Cima F1 Exam Question No 26

Question No 26:

R, a trainee management accountant is employed by JH. R has prepared the draft annual
financial statements for JH and presented them to JH’s Chief Executive prior to the executive
board meeting. The Chief Executive has told R that the profit reported in the financial
statements is too low and must be increased by $500,000 before the financial statements can
be approved by the executive board.
Which ONE of the threats listed below would apply to R in this situation, according to the
CIMA code of ethics for professional accountants?

A. Advocacy threat
B. Self-review threat
C. Intimidation threat
D. Self-interest threat

Answer: C

Cima F1 Exam Question No 25

Question No 25:

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 24

Question No 24:

Taxes commonly used by many countries include:

(i) import duty payable on specific types of imported goods;
(ii) individual income tax, usually deducted at source;
(iii) corporate income tax;
(iv) value added tax.

Which of the above would normally be defined as direct taxation?

A. (i) and (ii)
B. (i) and (iv)
C. (ii) and (iii)
D. (ii) and (iv)

Answer: C

Cima F1 Exam Question No 23

Question No 23:

A withholding tax is:

A. Tax deducted at source before payment to a recipient in a foreign country.
B. Tax on profits that is then paid out net as a dividend to equity shareholders.
C. Tax paid to local tax authorities with an amount withheld from payment.
D. Tax withheld from employees’ salaries with salaries paid to them net of tax.

Answer: A

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