 March 20X1.

BThe property should be treated as a non-current asset held for sale from 1 November 20X1.

CThe property should not be depreciated after 31 March 20X1.

DThe impairment of $520,000 should be shown as an expense in the statement of profit or loss.

EThe property should be depreciated until 31 October 20X1.

FThe property impairment should not be recorded until the sale has completed.

Answer : A, C, D

Question 5

Which THREE of the following statements are true?

ATax depreciation replaces accounting depreciation when calculating the taxable profit.

BTax depreciation increases the taxable profit.

CBalancing allowances increase the taxable profit.

DBalancing charges increase the taxable profit.

EBalancing charges reduce the taxable profit.

FBalancing allowances reduce the taxable profit.

Answer : A, D, F

Question 6

Company Y is using some of the money from a share issue to purchase a new office building. The company is also using some of the money to purchase inventories. Which method of financing is this?

AConservative financing

BMatching financing

CAggressive financing

Answer : A

Question 7

When developing local Generally Accepted Accounting Principles (known as local GAAP) some countries start with International Financial Reporting Standards (IFRSs) which are then amended to reflect local needs and conditions.

This type of approach is classified as:

AAdoption of IFRSs as local GAAP.

BUsing IFRSs as a model for local GAAP.

CIFRSs having a persuasive influence in formulating local GAAP.

DIFRSs having little or no impact in formulating local GAAP.

Answer : B

CIMA F1 Financial Reporting CIMAPRA19-F01-1 Exam Questions