CIMA Financial Reporting and Analysis

Question 1

Which financial statement reports a company's assets, liabilities, and equity at a specific point in time?

Accepted Answer

Balance Sheet

Answer

Income Statement

Answer

Statement of Cash Flows

Answer

Statement of Changes in Equity

Question 2

Under IFRS, intangible assets acquired through a business combination are recognized at:

Accepted Answer

Fair value at the acquisition date

Answer

Historical cost minus accumulated amortization

Answer

The carrying amount on the acquiree's books

Answer

Replacement cost at the reporting date

Question 3

The current ratio is calculated as:

Accepted Answer

Current assets divided by current liabilities

Answer

Net income divided by total assets

Answer

Total liabilities divided by shareholders' equity

Answer

Operating cash flow divided by current liabilities

Question 4

Deferred tax liabilities arise when:

Accepted Answer

Accounting profit exceeds taxable profit in the current period

Answer

Tax losses are carried forward to future periods

Answer

Taxable profit exceeds accounting profit in the current period

Answer

Permanent differences exist between book and tax income

Question 5

Which inventory valuation method is prohibited under IFRS?

Accepted Answer

Last-In, First-Out (LIFO)

Answer

First-In, First-Out (FIFO)

Answer

Weighted Average Cost

Answer

Specific Identification

Question 6

Return on Capital Employed (ROCE) is best defined as:

Accepted Answer

Operating profit divided by total assets minus current liabilities

Answer

Net profit divided by total equity

Answer

Gross profit divided by revenue

Answer

Net income divided by total liabilities

Question 7

Under the effective interest rate method, bond discount amortization over time will:

Accepted Answer

Increase each period

Answer

Remain constant each period

Answer

Decrease each period

Answer

Vary randomly based on market rates