CIMA Financial Reporting (F1) Practice Exam

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• What are the three main headings the cash flow statement groups cash flows under?
• If COGS is 600, ending inventory is 150, and payables are 120, what are purchases and payments?
• What is the carrying amount of an asset?
• Which of the following is an enhancing qualitative characteristic?
• Which of the following best defines inventory?
• Which of the following is a disadvantage of factoring?
• Exemption is a method of double taxation relief that exempts foreign-source income from domestic taxation.
• According to VAT regulations, how often are returns typically filed?
• In EOQ analysis, which statement best describes the condition at the inventory optimum?
• Which of the following is a non-adjusting event?
• Which statement is true about the use of the lower of cost and NRV in inventory valuation?
• How are reversals of impairment losses generally recognised?
• Which of the following is an example of a direct tax?
• Which of the following is a short-dated government bond?
• An aged trade payables analysis helps management to manage which of the following?
• Which of the following is included in the initial cost of an asset under IAS 16?
• Finished goods inventory holding period uses which denominator in the formula?
• Which of the following describes an indirect tax?
• To mitigate taxing overseas income twice is the aim of which tax relief concept?
• Formal incidence refers to which of the following?
• Short-dated government bonds are best described as:
• Which formula represents the cost of financing receivables?
• In forfaiting, which instrument does the exporter surrender to receive 100% of the receivable upfront?
• If an asset is revalued upward, where does the increase typically go?
• What is capital tax?
• Which statement best defines a liability?
• Which statement is NOT a characteristic of withholding tax?
• Which description correctly defines investing activities for the SOCF?
• Which formula is used to calculate the annual cost of an early settlement discount?
• Which of the following is a disadvantage of a rules-based approach to corporate governance?
• Which statement is NOT one of Adam Smith's four characteristics of an acceptable tax?
• What is factoring?
• Are dividends taxable under the described regime?
• Split rate system
• Which statement correctly describes the value in use concept?
• Under VAT rules, what does VAT exempt imply about registration and input tax?
• Which topic is covered by the IFRS framework?
• Which of the following is NOT a method of financing exports?
• Which statement differentiates tax avoidance from tax evasion?
• Which of the following is not a non-adjusting event?
• Who is the lessee?
• Which statement defines a direct tax?
• During rising interest rates, why might a firm prefer short-dated government bonds?
• Which of the following is an adjusting event?
• For a registered trader, VAT payable is calculated as what?
• What is the classical system?
• How should dividends finalised after year end be treated in year-end reporting?
• Which of the following is NOT a listed benefit of a just-in-time inventory system?
• NRV for an item with estimated selling price 120, costs to complete 15, costs to sell 5 equals what?
• When a company makes a trading loss, what is the typical tax result described?
• Which of the following is an example of a negotiable instrument?
• Which of the following is an adjusting event?
• What is defined as events after the reporting period?
• Which of the following is a financing activity?
• What is the nature of The Framework in accounting?
• What is the finished goods inventory holding period?
• At the end of the first year, which adjustment is made to the right of use asset?
• Which description correctly captures faithful representation under the Framework?
• Underlying tax is defined as the tax on the profits out of which a dividend is paid.
• What describes an acceptance credit?
• NRV is defined as what?
• In forfaiting, which statement is true?
• Which of the following is NOT one of the four aspects of receivables management?
• Which of the following is an example of investing activities?
• Which of the following is a primary source of short-term finance?
• Which of the following is a reason for claiming group loss relief?
• Which statement best defines an asset under the Framework?
• Which statement about acceptance credits is true?
• Overtrading occurs when the business does not have access to sufficient funds to fund the increase in trading. True or false?
• Which statement summarizes the principles of modern tax systems?
• How is a lease recognised at inception?
• A unit tax is best described as
• Which description best defines a documentary credit?
• Which of the following lists the five elements of financial statements?
• What defines a taxable person?
• Which quality would make an excise duty appropriate?
• Indirect method starting point for cash flow from operations?
• What is incidence of a tax?
• Which statement correctly describes money market deposits compared with bank deposit accounts?
