CIMA F1 Actual Questions

Financial Reporting Questions and Answers

Question 21

To apply the fundamental principles of the Code of Ethics, existing and potential threats to the entity first need to be identified and evaluated.

Which THREE of the following are identified in the Code as threats?

Confidentiality threat

Self-interest threats

Self-review threats

Familiarity threats

Integrity threats

Objectivity threats

Question 22

An entity has an inventory holding period of 52 days.

This means that the inventory:

takes 52 days to arrive after it has been ordered.

stays in the entity's warehouse for an average of 52 days before it is sold.

takes 52 days to manufacture.

takes 52 days to be paid for.

Question 23

In which of the following concepts is profit an increase in the nominal value of capital over a period?

Inflationary capital maintenance

financial capital maintenance

Operating capital maintenance

Physical capital maintenance

Question 24

Which TWO of the following would improve a company's short term cash flow position?

Postponing non essential capital expenditure

Increasing the working capital cycle by making payments to suppliers early

Taking advantage of bulk discounts offered on inventory purchases

Reducing levels of inventory by implementing a just in time system for purchasing

Paying a bonus to staff for exceptional performance