Question No. 1

An accountant acting under their Code of Ethics would do which THREE of the following?

AResist pressure from the directors to recognise revenue on sales where the risks and rewards have not transferred to the customer.

BReport material conflicts of interest to a more senior level.

CReject a justified change to a depreciation policy that increases profitability.

DAccept a recommendation from the audit committee to increase segregation of duties within the finance department.

EMake a provision for a liability of uncertain timing or amount, requested by the directors, where there is NOT a present obligation.

FAccept a director's instruction to remove one element of their remuneration from the directors' remuneration report.

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Correct Answer: A, B, D

Question No. 2

Which of the following are limitations of financial statement figures for ratio analysis? Select the ALL that apply.

AOnly provides historic data

BOnly provides financial information

CLimited information to identify trends over time

DProvide only summarised information

EContains complicated information that needs to be summarised

FOnly provides forecast data

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Correct Answer: A, B, C, D

Question No. 3

The following information relates to DEF for the year ended 31 December 20X7:

* Property, plant and equipment has a carrying value of $3,500,000 and a tax written down value of $2,500,000.

* There are unused tax losses to carry forward of $1,250,000. These tax losses have arisen due to poor trading conditions which are not expected to improve in the foreseeable future.

* The corporate income tax rate is 25%.

In accordance with IAS 12 Income Taxes,the financial statements of DEF for the year ended 31 December 20X7 would recognisedeferred tax balances of:

AOption A

BOption B

COption C

DOption D

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Correct Answer: A

Question No. 4

MNO is listed on its local stock exchange. It has a high level of gearing compared to the industry average as a result of rapid expansion funded by debt. The directors of MNO would like to reduce the level of gearing by raising equity to fund the next expansion project. The directors are considering whether to use a placing of new shares or a rights issue.

Which of the following statementsis true?

AA rights issue would not need to be underwritten because the risk of the shares not being taken up is small compared to a placing.

BThe administration costs associated with a placing are usually more expensive than a rights issue because less investors are involved.

CA placing will increase the proportion of the total number of MNO's shares held by large investors.

DThe directors must use a placing before offering the rights issue to existing shareholders.

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Correct Answer: C

Question No. 5

GH issued a 6% debenture for $1,000,000 on 1 January 20X4. A broker fee of $50,000 was payable in respect of this issue. The effective interest rate associated with this debt instrument is 7.2%.

The carrying value of the debenture at 31 December 20X4 is:

A$958,400

B$1,065,600

C$1,012,000

D$961,400

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Correct Answer: A

Free CIMA CIMAPRA19-F02-1 Exam Actual Questions

The questions for CIMAPRA19-F02-1 were last updated On Dec 17, 2024