F1 Exam Practice Questions prepared by CIMA Professionals [Q60-Q85]

F1 Exam Practice Questions prepared by CIMA Professionals

Use Valid New F1 Questions - Top choice Help You Gain Success

CIMA F1 certification exam is designed to test the candidate's knowledge and understanding of financial reporting standards, principles, and practices. It covers a wide range of topics, including accounting regulations, financial statements, taxation, and corporate governance.

CIMA F1 exam is designed to test the knowledge and skills required to prepare and interpret financial reports, analyze financial data, and make informed decisions based on financial information. F1 exam covers a range of topics, including financial statements, accounting concepts and principles, financial analysis techniques, and regulatory frameworks. Candidates are expected to have a good understanding of financial accounting and reporting standards, as well as the ability to analyze and interpret financial data.

NEW QUESTION # 60
Mr K is being pressured by his manager to change figures in his report so that it will improve his manager's bonus.
His manager has promised Mr K a promotion if he agrees to do this.
What threats is Mr K facing?

A. Intimidation and familiarity
B. Self-review and advocacy
C. Intimidation and self-interest
D. Familiarity and self-interest

Answer: C

NEW QUESTION # 61
STU commenced trading on 1 January. Total sales for the month of January were $250,000. which were 75% on credit and 25% for cash. Sales are expected to increase by 10% a month Irrecoverable debts are estimated to be 5% of credit sales Of the credit sales expected to pay, 50% pay in the month following the sale and the remaining 50% the month after.
The cash expected to be received in February is:

A. $162,500
B. $156,250
C. $151,563
D. $157,813

Answer: D

NEW QUESTION # 62
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. Integrity and ethical behaviour
C. Disclosure and transparency
D. Interests of other stakeholders
E. Rights and equitable treatment of shareholders

Answer: A

NEW QUESTION # 63
Statements of financial position for YZ, BC and DE at 31 March 20X2 include the following balances:

YZ purchased 90% of BC's equity shares for $508,000 on 1 January 20X2. On 1 January 20X2 BC's retained earnings were $183,000. YZ uses the proportion of net assets method to value non-controlling interest at acquisition.
YZ purchased 30% of DE's equity shares on 1 April 20X1 for $112,000. DE's retained earnings at 1 April
20X1 were $88,000.
On 1 February 20X2 YZ sold goods to BC for $28,000 at a mark up of 25% on cost. All the goods were still in BC's inventory at 31 March 20X2.
Calculate the goodwill arising on the acquisition of BC.
Give your answer to the nearest whole $.

Answer:

Explanation:
$118300

NEW QUESTION # 64
An entity purchased equipment on 1 April 20X4 for $200,000. The equipment was depreciated using the reducing balance method at 20% a year.
Depreciation was charged up to and including 31 March 20X7. At that date the recoverable amount of the equipment was $94,000.
Calculate the impairment loss on the equipment in accordance with IAS 36 Impairment of Assets.
Give your answer to the nearest whole $.

Answer:

Explanation:
$8400

NEW QUESTION # 65
KL has S90.000 of plant and machinery which was acquired on 1 June 20X4. Tax depreciation rates on plant and machinery are 20% reducing balance. All plant and machinery was sold for 560,000 on 1 June 20X6 Calculate the tax balancing allowance or charge on disposal tor the year ended 31 May 20X7 and state the effect on the taxable profit.

A. A balancing allowance of $2,400 increases taxable profit.
B. A balancing allowance of $2,400 reduces taxable profit.
C. A balancing charge of $2,400 increases taxable profit.
D. A balancing charge of $2,400 reduces taxable profit.

Answer: C

NEW QUESTION # 66
PZ has the following working capital ratios:

Which of the following could be the reason for the movements?

A. A new credit controller has been employed who has been more rigorous with their collection procedure of receivables.
B. PZ has introduced a new policy to take discounts from suppliers during 20X1.
C. The workforce of PZ have been on strike for a month during 20X1 but deliveries of inventory have still been received by the entity.
D. PZ has implemented a just-in-time system of ordering inventory during 20X1.

Answer: C

NEW QUESTION # 67
Which TWO of the following are functions of the International Financial Reporting Standards (IFRS) Advisory Council?

