F2 – Mock Exam 2 – Free Mode – CIMA Mock Exams | 3 Mock Exams £10/module

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Question 1 of 60

1. Question
Which of the following are characteristics of Preference Shares?

Select all that apply.
- Have voting power
- Holder's return comes from an appreciation in the share price
- Dividends at a fixed rate
- Cumulative preference option
- Convertible preference option
Correct

Incorrect
Question 2 of 60

2. Question
IFRS 9 stipulates three different measures: Amortised Cost, FVOCI or FVPL.

An organisation, applies the fair value option to eliminate an accounting mismatch, has the business model of holding onto the financial asset to collect contractual payments that represent solely the principal and interest.

Which method of measurement must be used?
- Amortised Cost
- FVOCI
- FVPL
Correct

Incorrect

Question 3 of 60

3. Question

Below you have an extract of the Parent and Subsidiary’s Financial Statements, the Parent purchased 100% of the Subsidiary for £7.5m, the goodwill will be amortised straight line over five years.

		Parent	Subsidary
SoFP at 31 December 2019		£’000	£’000
Non-current assets		1,875	3,750
Goodwill on consolidation
Goodwill amortised
Investment in Sunsidary		7,500
Current assets
Due from group company		3,225	1,125
Other current assets		2,400	3,375
Current liabilities
Due to group company		(1,350)	(3,000)
Other current liabilities		(900)	(125)
		12,750	5,125

Ordinary shares		3,000	1,250
P & L account	pre 31.12.18	7,950	3,000
	y/e 31.12.19	1,800	875
		12,750	5,125

Calculate the Group’s Total Equity figure:

Input your answer in the format “£X,XXX”.

Correct

Incorrect

Question 4 of 60

4. Question

Below are extracts from an organisation’s Financial Statements:

Income Statement		Statement of Financial Position
Revenue	£657,300	Non-current Assets	£715,000
Cost of Sales	£377,300	Current Assets
Gross Profit	£280,000	Inventory	£43,800
Expenses	£65,500	Receivables	£84,100
Operating Profit	£214,500	Bank	£270,200
Interest Expense	£41,000	Equity
Profit before tax	£173,500	Share Capital	£250,000
Tax expense	£44,000	Retained Earnings	£303,900
Net Profit	£129,500	Non-current Liabilities	£500,000
		Current Liabilities
		Accruals	£4,500
		Payables	£42,700
		Deferred tax	£12,000

Calculate the Acid Test Ratio:

Input your answer in the format “X.XX:1”.

Correct

Incorrect

Question 5 of 60

5. Question
Another name for the quantity of money the bondholder receives as interest payments, which is usually expressed as a percentage of the par value is called which one of the following?
- Coupon
- Face Value
- Covenant
- Maturity Date
Correct

Incorrect
Question 6 of 60

6. Question
With reference to IFRS 9, if both of the following conditions are met, the default measurement is?
1. The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
2. The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
- Amortised cost
- Fair value through other comprehensive income
- Fair value through profit or loss
Correct

Incorrect
Question 7 of 60

7. Question
An organisation acquired 25% of the equity of a supplier for £40m on the 1 July 2019 . The Supplier made a profit of £12m for the year ended 31 December 2019.

How much will the Organisation record in its financial statements in relation to profit from the Supplier?

Input your answer in the format “£X,XXX”.
Correct

Incorrect

Question 8 of 60

8. Question

Below are extracts from an organisation’s Financial Statements:

Income Statement		Statement of Financial Position
Revenue	£657,300	Non-current Assets	£715,000
Cost of Sales	£377,300	Current Assets
Gross Profit	£280,000	Inventory	£43,800
Expenses	£65,500	Receivables	£84,100
Operating Profit	£214,500	Bank	£270,200
Interest Expense	£41,000	Equity
Profit before tax	£173,500	Share Capital	£250,000
Tax expense	£44,000	Retained Earnings	£303,900
Net Profit	£129,500	Non-current Liabilities	£500,000
		Current Liabilities
		Accruals	£4,500
		Payables	£42,700
		Deferred tax	£12,000

Calculate the Inventory Days:

Input your answer in the format “X.XX”.