• Which characteristics are classified as must-haves in the Framework?
• Which statement about assets held for sale reflects a defining feature?
• Which of the following is an example of an enhancement cost?
• Exempt income is defined as which of the following?
• What is the accruals basis?
• What does the current ratio measure?
• When an asset is revalued upward and there is no prior impairment, how is the increase typically reflected?
• What is a group?
• Which of the following is an indicator of overtrading?
• Which description best defines lead time in inventory management?
• Which asset is never depreciated?
• What is the quick (acid test) ratio formula?
• Which statement best describes recognition in financial statements?
• Under OECD rules, a construction project lasting more than 12 months is considered a permanent establishment.
• Which term describes a tax that takes the same proportion of income as income rises?
• Which system provides a full tax credit equal to the underlying corporate income tax paid by the entity?
• Direct method involves which of the following?
• What is the definition of output tax in VAT?
• What is the formula for the current ratio?
• Which statement best describes 'comply or explain' in practice?
• How is fair value defined?
• Which statement about transfer pricing is correct?
• Using trade payables as a source of finance has which disadvantage?
• What is the formula for the Reorder Level (ROL)?
• What are the two models to measure assets?
• In the UK, how does tax consolidation work?
• Assets held for sale are measured at the lower of which pair of values?
• A revaluation upward typically affects which financial statement component?
• How must inventory be valued?
• Dividends received are shown in the cash flow statement as what?
• Cash outflows when repaying interest on a loan are classified in the cash flow statement under which section?
• Do assets held for sale require depreciation?
• Which of the following best defines the term 'reorder level' in inventory management?
• Which statement describes an aggressive working capital policy?
• Which factors affect the length of the working capital cycle?
• What is the imputation system?
• In stewardship, the party who owes a duty of care is the fiduciary, to whom is that duty owed?
• Which formula correctly computes withholding tax?
• What are the two ways of measuring elements?
• The 'comply or explain' approach is a principle used in which country?
• Which statement correctly describes ad valorem taxes?
• What is the primary purpose of transfer pricing rules?
• What is working capital management?
• Which of the following is NOT one of the five elements of financial statements?
• In stewardship, the relationship defined by a duty of care toward another is called what?
• What does the Economic Order Quantity (EOQ) determine?
• Who is the lessor?
• What is the formula for the balance sheet?
• How should interest payable be presented on the statement of financial position?
• Disposal of revalued assets: which entry correctly removes the unrealised gain from the revaluation surplus on disposal?
• Which statement best describes a bank overdraft compared with a loan?
• If you choose to revalue an asset, what must you do?
• What is depreciation?
• What is the essence of a revaluation surplus?
• What is the primary purpose of a documentary credit?
• Which costs should not be capitalised under IAS 16?
• In the context of taxation bases, which statement is true regarding profit and income?
• Under breakup basis, what is the treatment of assets?
• What is the recoverable amount of an asset in impairment testing?
• When you revise the useful life or residual value of an asset, which periods are affected?
• Which of the following best describes the items included in the right of use asset calculation?
• The balancing act involving trade receivables is to balance liquidity versus profitability by establishing what?
• When would you have a balancing charge / balancing allowance?
• What is the disposal entry for a non-current asset as commonly recorded?
• What is working capital?
• What does IASB identify as the threshold quality of useful financial information?
• Under IFRS 5, how is a discontinued operation defined?
• Which statement describes a conservative working capital policy?
• Which of the following is a service provided by a without recourse factor?
• What are the four steps of a revaluation?
• Which statement is true about the two methods for calculating cash flow from operations?
• Which statement about impairment disclosures under IAS 36 is correct?
• Which statement best describes an indirect tax?
• Under asset impairment rules, when should an impairment review be performed?
• Which of the following is NOT a requirement for IAS 2 inventories disclosures?
• Who bears the actual/effective incidence of a tax?
• When should a disposal be recorded and how is it calculated?
• Which statement best defines a direct tax?
• What does the lease liability represent?
• In the context of trade payables, what does paying suppliers later aim to achieve?
• Which of the following is an explicit assumption of the EOQ model?
