Questions for the CIMAPRA19 F02 1 were updated on : Nov 21 ,2025
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Question 1
Operating segments are separately reportable where they exceed 15% of revenue / profits / assets. These must in total cover 80% of total revenue. Is this statement true or false?
A. True
B. False
Answer:
B
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Question 2
Which of the following are limitations of financial statement figures for ratio analysis? Select the ALL that apply.
A. Only provides historic data
B. Only provides financial information
C. Limited information to identify trends over time
D. Provide only summarised information
E. Contains complicated information that needs to be summarised
F. Only provides forecast data
Answer:
A, B, C, D
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Question 3
The basic earning per share computed by a company for year ended 31st March 20X7 is £2 per share. The company had certain convertible debentures outstanding as on 31st March 20X7. The conversion of debentures to equity shares would result in the earnings per share to be £2.2. Which of the following should the company disclose?
A. Basic earnings per share only
B. Diluted earnings per share only
C. Both basic and diluted earnings per share
D. Neither basic nor diluted earnings per share
Answer:
A
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Question 4
Mr. Rodgers is an accountant for JK Pic. He is asked to record a particular share-based payment in the company's accounts and obliges by debiting as an expense the first relevant account and crediting the corresponding double-entry as a liability. Which type of share-based payment has Mr. Rodgers recorded?
A. Cash-settled in the future
B. Cash-settled immediately
C. Equity-settled immediately
D. Equity-settled in the future
E. Neither cash nor equity-settled
Answer:
A
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Question 5
Which of the following statements are INCORRECT with regards to impairment of financial instruments; Select ALL that apply.
A. Held to maturity instruments and available for sale assets are both measured at amortised cost and are therefore impacted by impairment.
B. If a loss is suspected following an impairment review, a financial asset is written down to its fair value.
C. If a contract relating to a financial instrument is breached then this might be an indication of impairment.
D. In the result of an impairment loss, the carrying amount of the asset is directly reduced, or reduced through an allowance account.
E. The impairment loss on held to maturity instruments is the difference between the assets carrying amount and the present value of its future cashflows.
Answer:
A, B
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Question 6
The IAS definitions of financial instruments dictate their classification between debt and equity. Which of of the following factors might this classification impact? Select ALL that apply.
A. Financial risk
B. Profitability
C. Profit distribution
D. Liquidity
Answer:
A
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Question 7
The tax benefit on a company's asset is £180,000 and the useful life on that asset is five years. The company creates a deferred tax provision to spread this benefit over the asset's useful life. What entry is needed to reduce this deferred tax provision in the company's year two accounts?
A. DR Deferred tax liability (SOFP) £36,000
B. CR Deferred tax liability (SOFP) £36,000
C. DR Corporation tax (income statement) £36,000
D. CR Corporation tax (income statement) £36,000
E. DR Deferred tax liability (SOFP) £144,000
F. CR Deferred tax liability (SOFP) £144,000
G. DR Corporation tax (income statement) £144,000
H. CR Corporation tax (income statement) £144,000
Answer:
A
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Question 8
A local council is one year into a two year project to renovate local parks. The project is on track to be completed within the set time-scale, however it has proved more costly than initially expected. The project is on track to be completed within its two year period. Contracts for the labour and materials needed to renovate the parks were agreed at the start of the project and no changes have arisen. Despite the fact that the council has yet to fully settle these contracts, costs are set to be as budgeted. Why would this example not be recognised as a provision?
A. Neither the timing nor the amount of the provision is uncertain.
B. The settlement of the contract is unlikely to result in an outflow from the council.
C. The council doesn't have a present obligation from the project.
D. The council has no potential future obligations arising from the project.
Answer:
A
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Question 9
Which of the following examples would be classed as related parties ofJH Ltd due to the power they possess to directly influence the company? 1: JH Ltd's managing director 2: The son of JH Ltd's managing director, who is an intern in the company's office 3: The brother of JH Ltd's managing director, whose business supplies a large amount of production material for the company 4: JH Ltd's subsidiary company, AL Ltd 5: BR PLC, one of JH Ltd's regular customers
A. 1&4
B. 1
C. 1, 2, 3 & 4
D. 2, 3 & 4
E. 1, 2 & 3
F. All of the above
Answer:
B
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Question 10
Which of the following examples of contracts will use cost of sales as the balancing figure when calculating profit or loss? Select ALL that apply.
A. Contract A has a total value of£50m, costs to date of£42m and expected costs to completion of£15m. The project's % stage of completion is 74% using the cost method.
B. Contract A has a total value of£55m, costs to date of£33m and expected costs to completion of£18m.
C. Contract A has a total value of£75m, costs to date of£61m and expected costs to completion of£20m. The contracts % stage of completion was calculated by dividing its value to date of£45m by£75m.
D. Contract A has a total value of£60m, costs to date of£42m and expected costs to completion of£15m. The project's % stage of completion is 80% using the value method.
E. Contract A has a total value of£85m, costs to date of£69m and expected costs to completion of£22m. The contracts % stage of completion was calculated by dividing its costs incurred to date of£69m by £75m.
Answer:
C, D
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Question 11
Which of the following statements are true regarding consolidated cash flows after the acquisition of a subsidiary? Select ALL that apply.
A. The subsidiary's cash inflows and outflows become part of the group after purchase
B. Cash acquired from the subsidiary upon purchase is represented as a cash inflow
C. Adjustments need to be made to group working capital in light of the working capital acquired from the subsidiary
D. Net cash paid to acquire a subsidiary is shown as a cash inflow within the cash flow from investing activities
E. Disclosure notes are required to show cash and cash equivalents paid or received, but not details of goodwill, assets and liabilities acquired
F. Further adjustments are required to cash inflows and outflows after profit has been consolidated
Answer:
A, B, C
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Question 12
When establishing a group structure, which of the following factors need to be considered: Select ALL that apply.
A. Whether control has been established
B. The percentage ownership
C. The date of acquisition
D. Non-controlling interests
E. Goodwill
F. Intra-group investments
G. Whether control is direct or indirect
Answer:
A, B, C
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Question 13
MS Group's total profit for period on their consolidated income statement is £31,000. This includes adjusting for their share of joint venture JV2. Calculate the share of joint venture MS Group received based on the following information. MS operating profit £41,000 Dividend from JV2 £5,000 Finance cost £3,000 Tax £11,000
A. £4,000
B. £9,000
C. £1,000
D. £7,000
E. £6,000
F. £5,000
Answer:
A
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Question 14
Which of the following should be eliminated when using the equity method to account for associates in a parent's financial statements? Select ALL that apply.
A. Unrealised profits
B. Dividends from associates
C. Intra-group balances and transactions
D. Goodwill payments
Answer:
A, B
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Question 15
Which of the following principles are the basic principles followed by the consolidated income statement? Select ALL that apply.
A. Include all of the parent's income and expenses plus all of the subsidiaries' income and expenses
B. Ignore investment income from subsidiary to parent (e.g. dividend payments or loan interest)
C. After profit for the period, show the profit split between amounts attributable to the parent's shareholders and other shareholders
D. Include all of the parent's income and expenses minus all of the subsidiaries' income and expenses
E. Include investment income from subsidiary to parent (e.g. dividend payments or loan interest)