Correct

Incorrect

Question 9 of 60

9. Question
Which one of the following statements is true regarding the Bid-Ask Spread of a listed stock?
- The bid represents demand and the ask represents the supply
- The bid represents supply and the ask represents the demand
- Price takers buy at the bid price and sell at the ask price but the market maker buys at the bid price and sells at the ask price
- Price takers buy at the ask price and sell at the bid price but the market maker buys at the ask price and sells at the bid price
Correct

Incorrect
Question 10 of 60

10. Question
IFRS 9 makes reference to the definitions found in IAS 39, this standard defines a financial asset as:

a contractual right…

How does this sentence conclude?

Select two.
- To receive cash or another financial asset from another entity
- To exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity
- Puttable instruments classified as equity or certain liabilities arising on liquidation classified by IAS 32 as equity instruments
- A non-derivative for which the entity is or may be obliged to receive a variable number of the entity's own equity instruments
Correct

Incorrect
Question 11 of 60

11. Question
The Subsidiary purchases an item of PP&E on 1 January 2019. The Subsidiaries functional and presentation currency is the EUR, the invoice for the PP&E is for GBP 1,000. EUR/GBP rate on 1 January 20X1 is 0.9. The invoice is paid on 1 May 2019 when the EUR/GBP rate is 0.95.

What is the exchange rate difference?
- €58
- €50
- €161
- €153
Correct

Incorrect

Question 12 of 60

12. Question

Below you have an extract from an organisation’s Financial Statements:

	2018	2019
Statement of Financial Position
PPE	£150,000	£170,000
Inventory	£50,000	£55,000
Receivables	£40,000	£45,000
Cash	£80,000	£90,000
Share Capital	£220,000	£220,000
Retained Earnings	£35,000	£70,000
Bank Loan	£15,000	£25,000
Payables	£50,000	£45,000

Income Statement
Sales	£720,000	£750,000
Cost of Sales	£490,000	£500,000
Gross Profit	£230,000	£250,000
Expenses	£125,000	£120,000
Operating Profit	£105,000	£130,000
Interest expense	£900	£1,500
Profit before tax	£104,100	£128,500
Income tax	£26,000	£28,000
Profit after tax	£78,100	£100,500

Select which of the following is true:

Gross Profit Margin has improved
Interest Cover has deteriorated
Inventory Days has deteriorated
Trade Receivable Days has improved
Trade Payable Days has improved

Correct

Incorrect

Question 13 of 60

13. Question
Calculate the cost of equity using the dividend valuation model:

A company has 1,000,000 shares in issue each with a par value of £1, currently trading for £12.50 per share and pays a constant dividend of £3.25.

Input your answer in the format “X.X%”.
Correct

Incorrect
Question 14 of 60

14. Question
When would an organisation remove an intangible asset from its financial statements?

Select all that apply.
- When it is disposed of
- When no more future economic benefits are expected
- Once it has been fully amortised
- If the organisation becomes a subsidiary of a parent
- If the asset is revalued
Correct

Incorrect

Question 15 of 60

15. Question

A Parent owns 100% of a Subsidiary, the subsidiary sold $5,000 of stock (costing $4,500) to the parent on 31 October 2019. The goods remain in stock and the parent has yet to pay the subsidiary. A dividend was paid on 31 July 2019.

Below are extracts from the Parent and Subsidiary’s Income Statements:

	Parent	Subsidiary
Sales	£750,000	$130,000
Intergroup sales	–	$5,000
Cost of Sales	£500,000	$110,000
Depreciation	£30,000	$5,000
Other expenses	£55,000	$5,000
Dividend received	£1,360	–
Interest expense	£2,000	$500
Profit before tax	£164,360	$14,500
Income tax	£10,000	$5,000
Profit after tax	£154,360	$9,500

Exchange Rates:

31-Dec-18	£/$ 0.8
31-Jul-19	£/$ 0.85
31-Oct-19	£/$ 0.86
31-Dec-19	£/$ 0.87
Average	£/$ 0.83

Calculate the Profit Before Tax figure to be used in the consolidated cashflow statement, after all necessary intra-company adjustment:

Correct

Incorrect

Question 16 of 60

16. Question

Below you have an extract from an organisation’s Financial Statements:

	2018	2019
Statement of Financial Position
PPE	£700,000	£810,000
Inventory	£120,000	£110,000
Receivables	£300,000	£325,000
Cash	£610,000	£430,000
Share Capital	£1,000,000	£1,000,000
Retained Earnings	£124,000	£100,000
Bank Loan	£250,000	£250,000
Payables	£356,000	£325,000

