Cima F1 Exam Question No 37

Question No 37:

Which ONE of the following defines the meaning of “hypothecation”?

A. A new tax law has to be passed each year to allow taxes to be legally collected.
B. The difference between the total amount of tax due to be paid and the amount actually collected by the tax authority.
C. Tax is deducted from amounts due before they are paid to the recipient.
D. The products of certain taxes are devoted to specific types of public expenditure.

Answer: D

Cima F1 Exam Question No 36

Question No 36:

CFP, an entity resident in Country X, had an accounting profit for the year ended 31 December 2011 of $860,000. The accounting profit was after charging depreciation of $42,000 and amortisation of development costs of $15,000.
 
CFP was entitled to a tax depreciation allowance of $51,000 for the year to 31 December 2011.
CFP’s tax payable for the year ended 31 December 2011 is:

A. $202,250
B. $206,500
C. $212,750
D. $216,500

Answer: B

Cima F1 Exam Question No 35

Question No 35:

Which ONE of the following would cause a deferred tax balance to be included in the statement of financial position for an entity, as required by IAS 12 Income Taxes?

A. An expense that is included in the statement of comprehensive income but is not allowed for tax.
B. A non-current asset that does not qualify for tax depreciation.
C. Tax depreciation being allowed on a non-current asset at a different annual rate to that used for depreciation in the financial statements.
D. Impairment of goodwill that arose on the acquisition of a subsidiary entity.

Answer: C

Cima F1 Exam Question No 34

Question No 34:

Which ONE of the following would be considered to be an example of an indirect tax?

A. An entity assessed for corporate income tax on its profit.
B. An individual purchases goods in a shop, the price includes VAT.
C. An employee has tax deducted from salary through the PAYE system.
D. An individual pays capital gains tax on a gain arising on the disposal of an investment.

Answer: B

Cima F1 Exam Question No 33

Question No 33:

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

A. Confidentiality threat
B. Self-interest threats
C. Self-review threats
D. Familiarity threats
E. Integrity threats
F. Objectivity threats

Answer: B, C, D

Cima F1 Exam Question No 32

Question No 32:

HOTSPOT

Whilst undertaking an external audit, the auditor has identified that there is insufficient evidence to support the financial statements.
As a result the auditors consider these financial statements to be wholly unreliable for decision making purposes.

This will result in a modified audit report with the opinion being 

Cima F1 Exam Question No 31

Question No 31:

Which THREE of the following must an auditor consider in order to form an opinion on the truth and fairness of an entity's financial statements?

A. Whether the entity has kept proper accounting records.
B. Whether the entity has complied with the relevant legislator requirements in respect of the necessary disclosures.
C. Whether all the information and explanations necessary for the purposes of the audit have been received.
D. Whether every transaction that underpins the financial statements has been correctly recorded.
E. Whether the entity has been exposed to any fraud.

Answer: A, B, C