Question 1

According to IAS 21 The Effects of Changes in Foreign Exchange Rates, an entity should determine its functional currency.

Which of the following is NOT a factor that should be considered by an entity when determining its functional currency?

AThe currency that mainly influences selling prices of the entity's goods and services.

BThe currency that mainly influences labour, material and other costs.

CThe currency used for published financial reports.

DThe currency of the country whose competitive forces determine prices of goods and services.

Answer : C

Question 2

An entity has a number of subsidiary and associate investments.

Which of the following must be disclosed in the entity's separate financial statements if it is exempt from presenting consolidated financial statements?

AThe bases on which significant investments in subsidiaries and associates have been accounted for in those separate financial statements.

BA copy of the summarised financial statements of each of its subsidiaries.

CA list of all its significant investments in subsidiaries and associates which includes the date of acquisition and the price paid.

DA list of its top ten shareholdings including number of shares held and their market value.

Answer : A

Question 3

UV's financial statements for the year ended 31 March 20X8 were approved for publication on 30 June 20X8.

In accordance with IAS 10 Events After the Reporting Period, which of the following material events would have been classified as a non-adjusting event in these financial statements?

AOn 1 June 20X8 UV's auditors discovered that an error in valuation had caused the closing inventory to be overvalued by $150,000.

BOn 10 April 20X8 UV received a communication stating that one of its customers had ceased trading and gone into liquidation. The balance outstanding at 31 March 20X8 was unlikely to be paid.

COn 1 June 20X8 UV was awarded damages of $70,000 in respect of a legal claim that it had made against the local government authority in October 20X7.

DOn 28 April 20X8 a fire destroyed half of UV's main production facility. Output was severely reduced for six months.

Answer : D

Question 4

The following data has been extracted from GH's accounting records:

What is GH's average inventory days for the year ended 31 March 20X3?

A39 days

B43 days

C25 days

D28 days

Answer : A

Question 5

Which TWO of the following are functions of the International Financial Reporting Standards (IFRS) Advisory Council?

ATo give advice to the International Accounting Standards Board on agenda decisions and priorities in its work

BTo inform the International Accounting Standards Board of the views of organizations on major standard setting projects

CTo approve IFRSs for publication

DTo review new financial reporting issues not already covered by IFRS

ETo appoint the members of the International Accounting Standards Board

Answer : A, B

Free CIMA F1 Financial Reporting (CIMAPRA19-F01-1) Practice Questions

CIMAPRA19-F01-1 Sample Exam Questions

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