CIMA Fundamentals of Financial Accounting 4

Question 1

Which financial statement shows the financial position of a business at a specific point in time?

Accepted Answer

Statement of financial position

Answer

The statement of financial position (balance sheet) is a snapshot at a given date showing assets, liabilities, and equity.

Question 2

A company issued 100,000 shares at $2 par value for $3.50 each. The share premium account will be credited with:

Accepted Answer

$150,000

Answer

Share premium = (Issue price − Par value) × Shares = ($3.50 − $2.00) × 100,000 = $150,000.

Question 3

Which of the following costs would NOT be included in the valuation of finished goods inventory?

Accepted Answer

Selling and distribution expenses

Answer

IAS 2 requires inventory to include costs of conversion (direct labor, factory overhead) and direct materials, but selling costs are period expenses excluded from inventory.

Question 4

The accounting equation is best expressed as:

Accepted Answer

Assets = Liabilities + Equity

Answer

The fundamental accounting equation is Assets = Liabilities + Equity, reflecting that all assets are funded by either debt (liabilities) or owners' contributions (equity).

Question 5

An entity revalues its property upward by $50,000. The correct accounting treatment is to:

Accepted Answer

Credit the revaluation surplus in other comprehensive income by $50,000

Answer

Under IAS 16, an upward revaluation is credited to the revaluation surplus (equity) and recognized in other comprehensive income, not in profit or loss.

CIMA - Chartered Institute of Management Accountants Aptitude Test Practice Test

CIMA - Chartered Institute of Management Accountants Aptitude Test Practice Test

CIMA Fundamentals of Financial Accounting 4