CIMA CIMAPRA19-F02-1 Free Sample Exam Questions 2026

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Page: 1 / 54
Total Questions: 268

Questions & Answers PDF

• Question 1

  

  AB sold the majority of its operating equipment to LM for cash on 30 December 20X9 and then immediately leased it back under an operating lease.AB used the cash proceeds from the sale to reduce its long term borrowings significantly. No early repayment charge was levied by the lender.Which of the following statements is truein respect of AB's ratios calculated at 31 December 20X9?

  • AB's return on capital employed would be lower as a result of this sale being recorded.
  • AB's current ratio would be lower as a result of this sale being recorded.
  • AB's non-current asset turnover would be lower as a result of this sale being recorded.
  • AB's gearing ratio would be lower as a result of this sale being recorded.

  Reveal Answer Answer: D Next Question

• Question 2

  

  ST acquired 75% of the 2 million $1 equity shares of CD on 1 January 20X3, when the retained earnings of CD were S3,550,000. CD has no other reserves.ST paid $5,600,000 for the shares in CD and the non controlling interest was measured at its fair value of S1,400,000 at acquisition.At 1 January 20X3, the fair value of CD's net assets were equal to their carrying amount, with the exception of a building. This building had a fair value of $1,000,000 in excess of its carrying amount and a remaining useful life of 25 years on 1 January 20X3.At 31 December 20X5, the retained earnings of ST and CD were $8,500,000 and $5,250,000 respectively.What is thevalue ofretained earningsthat will be presentedin the consolidated statement of financial positionofST as at 31 December 20X5?

  • $9,685,000
  • $9,775,000
  • $9,715,000
  • $10,080,000

  Reveal Answer Answer: A Next Question

• Question 3

  

  When consolidating for group accounts, a number of calculations and adjustments are required to properly combine the entities into a single group. Which of the following processes are involved in this consolidation method?Select ALL that apply:

  • Add together the assets and liabilities of parent and subsidiary
  • Adjust for investment in subsidiaries
  • Adjustment for equity
  • Adjustment for profits
  • Adjustment for depreciation and amortisation

  Reveal Answer Answer: A, B, C Next Question

• Question 4

  

  Which of the following would limit the effectiveness of analysis performed on the operating profit margins oftwo separate entities with the same total revenue over a12 month period?

  • Different accounting estimates in respect of depreciation of property, plant and equipment.
  • Different approaches to allocating expenses to cost of sales, administration expenses and distribution costs.
  • Different interest rates on loan financeavailable to the entities.
  • Different pattern of monthly revenues caused by seasonality.

  Reveal Answer Answer: A Next Question

• Question 5

  

  Following a wedding in October 20X0 ten people contracted food poisoning from eating food cooked by the wedding caterer PQ. At 31 December 20X0 PQ was advised by its legal advisors that aliability was possible but not probable and the incident was disclosed as a contingent liability at that date.As the result of developments in the case, which is still not settled, PQ was advised that it is now probable, as at 31 December 20X1, that they will be found liable and will therefore have to pay damages of unknown value.Which of the following would indicate that in the financial statements of PQ for the year ended 31 December 20X1 this should still be recognised as a contingent liability rather than a provision?

  • There is no reliable estimate of the cost.
  • A present obligation exists as a result of a past event.
  • It is probable that there will be an outflow of economic resources to settle the case.
  • The case has not yet been settled.

  Reveal Answer Answer: A Next Question

• Question 6

  

  The dividend yield of ST hasfallen in theyear to 31 May 20X5, compared to the previous year.The share price on 31 May 20X4 was $4.50 and on 31 May 20X5 was $4.00. There were no issues of share capital during the year.Whichof the following should explain the reduction in the dividend yield for the year to 31 May 20X5 compared to the previous year?

  • The dividend paid in the year was reduced in order to pay for new assets.
  • Surplus cash was used to pay a special dividend in additionto the normal dividend in the year.
  • The profit for the year fell significantly and the dividend per share stayed the same.
  • To compensate investors for thereduction in share price a higher dividend per share was paid.

  Reveal Answer Answer: A Next Question

• Question 7

  

  You are a Financial Controller at BCD and are in the process of preparing the year-end financial statements. A member of your finance team has come to see you about her provisions balance at year-end.She says that the Managing Director has asked her to increase the provisions balance by $1 million overall. She thinks this is because BCD has had a very good year in terms of profit, and the Managing Director wants to put some profit aside to protect against any future reductions in profit. $1 million is material to BCD.Youbelieve that the provisions balance wasfairly stated without the additional $1 million.Which TWO of the following would be appropriate actions in this scenario?

  • Discuss the matter with the Finance Director as he is your immediate line manager.
  • Speak to the Managing Director to explain that the level of provisions is governed by financial reporting standards.
  • Tell the member of your finance team to ignore the Managing Director and to leave the provisions balance as it was.
  • Contact the external auditors of BCD and tell them that the Managing Director wants to change the provisions balance.
  • Speak to the shareholders at the upcoming annual general meeting about this issue.

  Reveal Answer Answer: A, B Next Question

• Question 8

  

  GH owned 70% of the equity share capital of XY at 1 January 20X6. GH acquired a further 20% of XY's equity share capital on 31 December 20X6 for $430,000. Non controlling interest was measured at $600,000 immediately prior to the 20% acquisition.Which of the following amounts will GH debit to non controlling interest when the 20% acquisition is adjusted for in its consolidated financial statements at 31 December 20X6?

  • $400,000
  • $120,000
  • $200,000
  • $430,000

  Reveal Answer Answer: A Next Question

• Question 9

  

  Whichof the following taken independently would explain the reduction in the profits as highlighted by the Chairman's press release?

  • Amortisation of development expenditure.
  • Staff training costs.
  • Extended credit terms to customers.
  • Installation costs of new equipment.

  Reveal Answer Answer: B Next Question

• Question 10

  

  Whatis meant by the term 'a placing of ordinary shares'?

  • Selling new ordinary shares to a financial institution on a pre-arranged basis.
  • Selling new ordinary shares directly to the public.
  • Selling existing ordinary shares to new investors through a stock exchange.
  • Selling new ordinary shares to existing shareholders.

  Reveal Answer Answer: A Next Question

Page: 1 / 54
Total Questions: 268

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