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Cima F1 Exam Questions

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Cima f1 exam questions

Pass CIMA F1 - Financial Reporting and Taxation exam in just 24HOURS!


CIMA F1 - Financial Reporting andTaxation

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Question No1:

Cima f1 exam questions


The Conceptual Framework for Financial Reporting issued by the International Accounting Standards Board (known as the IASB's conceptual framework) includes one underlying assumption about the preparation of financial statements and two fundamental qualitative characteristics for financialinformation.

Identify the underlying assumption and one of the fundamental characteristics by placing one of the options in each of the boxesbelow.


Question No2:

Statements of financial position for FG, IJ and KL at 31 December 20X5 include the following balances:

Cima f1 exam questions

FG acquired 90% of IJ's equity shares for $358,000 on 1 July 20X5 when IJ's retained earnings were$98,000.

FG acquired 100% of KL's equity shares for $360,000 on 1 January 20X5 when KL's retained earnings were$155,000.

FG used the proportion of net assets method to value non-controlling interests at acquisition. KL sold a piece of land to FG for $130,000 on 1 September 20X5. At the date of transfer the land had a carrying value of $50,000.

The management of FG expect KL to make profits in the future and no impairment ot its goodwill was proposed at 31 December20X5.

Calculate the value of property, plant and equipment to be recognized in FG's consolidated statement of financial position at 31 December20X5.

Give your answer to the nearest whole$.


Cima f1 exam questions

Question No3:

The statement of profit or loss for PQ, ST and AB for the year ended 31 December 20X0 are shownbelow:

PQ acquired 80% of its subsidiary, ST, on 1 January 20X0 and 40% of its associate, AB, on 1 September20X0.

Since acquistion PQ has sold goods to ST and AB for $20,000 and $30,000 respectively. At the year end both ST and AB have 50% of these goods remaining in inventory. PQ uses a mark-up of 20% on all of its sales.

Since acquisition the goodwill in respect of ST has been impaired by $8,000 and the investment in AB has been impaired by$2,000.

PQ uses the fair value method for non-controlling interest atacquisition.

Cima f1 exam questions

Calculate the profit attributable to the non-controlling interests disclosed in PQ's consolidated statement of profit or loss for the year ended 31 December20X0.

Give your answer to the nearest whole$.


Question No4:

An entity purchased an asset for $375,000 on 1 November 20X0 incurring legal feesof

$33,000. Improvements were made to the asset for $65,000 on 1 December 20X2 which qualified as capital expenditure under the local tax rules. The entity also incurred repair costs on the asset on 1 February 20X3 amounting to$10,000.

The asset was sold for $680,000 on 1 December 20X5 incurring allowable costs on disposalof


Indexation on the purchase cost and the improvement areallowable.

The index increased by 20% between November 20X0 and December 20X5,15% between December 20X2 and December 20X5 and 10% between February 20X3 and December20X5

Calculate the chargeable gain on the disposal of the asset on 1 December20X5.

A. $90,650 B. $100,650 C. $89,650 D. $107,250


Question No5:

WX is considering an investment inST.

At 31 December 20X2 ST had the following balances in its statement of financialposition:

Cima f1 exam questions

Which of the following would cause ST to become an associate investment ofWX?

WX purchases 15,000 of ST's $1 equity shares and 20,000 of ST's $1 preferenceshares.

WX purchases 25,000 of ST's $1 equityshares.

WX purchases 75,000 of ST's $1 equityshares.

WX purchases 50,000 of ST's $1 preferenceshares.


Question No5:

Which of the following would be classified as a parent and subsidiary relationship in accordance with IFRS 10 Consolidated FinancialStatements?

Entity A owns 30% of another entity's equity shares and has the power to appoint or remove the majority of the members of the board of directors and control of the entity is through thatboard.

Entity B owns 20% of another entity's equity shares and has an agreement withother

equity shareholders of that entity that gives it power over a further 20% of the equity votingrights.

Entity C owns 45% of another entity's equity shares and can exercise significant influence over that entity's financial and operating policydecisions.

Entity D owns 25% of another entity's equity shares and associated voting rights and 100% of its preferenceshares.


Cima f1 exam questions

Question No6:

PP supplies zero-rated and standard-rated goods. During the year ended 30 March 20X3, the standard-rated goods made up 50% of the total supplies. During the year ended 30 March 20X4 this percentage increased to60%.

What percentage of input tax suffered can PP claim back in the year ended 30 March 20X4? Give your answer as a wholenumber.


Question No7:

AA manufactures computers. These are sold to BB at $100 a computer plus a 5% sales tax. BB subsequently sells the computers to CC for $200 a computer plus a 5% sales tax. C sells the computers to customers at $300 a computer plus a 5% salestax.

The total tax received by the tax authority is $30. Which type of tax is describedabove?

Single-stage salestax

Value addedtax


Multi-stage cumulative salestax

Answer: D Question No8:

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 toevasion.

Reduce penalties foravoidance.

Reduce requirements to have tax returnsaudited.

Simplify the tax structure, minimizing allowances andexemptions.

Answer: D Question No9:

Cima f1 exam questions

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Which of the following is NOT a principle in the CIMA Code of Ethics for Professional Accountants?


Professional competence and duecare



Answer: C Question No10:

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

Whether the entity has kept proper accountingrecords.

Whether the entity has complied with the relevant legislator requirements in respect of the necessarydisclosures.

Whether all the information and explanations necessary for the purposes of the audit have beenreceived.

Whether every transaction that underpins the financial statements has beencorrectly


Whether the entity has been exposed to anyfraud.

Answer: A, B,C

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