cima cimapra19 f01 1 practice test

F1 Financial Reporting

Last exam update: Nov 18 ,2025
Page 1 out of 13. Viewing questions 1-15 out of 194

Question 1

Which THREE of the following statements are NOT true of the IFRS Foundation trustees?

  • A. Are involved in the technical matters relating to accounting standards
  • B. Are mainly from Europe and the USA
  • C. Receive funding by donations from the general public
  • D. Responsible for appointing members of the IA5B
  • E. Responsible of appointing members of the IFRS interpretations committee
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A, B, C

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Question 2

While conducting their audit, auditor 0 did not encounter issues which significantly limited the scope
of their audit, however they did run into problems in that they disagreed with the management on
facts in the statements.
These disagreements were somewhat material, but they did not affect the auditor's overall opinion
of the business. Which of the following statements should auditor 0 issue?

  • A. Emphasis of matter
  • B. Unqualified report
  • C. 'Except for' qualification
  • D. Adverse audit opinion
  • E. Disclaimer of opinion
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Answer:

A

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Question 3

Extreme nepotism within Company E shows a failure to correctly observe which of the following
principles of corporate governance?

  • A. Role and responsibilities of the board
  • B. Rights and equitable treatment of shareholders
  • C. Interests of other stakeholders
  • D. Integrity and ethical behaviour
  • E. Disclosure and transparency
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A

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Question 4

It costs PWR £7.50 to produce product H, per product. Product H is typically sold for £89.99. It costs
£5.00 to package product H and £15 to deliver product H to customers.
PWR is currently selling faulty versions of product H from a defunct batch, (let's call this version
product I), for 25% of the original price.
Which of the below options represent the correct inventory price for product I?

  • A. £2.50
  • B. £7.50
  • C. £20.00
  • D. £3.50
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A

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Question 5

Company RET's financing activities are exactly 35% of their operating activities expenses each month.
Below is a list of Company RET's total expenses for this month:
Inventory supplies purchased: £145,000
Employee wages: £65,000
Purchase of a shop: £105,000
Dividend payments: ??
Cash repayments on loan: £61,000
What is company RET's total dividends payment for this month?

  • A. £12,500
  • B. £49,250
  • C. £131,600
  • D. £26,500
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A

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Question 6

Which THREE of the following are conditions that must be met to allow an asset to be categorised as
held for sale?

  • A. Management is committed to a plan to sell
  • B. The asset is being actively marketed at a reasonable price
  • C. The asset is available for immediate sale
  • D. A buyer has already expressed interest
  • E. The sale of the asset is likely to generate a significant profit
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A, B, C

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Question 7

The subsidiary company of Group XY has purchased £150,00 worth of goods its parent company.
However the goods purchased have yet to arrive at the subsidiary at the end of the financial year
20X4, meaning there is a disagreement in the current account balances between the parent and
subsidiary.
With Group XY looking to produce its CSOFP for the end of the financial year, which of the following
statements are true in relation to accounting for this disagreement? Select ALL that apply.

  • A. The adjustments to resolve this disagreement, need to be accelerated, so they can be included in the consolidation of assets for the CSOFP for 20X4
  • B. £150,000 worth of inventory will be debited into the subsidiary's inventory account
  • C. As the goods have not reached the subsidiary by the end of the financial year 20X4, they will be included in the CSOFPfor the next financial year
  • D. £150,000 worth of inventory will be credited into the subsidiary's inventory account
  • E. £150,000 will be debited to the payables account of the parent company
  • F. £150,000 will be credited to the payables account of the subsidiary company
  • G. £150,000 will be credited into the receivables account of the parent company
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A, B

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Question 8

The IV Group is formed of I Ltd and its subsidiary company V Ltd. I Ltd purchased 67% of V Ltd's
ordinary share capital on 31 March 20X3.
The purchase cost I Ltd £129,000. At the date of purchase V Ltd's net assets were £155,000 while its
share capital was £37,000. NCI fair value on the date of acquisition was £31,000.
What was the amount of goodwill I Ltd paid as part of the acquisition. Calculate this figure using both
the proportion of net assets method and the full good will method for valuing the non-controlling
interest.

  • A. Proportion of net assets method = £25,150
  • B. Full goodwill method = £5,000
  • C. Proportion of net assets method = £5,000
  • D. Full goodwill method = £25,150
  • E. Proportion of net assets method = £77,150
  • F. Full goodwill method = £57,000
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A, B

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Question 9

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. £9,900
  • B. £18,000
  • C. £6,750
  • D. £9,375
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A

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Question 10

Which TWO of the following statements about accounting for associates are true?

  • A. Intra associate transactions are not eliminated
  • B. Unrealised profits are adjusted for
  • C. Intra associate transactions are eliminated
  • D. Unrealised profits are not adjusted for
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A, B

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Question 11

Which THREE of the following statements about government grants are INCORRECT?

  • A. A grant is recognised as revenue
  • B. Grants must not be deducted from the related expenses in financial statements
  • C. Capital grants relate to cash inflow and outflow
  • D. A compensatory grant should be recognised in statements when it is received, not when the expenses it applies to occurred
  • E. A grant is recognised only when there is reasonable assurance that the entity will comply with any conditions attached to the grant
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A, B, C

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Question 12

Which of the following does the phrase 'events after the reporting period' refer to?

  • A. Material events which occur between the statement of financial position date and the date on which the financial statements are approved
  • B. Material events which occur after the release of the statement of financial position
  • C. Material events which occur before the statement of financial position date
  • D. Material events which occur between the income statement date and the statement of financial position date
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A

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Question 13

Which of the following is the most appropriate definition of the term 'factoring'?

  • A. Where a business sells its accounts receivable to a third party at a discount
  • B. Where a business borrows a loan with short-term conditions from a third party
  • C. Where a business sells equity to third parties to gain short-term finance
  • D. Where a business is provided with a highly flexible regular source of short-term finance by a bank
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Question 14

Company Y is using some of the money from a share issue to purchase a new office building. The
company is also using some of the money to purchase inventories. Which method of financing is
this?

  • A. Conservative financing
  • B. Matching financing
  • C. Aggressive financing
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A

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Question 15

Which of the following are techniques that can be used by a company to ensure they receive timely
payment of receivables? Select ALL that apply:

  • A. Offering cash or early payment discount
  • B. Charging interest on late payments
  • C. Assessing credit risk of customers before they are given credit
  • D. Offering extended credit to return customers
  • E. Offering free items
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A, B, C

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