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Free CIMA F1 Practice Exam with Questions & Answers | Set: 4

Questions 31

Which of the following is NOT a source of short-term finance?

Options:
A.

Increase in trade receivables

B.

Increase in trade payables

C.

Debt factoring

D.

Increase in a bank overdraft

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Questions 32

Which of the following is an effect of using equity accounting to include an entity in the consolidated statement of financial position of a group?

Options:
A.

A single figure is included in net assets which is the sum of the initial cost of investment in the investee entity plus the group share of all changes in net assets since acquisition.

B.

100% of each asset and liability of the investee entity is included with the investing entity's balances.

C.

The group share of each asset and liability of the investee entity is included with the investing entity's balances.

D.

The investment in the investee entity is included in non-current assets at cost to the investing entity.

Questions 33

Which THREE of the following are costs that a business might incur as a result of holding insufficient inventory of raw materials?

Options:
A.

Lost production

B.

Purchasing inventory at a higher price

C.

Additional storage costs

D.

Increased risk of obsolescence

E.

Loss of sales

Questions 34

F1 Question 34

Options:
Questions 35

Which THREE of the following statements are true?

Options:
A.

Tax depreciation replaces accounting depreciation when calculating the taxable profit.

B.

Tax depreciation increases the taxable profit.

C.

Balancing allowances increase the taxable profit.

D.

Balancing charges increase the taxable profit.

E.

Balancing charges reduce the taxable profit.

F.

Balancing allowances reduce the taxable profit.

Questions 36

XY acquired 75% of the equity shares of CD on 1 January 20X2 for $230,000.

On 1 January 20X2 CD had the following balances:

F1 Question 36

XY uses the proportionate share of net assets method to value non controlling interest at acquisition.

Calculate the goodwill arising on the acquisition of CD.

Give your answer to nearest whole number.

Options:
Questions 37

The following data has been extracted from GH's accounting records:

F1 Question 37

What is GH's average inventory days for the year ended 31 March 20X3?

Options:
A.

39 days

B.

43 days

C.

25 days

D.

28 days

Questions 38

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?

Options:
A.

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

B.

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

C.

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

D.

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

E.

The property should be depreciated until 31 October 20X1.

F.

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

Questions 39

According to IAS 21 The Effects of Changes in Foreign Exchange Rates, an entity should determine its functional currency.

Which of the following is NOT a factor that should be considered by an entity when determining its functional currency?

Options:
A.

The currency that mainly influences selling prices of the entity's goods and services.

B.

The currency that mainly influences labour, material and other costs.

C.

The currency used for published financial reports.

D.

The currency of the country whose competitive forces determine prices of goods and services.

Questions 40

Which of the following is a feature of value added tax (VAT)?

Options:
A.

Only registered entities can charge VAT on sales or recover VAT paid on purchases.

B.

The value of all supplies must be taken into account when determining whether the registration threshold has been exceeded.

C.

Entities cannot register for VAT if the value of their taxable supplies is below the registration threshold.

D.

Entities that make only standard-rated or zero-rated supplies have their right to recover input tax restricted.

Exam Code: F1
Certification Provider: CIMA
Exam Name: Financial Reporting
Last Update: Jul 11, 2025
Questions: 248

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