A. To inform the International Accounting Standards Board of the views of organizations on major standard setting projects
B. To review new financial reporting issues not already covered by IFRS
C. To appoint the members of the International Accounting Standards Board
D. To give advice to the International Accounting Standards Board on agenda decisions and priorities in its work
E. To approve IFRSs for publication

Answer: A,D

NEW QUESTION # 68
Country Q has the following rules in respect of capital tax on the disposal of assets:
*Capital gains are subject to tax at 25%.
*Capital losses can only be carried forward and offset against future capital gains.
The following data relates to ABC:

How much capital tax will be payable on the capital gain recorded in 20X3?
Give your answer to the nearest $.

Answer:

Explanation:
$62500

NEW QUESTION # 69
GH's tax liability at 30 June 20X3 in respect of the tax charge on the profits for the year ended 30 June
20X3 is $876,000.
There was an over provision of $105,000 that related to the tax charge on the profits for the year ending
30 June 20X2.
What amount should be shown in GH's statement of profit or loss for the year ending 30 June 20X3?
Give your answer to the nearest $.

Answer:

Explanation:
$771000

NEW QUESTION # 70
Country Q has the following rules in respect of capital tax on the disposal of assets:
*Capital gains are subject to tax at 25%.
*Capital losses can only be carried forward and offset against future capital gains.
The following data relates to ABC:

How much capital tax will be payable on the capital gain recorded in 20X3?
Give your answer to the nearest $.

Answer:

Explanation:
$62500

NEW QUESTION # 71
On 1 January 20X6 PQR leases equipment for 3 years to use on a construction project. The total lease payments are $360,000 divided into 36 monthly instalments of $10,000 On 1 January 20X6 the present value of the lease payments is $270,000 and initial direct costs of $3,000 were incurred.
Which THREE of the following statements are true?

A. The value of the lease liability on 1 January 20X6 is $273,000.
B. The value of the lease liability on 1 January 20X6 is $270,000.
C. Initial direct costs of $3,000 are expensed in the statement of profit or loss.
D. The value of the right of use asset on 1 January 20X6 is $273,000.
E. Monthly payments of $10r0OO are expensed in the statement of profit or loss.
F. The right of use asset is depreciated over 3 years.

Answer: B,D,F

NEW QUESTION # 72
The accounting profit before tax of an entity was $243,200 for the year ended 31 July 20X4.
The accounting profit included disallowable income from government grants of $48,000 and disallowable expenditure of $25,600 on entertaining expenses.
The entity also paid a $40,000 dividend to shareholders. The tax rates for the country were as follows:

Calculate the tax the entity is due to pay for the year ending 31 July 20X4.

A. $39,174
B. $47,840
C. $57,546
D. $44,160

Answer: B

NEW QUESTION # 73
Country X levies corporate income tax at a rate of 25% and charges income tax on all profits irrespective of whether they are distributed by way of dividend. Country Y levies corporate income tax at a rate of 20%.
A, who is resident in Country X, pays a divided to B, who is resident in Country Y. B is required to pay corporate income tax on the dividend received from A, but a deduction can be made for the tax suffered on this dividend restricted to a rate of 20%.
Which method of relief for foreign tax does this describe?

A. Deduction
B. Restricted
C. Exemption
D. Tax credit

Answer: D

NEW QUESTION # 74
DEF is considering introducing a Pay-As-You-Earn (PAYE) system but unsure of the advantages of using it.
Which of the following statements are advantages from the employees perspective of an entity using a PAYE system for collecting taxes from employees.
Select ALL that apply.

A. The employee does not have to complete a self assessment tax return.
B. The employee does not have to budget for their tax payments because the tax is deducted at source.
C. The employee will calculate their own tax payment.
D. The employee will avoid being charged penalties for paying late.
E. The employee will be able to deal with tax authority directly to make payments.

Answer: A,B,D

NEW QUESTION # 75
In accordance with IAS 1 Presentation of Financial Statements, which of the following will be shown in the statement of changes in equity?