Income Statement
Sales	£8,450,000	£9,250,000
Cost of Sales	£2,535,000	£2,960,000
Gross Profit	£5,915,000	£6,290,000
Expenses	£4,732,000	£5,346,500
Operating Profit	£1,183,000	£943,500
Interest expense	£30,000	£30,000
Profit before tax	£1,153,000	£913,500
Income tax	£300,000	£310,000
Profit after tax	£853,000	£603,500

Select which of the following is true:

Operating Profit Margin has deteriorated
Interest Cover has deteriorated
Acid test has deteriorated
Inventory Days has deteriorated
Working Capital Cycle has improved

Correct

Incorrect

Question 17 of 60

17. Question
Calculate the cost of equity using the dividend valuation model:

A company has 1,000,000 shares in issue each with a face value of £1.00, currently trading for £3.95 per share and paid a dividend of £1.65, dividends were 1.50 last year. The company can re-invest at a rate of 15%.

Input your answer in the format “X.X%”.
Correct

Incorrect

Question 18 of 60

18. Question

An organisation has the following extracted Income Statement:

Revenue	£8,750,000
Cost of Sales	£3,250,000
Gross Profit	£5,500,000
Depreciation	£145,000
Fines	£205,000
Professional Fees	£125,000
Rent	£700,000
Salaries	£2,250,000
Operating Profit	£2,075,000
Interest	£100,000
Profit before Tax	£1,975,000

Notes:

Professional Fees: £25,000 for accounting, £20,000 for general legal work, £80,000 for a trade dispute with a supplier.
Fine: Health and Safety fine
Depreciation: Relates to Plant & Equipment which has a Capital Allowance of £80,000

Tax rate is 19%.

Calculate the tax expense for the year:

Input your answer in the format “£X,XXX”.

Correct

Incorrect

Question 19 of 60

19. Question

A Parent owns 100% of a Subsidiary, the subsidiary sold $5,000 (costing $4,000) to the parent on 31 October 2019. The Subsidiary, the goods remain in stock and the parent has yet to pay the subsidiary. A dividend of $1,600 was paid on 31 July 2019.

Below are extracts from the Parent and Subsidiary’s SoFP:

	Parent		Subsidiary
	2018	2019	2018	2019
PPE	£150,000	£170,000	$75,000	$80,000
Inventory	£50,000	£55,000	$20,000	$25,000
Receivables	£40,000	£45,000	$20,000	$30,000
Cash	£80,000	£90,000	$25,000	$20,000
Share Capital	£220,000	£220,000	$100,000	$100,000
Retained Earnings	£35,000	£70,000	$20,000	$30,000
Bank Loan	£15,000	£25,000	$10,000	$15,000
Payables	£50,000	£45,000	$10,000	$5,000

Exchange Rates:

31-Dec-18	£/$ 0.8
31-Jul-19	£/$ 0.85
31-Oct-19	£/$ 0.86
31-Dec-19	£/$ 0.87
Average	£/$ 0.83

Calculate the Effect of exchange rate changes arising from the intergroup sale to be used in the consolidated cashflow statement, after all necessary intra-company adjustment:

Input your answer in the format “£X,XXX”.

Correct

Incorrect

Question 20 of 60

20. Question

Below you have an extract from an organisation’s Financial Statements:

	2018	2019
Statement of Financial Position
PPE	£700,000	£810,000
Inventory	£120,000	£110,000
Receivables	£300,000	£325,000
Cash	£610,000	£250,000
Share Capital	£1,000,000	£1,000,000
Retained Earnings	£124,000	-£5,000
Bank Loan	£250,000	£100,000
Payables	£356,000	£400,000

Income Statement
Sales	£8,450,000	£9,250,000
Cost of Sales	£2,366,000	£2,405,000
Gross Profit	£6,084,000	£6,845,000
Expenses	£4,867,200	£5,346,500
Operating Profit	£1,216,800	£1,498,500
Interest expense	£30,000	£12,000
Profit before tax	£1,186,800	£1,486,500
Income tax	£300,000	£310,000
Profit after tax	£886,800	£1,176,500

Which category of ratios is of most concern?

