Cima F1 Exam Question No 22

Question No 22:

ABC is registered for tax in Country X.
ABC purchases goods and services from suppliers, including VAT at standard rate and sells goods to customers, including VAT at standard rate.
The formal incidence of the VAT is on:

A. ABC’s customers
B. ABC’s suppliers
C. ABC
D. Country X’s tax authority

Answer: C

Cima F1 Exam Question No 21

Question No 21:

PH purchased 100,000 of its own $1 equity shares on the stock market for $105,000. PH classified the shares as “treasury shares”. PH still held the treasury shares at the year end.
How should PH present the treasury shares according to IAS 32 Financial Instruments, Presentation?

A. As a non-current asset investment $100,000
B. As a non-current asset investment $105,000
C. As a deduction from equity $100,000
D. As a deduction from equity $105,000

Answer: D

Cima F1 Exam Question No 20

Question No 20:

According to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, which ONE of the following is a change in accounting policy?

A. The depreciation method of vehicles being changed from straight line to reducing balance.
B. The provision for warranty claims being recalculated using a different method.
C. Recognising a provision for a legal claim which had been disclosed as a contingent liability in the previous year’s financial statements.
D. Presenting depreciation in cost of sales which had previously been presented in administrative expenses.

Answer: D

Cima F1 Exam Question No 19

Question No 19:

At its financial year end HX has an outstanding legal action against it by a large multinational entity. It is highly probable that the legal action will be successful and HX will have to pay substantial damages. HX has refused to provide for these damages.
In the opinion of the auditor, failure to make this provision means that the financial statements are seriously misleading.
What type of audit report will be issued in this situation?

A. A modified report with an adverse opinion
B. An unmodified report with an emphasis of matter paragraph
C. A modified report with a disclaimer of opinion
D. A modified report with a qualified opinion

Answer: A

Cima F1 Exam Question No 18

Question No 18:

What type of audit report will be issued in this situation?

A. A modified report with an adverse opinion
B. An unmodified report with an emphasis of matter paragraph
C. A modified report with a disclaimer of opinion
D. A modified report with a qualified opinion

Answer: A

Cima F1 Exam Question No 17

Question No 17:

MX suffered a major fire in its central warehouse on 14 March 2014. Inventory held in the warehouse with a value of $700,000 was either damaged or destroyed. An external audit of MX’s financial statements discovered that the loss had not been recognized in MX’s financial statements. This is regarded as material but not pervasive.
What type of audit report should the auditor issue for MX’s financial statements for the year ended 31 March 2014?

A. A modified report, with a qualified opinion based on insufficient appropriate evidence.
B. A modified report, with a qualified opinion, with a qualified “except for” opinion.
C. An unmodified report with an unqualified opinion.
D. An unmodified report with an emphasis of matter paragraph relating to the inventory.

Answer: B

Cima F1 Exam Question No 16

Question No 16:

Under the current structure of regulatory bodies, which organisation is responsible for seeking out the views of its members and passing them on in summary form to the International Accounting Standards Board (IASB)?

A. IFRS Interpretations Committee
B. International Organization of Securities Commissions
C. IFRS Foundation
D. IFRS Advisory Council

Answer: D