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CIMA Financial Reporting Sample Questions:
1. PZ has the following working capital ratios:
Which of the following could be the reason for the movements?
A) PZ has introduced a new policy to take discounts from suppliers during 20X1.
B) The workforce of PZ have been on strike for a month during 20X1 but deliveries of inventory have still been received by the entity.
C) A new credit controller has been employed who has been more rigorous with their collection procedure of receivables.
D) PZ has implemented a just-in-time system of ordering inventory during 20X1.
2. Which of the following would NOT be a risk or impact of overtrading?
A) Expanding too quickly
B) Shortage of working capital
C) Increase in interest payments
D) Increased borrowings
3. ST has $20,000 of plant and machinery which was acquired on 1 April 20X0. Tax depreciation rates on plant and machinery are 20% reducing balance. All plant and machinery was sold for $12,000 on 1 April 20X2.
Calculate the tax balancing allowance or charge on disposal for the year ended 31 March 20X3 and state the effect on the taxable profit.
A) A balancing charge of $800 will increase taxable profits.
B) A balancing allowance of $800 will increase taxable profits.
C) A balancing charge of $800 will reduce taxable profits.
D) A balancing allowance of $800 will reduce taxable profits.
4. Company R use a defined benefit plan pension scheme. Employee UW has been working for Company R for
25 years. The defined benefit plan is 1.5% of the employee's annual salary during their time at the company, for every year of employment.
Employee UW started on a £18,000 per annum salary. After 10 years of employment. Employee UW received a promotion and began earning £22,000. After another 3 years of employment. Employee UW got promoted to a wage of £35,000, and is still on this salary now. How much pension has Employee UW accumulated since working at Company R?
A) £6,750
B) £9,375
C) £9,900
D) £18,000
5. In accordance with the Conceptual Framework for Financial Reporting, which of the following describes the historical cost measurement basis for an asset?
A) The amount paid when the asset was purchased.
B) The cost to acquire an equivalent asset at the measurement date.
C) The present value of future cash flows generated from the asset.
D) The amount that would be received on the sale of the asset.
Solutions:
| Question # 1 Answer: B | Question # 2 Answer: A | Question # 3 Answer: D | Question # 4 Answer: C | Question # 5 Answer: A |
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