Profitability
Efficiency
Leverage
Liquidity

Correct

Incorrect

Question 21 of 60

21. Question
An organisation has secured a loan from a lender at a rate of 10% fixed per annum, on a loan of £1,500,000. If the tax rate in the country is 25%, what is the post tax cost of the debt as a percentage ?

Input your answer in the format “X.X%”.
Correct

Incorrect
Question 22 of 60

22. Question
An organisation has acquired a new asset costing £50,000, which is to be depreciated straight line over four years. The capital allowances for this asset over the four years are: £25,000, £4,500, £3,690 and £16,810 respectively.

If the tax rate is 20%, what is the necessary deferred tax adjustment for the end of the year 2?

Input your answer in the format “£X,XXX”.
Correct

Incorrect
Question 23 of 60

23. Question
Under IAS 24, which of he following must be disclosed for key management personnel:

Select all that apply
- Short-term employee benefits
- Post-employment benefits
- Termination benefits
- Share-based payments
- Percentage of equity owned by key management personnel
Correct

Incorrect
Question 24 of 60

24. Question
A Manager has received a Statement of Profit and Loss, it appears that the cost of sales have increased significantly, with reference to Gartner’s Data Analytics maturity model, what is the next step for this Manager?
- Descriptive
- Diagnostic
- Predictive
- Perspective
Correct

Incorrect
Question 25 of 60

25. Question
An organisation has two loans, one with an interest rate of 4% and a debt of £500,000 and a second at a rate of 6% with a debt of £1,500,000.

If the organisation pays tax on profits at 17%, what is the cost of the debt post tax?

Input your answer in the format “£X,XXX”.
Correct

Incorrect
Question 26 of 60

26. Question
An organisation has a credit trial balance figure of £1,000 for deferred tax liability. At the year-end, it was determined that an increase in the deferred tax liability of £1,500 was required.

Calculate the Closing Deferred Tax Liability for the year.

Input your answer in the format “£X,XXX”.
Correct

Incorrect
Question 27 of 60

27. Question
Organisation A starts a Joint Venture with Organisation B, and both hold 50% equity in Organisation C.

Who is a related party to Organisation A?
- B only
- C only
- B and C
- No related parties
Correct

Incorrect
Question 28 of 60

28. Question
Which of the following are examples of the descriptive level of Gartner’s Analytics maturity model?
- Balanced Scorecard
- Benchmarking
- Trend Analysis
- Statistical Analysis
- Big Data
Correct

Incorrect
Question 29 of 60

29. Question
An investor is considering a bond with a par value of £75 and a coupon rate at 8%, which can be redeemed in four years for £100. The investor requires a return of 13%.

What is the yield of the bond?

Working to four decimal places, input your answer in the format “X.XX%”.
Correct

Incorrect
Question 30 of 60

30. Question
A UK based organisation, which has GBP as its functional currency, is preparing its group accounts to 31 December 2019, with a subsidiary that is based in the US and uses the US Dollar as its functional currency.

Which exchange rate should the parent use for the Income Statement?
- Exchange rate at 31 December 2018 £/$ 1.30
- Exchange rate at 31 December 2019 £/$ 1.20
- Average Exchange rate for the year to December 2019 £/$ 1.23
- Average Exchange rate for the year to December 2018 £/$ 1.45
Correct

Incorrect
Question 31 of 60

31. Question
An organisation makes a Net Profit of £1,000,000, tax of £250,000 and Preference share dividend of £150,000.

The organisation has 1,000,000 authorised shares and 800,000 in issue.

What is the earnings per share?

Inout your answer in the format “£X.XX”.
Correct

Incorrect
Question 32 of 60

32. Question
A highly profitable organisation has managed to achieve similar ratios across their Financial Statements, apart from a deteriorating in the gearing ratio, it has increased from 54% to 67% in the last financial year.

Which one of the following would reverse the deterioration?
- Reduce the dividend paid
- Decrease the margin on per unit selling price
- Increase the value of inventory held
- Encourage credit customers to pay sooner
Correct

Incorrect
Question 33 of 60

33. Question
An organisation has a 10% convertible bond which is currently trading for £110, which can be redeemed, either by:
1. Cash, 20% premium on par value in four years, or
2. 20 ordinary shares, currently trading for £6 and expected to grow by 2% indefinitely.
The tax rate is 25%.