A. Proceeds from share issue, dividends received and profit for the period.
B. Proceeds from share issue, dividends paid and revaluation surplus.
C. Other income, dividends paid and revaluation surplus.
D. Proceeds from share issue, other income and profit for the period.

Answer: B

NEW QUESTION # 76
During the year a piece of equipment that originally cost $96,000, with accumulated depreciation of
$39,000, met the criteria of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations to be classified as held for sale.
The equipment is being advertised for sale at $46,000 and costs of $1,000 will be incurred to enable the sale to be completed.
At what value should the equipment be included in the statement of financial position at the year end assuming that it remains unsold?
Give your answer to the nearest whole number.

Answer:

Explanation:
$45000

NEW QUESTION # 77
Country X charges corporate income tax at the rate of 20% on all income irrespective of whether it is paid out as a dividend. Country Y charges corporate income tax at the rate of 25% on all income.
An entity, AA, which is resident in Country X pays a dividend of $100,000 to another entity, BB, which is resident in Country Y.
Countries X and Y have a double taxation treaty which adopts the exemption method in respect of this type of transaction.
What is BB's liability to tax in Country Y in respect of the dividend income received?

A. No tax will be payable.
B. Tax will be payable at 25% less a credit given for the 20% already paid by AA in Country X.
C. Tax will be payable at 25%.
D. Tax will be payable at 20%.

Answer: A

NEW QUESTION # 78
OP has five main geographic segments and reports segmental information in accordance with IFRS 8 Operating Segments.

Which THREE of the following would be regarded as operating segments of OP in accordance with IFRS 8?

A. Asia
B. North America
C. South America
D. Middle east
E. All other segments
F. Europe

Answer: A,D,F

NEW QUESTION # 79
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. £6,750
B. £9,900
C. £9,375
D. £18,000

Answer: B

NEW QUESTION # 80
The following information is extracted from the statement of financial position for ZZ at 31 March 20X3:

Included within cost of sales in the statement of profit or loss for the year ended 31 March 20X3 is $20 million relating to the loss on the sale of plant and equipment which had cost $100 million in June 20X1.
Depreciation is charged on all plant and equipment at 25% on a straight line basis with a full year's depreciation charged in the year of acquisition and none in the year of sale.
The revaluation reserve relates to the revaluation of ZZ's property.
The total depreciation charge for property, plant and equipment in ZZ's statement of profit of loss for the year ended 31 March 20X3 is $80 million.
The corporate income tax expense in ZZ's statement of profit or loss for year ended 31 March 20X3 is
$28 million.
ZZ is preparing its statement of cash flows for the year ended 31 March 20X3.
What figure should be included within cash flows from investing activities for the proceeds of sale of plant and equipment?

A. $120 million
B. $95 million
C. $55 million
D. $80 million

Answer: C

NEW QUESTION # 81
XYZ operates in Country A where tax rules state that entertaining costs and donations to political parties are disallowable for tax purposes.
XYZ calculated both its accounting and taxable profits for the year ended 31 December 20X2 after deducting $10,000 of entertaining costs.
It is considering what impact the ruling that "entertaining costs are disallowable for tax purposes" will have on its two profit figures.
Which of the following correctly states the impact of the ruling on the profits already calculated?

A. Both accounting and taxable profits will decrease by $10,000.
B. Both accounting and taxable profits will increase by $10,000.
C. Accounting profit will not be affected but taxable profit will increase by $10,000.
D. Accounting profit will decrease by $10,000 and taxable profit will increase by $10,000.

Answer: C

NEW QUESTION # 82
Which of the following would be the most immediate impact of overtrading?

A. Having to offer bulk discounts to customers.
B. An inability to pay trade payables.
C. An inability to pay dividends to shareholders.
D. A shortage of inventory

Answer: B

NEW QUESTION # 83

Answer:

Explanation:

NEW QUESTION # 84
UK purchased an asset, with a useful economic life of 10 years, on 1 January 20X5 for $40,000. The asset was revalued on 31 December 20X6 to 544,000 and the directors believed its total useful economic life remained unchanged On 31 December 20X7 UK sells the asset for $50,000 How much will be recorded as a profit on disposal of the asset in UK's statement of profit or loss for the year ended 31 December 20X7?
Give your answer to the nearest $.