• The quick ratio is a measure of liquidity. If the ratio is 1:1, what does this imply?
• Which statement correctly describes cash equivalents?
• Which statement correctly describes bank deposit accounts?
• Which statement accurately describes invoice discounting compared with factoring?
• Which are examples of current value measurements?
• What are operating activities on the cash flow statement (SOCF)?
• Which of the following sets comprises the enhancing qualitative characteristics?
• Which statement describes income under the Framework?
• What is invoice discounting?
• Under IAS 1, which characteristics must information possess to be fairly presented?
• The balancing act involving inventory aims to balance liquidity with what?
• Which item is considered a cost to be included in deciding credit policy?
• How do you calculate the receivable balance?
• What distinguishes a with-recourse factor from a without-recourse factor?
• Which statement best describes the treatment of dividends finalised after year end in equity?
• Formula for trade payable days?
• In the risk committee, what is the recommended composition?
• When actual cost is not available for measuring one unit of inventory, which of the following is a common approximation?
• What is export factoring?
• Impairment reviews are triggered by what condition?
• Which items are included in calculating the right of use asset?
• Financing activities include which of the following?
• Under breakup basis, which statement is consistent with the described approach?
• Which of the following is a function of the IFRS Foundation?
• Under IAS 2 inventories, which of the following must be disclosed?
• What does it mean to be VAT exempt for a business?
• Which of the following correctly lists the three types of taxes?
• What is the main objective of working capital management?
• What is a bill of exchange?
• Which statement correctly describes maximum demand in the context of ROL?
• What is the raw inventory holding period formula?
• In lease term measurement, which of the following is included?
• Which of the following best describes PPE?
• Which of the following would be classified as investing activities?
• ROL is calculated using which of the following combinations?
• What is the objective of financial statements?
• What happens to current bond prices when interest rates rise?
• Which topic is covered by the IFRS framework related to fundamental accounting concepts?
• Which are examples of directly attributable costs of assets?
• What is an aged trade creditor's analysis?
• In the capital gains calculation, which deduction is applied last to arrive at the chargeable gain?
• What is rollover relief?
• Dividends received are shown on the cash flow statement under which section?
• According to IAS 16, when should an asset be recognised?
• Imputation system truth statement
• Which cost method values inventory at the average price?
• Underlying tax equals (dividend after tax) multiplied by which factor?
• Which statement best describes a conservative working capital policy?
• The going concern assumption presumes the entity will continue operating for approximately how long?
• Which issue is addressed by the EOQ model?
• Which of the following is true regarding impairment and testing?
• The balancing act with trade payables refers to balancing liquidity against what?
• In Adam Smith's tax principles, which statement best describes certainty?
• Which of the following is NOT a main type of short-term investments?
• In the revaluation model, how is carrying amount determined?
• Which statement describes a primary benefit of a PAYE system?
• How are short life and low value leased assets accounted for?
• Which of the following is a quality of exercise duties?
• In the straight-line depreciation method, depreciation is calculated as
• What is the formula to calculate the working capital cycle?
• Which statement best describes the relationship between EOQ and reorder level?
• Which is an industry norm affecting the length of the working capital cycle?
• Under IAS 7, which item would appear under cash flows from operating activities?
• In managing trade receivables, the main objective is to balance liquidity with profitability by doing what?
• Which statement best describes adjusting and non-adjusting events?
• Can non-current assets held for sale still be used?
• Intra-group transfer pricing can affect group profits by pricing intercompany transactions at favourable rates.
• Which of the following is NOT listed as a characteristic of a good tax?
• Which formula correctly calculates interest earned on a deposit over a period?
• Which of the following is an example of a tax base?
• Which formula represents gain or loss on disposal?
• What is the tax gap?
• Which are examples of other short-term investments?
• In the standard pro forma for calculating taxable trading profit, which item is added back to accounting profit?
• Which of the following is an example of a negotiable instrument?
• Which of the following options lists the components used to calculate the working capital cycle?
• Which of the following best defines property, plant and equipment?
• What is the WIP holding period formula?
• What is the UK's Terminal Loss Relief system?