Calculate the cost of the debt for the convertible bond:

Which band does the cost of debt for the convertible bond fit into?
- 10.5 – 10.99%
- 11.0 – 11.49%
- 11.5 – 11.99%
- 12.0 – 12.49%
Correct

Incorrect
Question 34 of 60

34. Question
The Profit for the Year of the group is £2,500,000, the parent owns 70% of the equity.

With reference to IAS 1, how much would be reported as being attributable to the Non-Controlling interest in the group accounts?

Input your answer in the format “£X,XXX”
Correct

Incorrect
Question 35 of 60

35. Question
An organisation has a profit attributable to shareholders of £1,000,000, and it has 2,000,000 common shares outstanding that sell on the open market for an average of £12 per share. In addition, there are 60,000 options outstanding that can be converted to the organisation’s common stock at £10 each.

Calculate the Diluted Earnings per Share.

Input your answer in the format “£X.XXX”.
Correct

Incorrect
Question 36 of 60

36. Question
Which one of the following would have an adverse effect on the Working Capital Cycle?
- Incentives to credit customers to pay earlier
- An increase in the time to settle credit purchases
- Moving to a Just In Time Delivery model
- Offering longer credit terms with customers
Correct

Incorrect
Question 37 of 60

37. Question
An organisation has a 10% convertible bond which is currently trading for £100, which can be redeemed:
1. Cash, 10% premium on par value in four years, or
2. 20 ordinary shares, currently trading for £5 and expected to grow by 2% indefinitely.
The tax rate is 20%.

Calculate the cost of the debt for the convertible bond:

Which band does the cost of debt for the convertible bond fit into?
- 10 – 11%
- 11 – 12%
- 12-13%
- 9 – 10%
Correct

Incorrect
Question 38 of 60

38. Question
Which of the following are acceptable methods for valuing a joint venture?

Select two
- Equity Method
- Proportional Consolidation Method
- Fair Value Method
- Consideration Method
Correct

Incorrect
Question 39 of 60

39. Question
There are three underpinning principles of Integrated Reporting, which three?
- Value creation for the organisation and for others
- The capitals
- The value creation process
- Energy efficiency
- Risk and reward for providers of financial capital
Correct

Incorrect
Question 40 of 60

40. Question
The two components of Working Capital are:

Select two:
- Current Assets
- Current Liabilities
- Current ratio
- Acid Test
- Inventory
Correct

Incorrect
Question 41 of 60

41. Question
A listed company has the following Equity Structure:

Ordinary Shares (£0.50): £10,000,000
4% Redeemable Bonds: £5,000,000
4% Bank Loan: £4,000,000

The current trading price of the stock is £15 (ex-div) and has just paid a dividend of £1.50, the dividend four years ago was £1.20.

The 4% Redeemable Bonds are trading at £102 (ex-int) and are redeemable in seven years time.

Tax rate is 20%.

Calculate the WACC:

Which band does the WACC fit into?
- 14.5 – 15.49%
- 15.5 – 16.49%
- 16.5 – 17.49%
- 17.5 – 18.49%
Correct

Incorrect
Question 42 of 60

42. Question
Which one of the following is not a limitation of financial ratio analysis?
- Snap shot in time
- Does not consider the bargaining power of the entity
- Ignores accounting policies
- Cannot be applied to all industries
Correct

Incorrect
Question 43 of 60

43. Question
Which one of the following is not a guiding principle of Integrated Reporting?
- Strategic focus and future orientation
- Stakeholder relationships
- Conciseness
- Performance
Correct

Incorrect

Question 44 of 60

44. Question

Below you have an extract of an organisation’s Financial Statements:

Income Statement		Statement of Financial Position
Revenue	£767,000	Non-current Assets	£312,000
Cost of Sales	£612,000	Current Assets
Gross Profit	£155,000	Inventory	£23,500
Expenses	£82,000	Receivables	£54,000
Operating Profit	£73,000	Bank	£177,000
Interest Expense	£13,500	Equity
Profit before tax	£59,500	Share Capital	£250,000
Tax expense	£12,000	Retained Earnings	£32,300
Net Profit	£47,500	Non-current Liabilities	£225,000
		Current Liabilities
		Accruals	£4,500
		Payables	£42,700
		Deferred tax	£12,000

Calculate the Trade Receivable Days:

Input your answer in the format “X.XX”.

