F1 Exam Questions Tutorials

Financial Reporting Questions and Answers

Question 25

Which of the following methods could be used by a tax authority to reduce tax evasion and avoidance?

Increase tax rates to compensate for losses due to evasion.

Reduce penalties for avoidance.

Reduce requirements to have tax returns audited.

Simplify the tax structure, minimizing allowances and exemptions.

Question 26

Question 27

RS purchased an asset on 1 May 20X1 for $200,000, exclusive of import duties of $25,000.

The asset was sold on 1 December 20X3 for $450,000, incurring costs to sell of $15,000.

RS is resident in Country Y where indexation is allowable from the date of purchase to the date of sale.

The indexation factor increased by 40% in the period 1 May 20X1 to 1 December 20X3.

Capital gains are taxed at 25%.

What is the capital tax due from RS on disposal of the asset?

$120,000

$38,750

$30,000

$28,500

Question 28

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

Where a business sells its accounts receivable to a third party at a discount

Where a business borrows a loan with short-term conditions from a third party

Where a business sells equity to third parties to gain short-term finance

Where a business is provided with a highly flexible regular source of short-term finance by a bank