• Which of the following is an indirect tax?
• When given a VAT-exclusive price, how is the VAT amount calculated?
• Which of the following is NOT a solution to overtrading?
• Partial imputation system specifics
• Which metric best assesses the effectiveness of credit control in a business?
• Which option lists the components included in the calculation of the working capital cycle?
• What is other comprehensive income?
• If an asset has been previously revalued, how should an impairment loss be treated?
• How is equity defined under the Framework?
• Where should assets held for sale be recorded on the balance sheet?
• What is the aim of double tax relief?
• Which of the following is an example of a benefit in kind that can be taxed as part of employee taxation?
• What are cash equivalents?
• How should asset cost be measured under IAS 16?
• Balancing charge / balancing allowance definitions
• Which of the following best describes the items included in the right of use asset calculation?
• How is the right-of-use asset measured at commencement?
• What does the principle 'substance over legal form' imply?
• What does it mean to be VAT zero rated?
• Which of the following is an element of financial statements?
• If the average collection period lengthens while annual sales are unchanged, what happens to the receivable balance?
• In capital gains calculation, which term represents the amount remaining after deducting costs to sell from proceeds?
• Which expression represents purchases in terms of COGS and inventory?
• Are dividends exempt income?
• Materiality in the IASB framework is best described as which of the following?
• Which statement describes expenses?
• Impairment losses should be recorded as an expense unless the asset has been previously revalued, in which case the loss can be offset against what?
• Which statement describes LIFO inventory costing?
• Under OECD model, a construction project lasting more than how many months is considered a permanent establishment?
• What is the lease term?
• When an asset that was previously revalued is sold, how should the revaluation reserve be treated?
• What is the aim of a just-in-time inventory system?
• Which statement describes a moderate working capital policy?
• Which statement correctly reflects the minimum number of committees required and their typical composition in corporate governance?
• What does the optimum reorder level specify?
• When given a VAT-inclusive price, which formula gives the VAT amount?
• Which formula correctly calculates the proceeds from a share issue for the statement of cash flows?
• What are the three main bases developed countries use for taxation?
• What is the correct in-order sequence to deal with an ethical dilemma?
• What is historical cost?
• What does the tax base identify?
• Under what conditions can subsequent expenditure of assets be capitalised?
• In capital gains calculations, net proceeds are obtained by subtracting which item from proceeds?
• Which components of lease accounting are charged to the profit and loss statement?
• Which of the following is NOT a characteristic of fair presentation under IAS 1?
• What is the special case when non-adjusting events may become adjusting?
• Value in use is defined as which of the following?
• Which mechanisms exist for double taxation relief?
• Which are typical VAT regulation requirements?
• Which of the following is NOT one of the three primary principles of a good tax policy?
• What does the IAS say about presentation of financial statements?
• What are the two main types of indirect taxes?
• What is cash?
• According to the IASB framework, which option best describes the two methods of capital maintenance?
• Which of the following describes payables grouped by age since purchase?
• What costs are included in inventory cost?
• Formula for trade receivable days?
• In the context of value-added tax, who bears the formal incidence?
• How is profit or loss on disposal treated for tax purposes?
• What are financing activities in the SOCF?
• Which expression represents payments in terms of purchases and payables?
• Which option correctly states the formula for calculating share-issue proceeds for the cash flow statement?
• According to the OECD model, which factor is most indicative of where a company will be resident for tax purposes?
• What is competent jurisdiction in tax terms?
• Which of the following represents the underlying tax formula?
• Which describes values in use?
• What is indexation?
• Which method provides relief by allowing tax paid in one country to be used as a credit in another, with relief limited to the lower of the two countries' taxes?
• What is the working capital cycle?
• Which factor would increase the length of the working capital cycle?
• Which of the following is an assumption of the Economic Order Quantity (EOQ) model?
• Which statement best describes rollover relief reinvestment?
• Under the Conceptual Framework for Financial Reporting, recognition occurs when an item meets which condition?
• What are the four ways a company can offset a trading loss?
• What is a lease?
• If an entity has permanent establishment in more than one country, it is resident in the country of its effective management.