Correct

Incorrect

Question 45 of 60

45. Question
A listed company has the following Equity Structure:

Ordinary Shares (£1): £5,000,000
9% Bank Loan: £4,000,000

The current trading price of the stock is £4 (ex-div) and has just paid a dividend of £0.50, the dividend four years ago was £0.40.

Tax rate is 20%.

Calculate the WACC:

Which band does the WACC fit into?
- 15 – 17.5%
- 17.5 – 20%
- 20 – 22.5%
- 22.5 – 25%
Correct

Incorrect
Question 46 of 60

46. Question
Rearrange the following in order of a Goodwill calculation:
- +
- NCI
- –
- =
- Fair Value of Net Assets
- Parent
- Goodwill
Correct

Incorrect
Question 47 of 60

47. Question
The two most citied benefits of Integrated Reporting are:
- Better Communication
- Better Understanding
- Informed Stakeholders
- Informed Investors
- Improved decision making
Correct

Incorrect

Question 48 of 60

48. Question

Below you have an extract of an organisation’s Financial Statements:

Income Statement		Statement of Financial Position
Revenue	£767,000	Non-current Assets	£312,000
Cost of Sales	£612,000	Current Assets
Gross Profit	£155,000	Inventory	£23,500
Expenses	£82,000	Receivables	£54,000
Operating Profit	£73,000	Bank	£177,000
Interest Expense	£13,500	Equity
Profit before tax	£59,500	Share Capital	£250,000
Tax expense	£12,000	Retained Earnings	£32,300
Net Profit	£47,500	Non-current Liabilities	£225,000
		Current Liabilities
		Accruals	£4,500
		Payables	£42,700
		Deferred tax	£12,000

Calculate the ROCE:

Input your answer in the format “X.XX%”.

Correct

Incorrect

Question 49 of 60

49. Question
According to IFRS 15, what would the Revenue figure be for this scenario?

An organisation sells 100 units at a selling price per unit of £20. The organisation has cost of sales of £14 per unit. The organisation believes 6 of the 100 units will be returned.
- £2,000
- £1,880
- £1,916
- £1,964
Correct

Incorrect
Question 50 of 60

50. Question
Match the answers to the question:
Sort elements
- A joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement
- A joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.
- Recognises: • its assets, including its share of any assets held jointly • its liabilities, including its share of any liabilities incurred jointly • its revenue from the sale of its share of the output of the joint operation • its share of the revenue from sale of output by the joint operation • its expenses, including its share of any expenses incurred jointly
- Recognises its interest as an investment using the equity method in accordance with IAS 28
- Accounting treatment of Joint Venture?
- Define Joint Venture?
- Define Joint Operation?
- Accounting treatment of Joint Operation?
Correct

Incorrect
Question 51 of 60

51. Question
Which Integrated Reporting Capital is being defined below:

the knowledge, systems, and processes that an SME has at its disposal that provide it with a competitive advantage and positively affect its future earning potential
- Intellectual
- Manufactured
- Financial
- Human
Correct

Incorrect
Question 52 of 60

52. Question
Which of the following would be categorised as a lease for an organisation that is deemed a large?

Select all that apply.
- Nine month lease for a fleet of trucks costing £250,000 in total
- A 36-month lease for one new laptop for the remote sales person
- A £40,000 year lease on a warehouse with a minimum term of 10 years
- Eight delivery vans with a monthly lease of £2,500 for a term of 24 months
- Internal server computer costing £400 a month for a minimum term of 5 years.
Correct

Incorrect

Question 53 of 60

53. Question

Below you have an extract of a Parent and a Subsidiary, where the parent owns 80%:

		Parent	Subsidary
Statement of Financial Position at 31 December 2019		£’000	£’000
Non-current assets		2,000	6,000
Goodwill on consolidation to be amortised over five years
Investment in Subsidiary		8,000
Current assets
Due from group company		4,800	1,800
Other current assets		5,200	5,400
Current liabilities
Due to group company		-1,800	-4,800
Other current liabilities		-1,200	-200
		17,000	8,200

Ordinary shares		4,000	2,000
P & L account	pre 31.12.18	10,600	4,900
	y/e 31.12.19	2,400	1,300
		17,000	8,200
Income Statement
Year ended 31 December 2019
Sales	external	20,000	8,000
	inter group	3,200	4,000
Cost of sales	external	-15,000	-6,200
	inter group	-4,000	-3,200
Gross profit		4,200	2,600
Admin expenses		-1,400	-1,000
Net profit before tax		2,800	1,600
Taxation		-400	-300
Net profit after tax		2,400	1,300

Calculate the Gross Profit which would be included on the Income Statement.

