CIMA CIMAPRA19-F02-1 Exam Practice Test Instant Access

Question 1

The basic earning per share computed by a company for year ended 31st March 20X7 is 2 per share. The company had certain convertible debentures outstanding as on 31st March 20X7. The conversion of debentures to equity shares would result in the earnings per share to be 2.2. Which of the following should the company disclose?

ABasic earnings per share only

BDiluted earnings per share only

CBoth basic and diluted earnings per share

DNeither basic nor diluted earnings per share

Answer : A

Question 2

A local council is one year into a two year project to renovate local parks. The project is on track to be completed within the set time-scale, however it has proved more costly than initially expected.

The project is on track to be completed within its two year period. Contracts for the labour and materials needed to renovate the parks were agreed at the start of the project and no changes have arisen. Despite the fact that the council has yet to fully settle these contracts, costs are set to be as budgeted.

Why would this example not be recognised as a provision?

ANeither the timing nor the amount of the provision is uncertain.

BThe settlement of the contract is unlikely to result in an outflow from the council.

CThe council doesn't have a present obligation from the project.

DThe council has no potential future obligations arising from the project.

Answer : A

Question 3

Which of the following examples would be classed as related parties ofJH Ltd due to the power they possess to directly influence the company?

1: JH Ltd's managing director

2: The son of JH Ltd's managing director, who is an intern in the company's office

3: The brother of JH Ltd's managing director, whose business supplies a large amount of production material for the company

4: JH Ltd's subsidiary company, AL Ltd

5: BR PLC, one of JH Ltd's regular customers

A1&4

C1, 2, 3 & 4

D2, 3 & 4

E1, 2 & 3

FAll of the above

Answer : B

Question 4

Which of the following examples of contracts will use cost of sales as the balancing figure when calculating profit or loss?

Select ALL that apply.

AContract A has a total value of50m, costs to date of42m and expected costs to completion of15m. The project's % stage of completion is 74% using the cost method.

BContract A has a total value of55m, costs to date of33m and expected costs to completion of18m.

CContract A has a total value of75m, costs to date of61m and expected costs to completion of20m. The contracts % stage of completion was calculated by dividing its value to date of45m by75m.

DContract A has a total value of60m, costs to date of42m and expected costs to completion of15m. The project's % stage of completion is 80% using the value method.

EContract A has a total value of85m, costs to date of69m and expected costs to completion of22m. The contracts % stage of completion was calculated by dividing its costs incurred to date of69m by 75m.

Answer : C, D

Question 5

Which of the following statements are true regarding consolidated cash flows after the acquisition of a subsidiary?

Select ALL that apply.

AThe subsidiary's cash inflows and outflows become part of the group after purchase

BCash acquired from the subsidiary upon purchase is represented as a cash inflow

CAdjustments need to be made to group working capital in light of the working capital acquired from the subsidiary

DNet cash paid to acquire a subsidiary is shown as a cash inflow within the cash flow from investing activities

EDisclosure notes are required to show cash and cash equivalents paid or received, but not details of goodwill, assets and liabilities acquired

FFurther adjustments are required to cash inflows and outflows after profit has been consolidated

Answer : A, B, C

Question 6

Information from the financial statements of an entity for the year to 31 December 20X5:

The gearing ratio calculated as debt/equity and interest cover are:

Agearing of 15% andinterest cover of 6.

Bgearing of 16% and interest cover of 6.

Cgearing of 15% and interest cover of 4.

Dgearing of 16% and interest cover of 4.

Answer : A

Question 7

As at 31 October 20X7 TU's financial statementsshow the entity having profit after tax of$600,000 and 900,000$1 ordinary sharesin issue. There have been no issues of shares during the year. At 31 October 20X7 TUhave 300,000 share options in issue, which allow the holders to purchase ordinary shares at $2a share in 3 years' time. The average price of the ordinary shares throughout the year was $5a share.

What is the diluted earnings per share for the year ended 31 October 20X7?

A66.7 cents

B58.8 cents

C50.0 cents

D55.6 cents

Answer : D

CIMAPRA19-F02-1 F2 Advanced Financial Reporting Exam Practice Test