Input your answer in the format “£X,XXX”

Correct

Incorrect

Question 54 of 60

54. Question
Which one of the following is not what is considered as part of Natural Capital and Integrated Reporting?
- Food
- Water
- Timber
- Climate security
- Community
Correct

Incorrect
Question 55 of 60

55. Question
A Lessee remeasures lease liability using revised lease payments and an unchanged discount rate when:

Select all that apply.
- the amount expected to be payable under the residual value guarantee changes
- the variability of payments is resolved so that they become in substance fixed payments
- future lease payments change as a result of a change in floating interest rates
- the lease term changes
- the assessment of the exercise of a purchase option changes
Correct

Incorrect
Question 56 of 60

56. Question
Below you have an extracts from the Parent and Subsidiary:

Parent Subsidary

Revenue £1118,950 £50,830

Cost of Sales £82,485 £30,498

Gross Profit £36,465 £20,332

The Subsidiary made a sale to the Parent during the year of £10,000. The Subsidiary originally purchased the goods at a cost of £7,000. Half of these items remained in the inventory of the Parent at the year end.

What should the consolidated Cost of Sales figure for the group accounts?

Input your answer in the format “£X,XXX”
Correct

Incorrect

Question 57 of 60

57. Question

Below are extracts from an organisation’s Financial Statements:

Income Statement		Statement of Financial Position
Revenue	£657,300	Non-current Assets	£715,000
Cost of Sales	£377,300	Current Assets
Gross Profit	£280,000	Inventory	£43,800
Expenses	£65,500	Receivables	£84,100
Operating Profit	£214,500	Bank	£270,200
Interest Expense	£41,000	Equity
Profit before tax	£173,500	Share Capital	£250,000
Tax expense	£44,000	Retained Earnings	£303,900
Net Profit	£129,500	Non-current Liabilities	£500,000
		Current Liabilities
		Accruals	£4,500
		Payables	£42,700
		Deferred tax	£12,000

Calculate the Operating Profit Margin:

Input your answer in the format “X.XX%”.

Correct

Incorrect

Question 58 of 60

58. Question
With regards to IAS 16, which of the following needs to be disclosed?

Select all that apply.
- Basis for measuring carrying amount
- Depreciation method(s) used
- Useful lives or depreciation rates
- Gross carrying amount and accumulated depreciation and impairment losses
- Itemised breakdown all all asset(s)
Correct

Incorrect

Question 59 of 60

59. Question

Below you have an extract of a Parent than owns 60% of the Subsidiary

Income Statement		Parent	Subsidiary
Year ended 31 December 2019
Sales	external	£15,000	£5,000
	inter group	£2,400	£3,000
Cost of sales	external	(£11,250)	(£3,875)
	inter group	(£3,000)	(£2,400)
Gross profit		£3,150	£1,725
Admin expenses		(£1,050)	(£625)
Net profit before tax		£2,100	£1,100
Taxation		(£300)	(£600)
Net profit after tax		£1,800	£500

Calculate the group Net Profit after tax:

Input your answer in the format “£X,XXX”.

Correct

Incorrect

Question 60 of 60

60. Question

Below are extracts from an organisation’s Financial Statements:

Income Statement		Statement of Financial Position
Revenue	£657,300	Non-current Assets	£715,000
Cost of Sales	£377,300	Current Assets
Gross Profit	£280,000	Inventory	£43,800
Expenses	£65,500	Receivables	£84,100
Operating Profit	£214,500	Bank	£270,200
Interest Expense	£41,000	Equity
Profit before tax	£173,500	Share Capital	£250,000
Tax expense	£44,000	Retained Earnings	£303,900
Net Profit	£129,500	Non-current Liabilities	£500,000
		Current Liabilities
		Accruals	£4,500
		Payables	£42,700
		Deferred tax	£12,000

Calculate the Gearing (either method):

Input your answer in the format “X.XX%”.

Correct

Incorrect

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