CIMA CIMA-F1 Online Practice Questions and Exam Preparation

CIMA CIMA-F1 Online Questions & Answers

• Question 81:

  What does the tax credit method of giving double taxation relief mean?

  A. Tax paid in one country may be allowed as a tax credit in another country. Relief is normally restricted to the lower of the foreign or country of residency tax.
  B. Tax paid in one country may be allowed as a tax credit in another country. Relief is normally restricted to the higher of the foreign or country of residency tax.
  C. Tax relief is gained by deducting the foreign tax from the foreign income so that only the "net" amount will be subject to tax in the country of residency.
  D. The countries agree on certain types of income which will be exempt or partially exempt in one country or the other.
  A. Tax paid in one country may be allowed as a tax credit in another country. Relief is normally restricted to the lower of the foreign or country of residency tax.

• Question 82:

  FILL IN THE BLANK

  OP is considering investing in government bonds. The current price of a $100 bond with 8 years to maturity is $88.

  The bonds have a coupon rate of 6% and repay face value of $100 at the end of the 8 years.

  Calculate the yield to maturity.

  Give your answer to one decimal place.

  8.2%

• Question 83:

  FILL IN THE BLANK

  XY purchased a building on 1 April 20X1 for $300,000 with a useful economic life of 30 years. On 1 April 20X7 the building was revalued at $525,000.

  What will the new depreciation charge be following the revaluation?

  Give your answer as a whole number.

  $21875

• Question 84:

  There are two main approaches to corporate governance: rules-based and principle-based. Which THREE of the following are correct?

  A. Rules-based corporate governance applies to the USA and principle-based corporate governance applies to the UK.
  B. Rules-based corporate governance applies to the UK and principle-based corporate governance applies to the USA.
  C. Sarbanes Oxley Act (SOX) is a rules-based approach to corporate governance.
  D. Sarbanes Oxley Act (SOX) is a principle-based approach to corporate governance.
  E. A principle-based approach will mean the entity must comply or explain and a rules- based approach will have appropriate penalties for transgression.
  F. Best practice will use a rules-based approach to corporate governance and will have appropriate penalties for transgression.
  A. Rules-based corporate governance applies to the USA and principle-based corporate governance applies to the UK.
  C. Sarbanes Oxley Act (SOX) is a rules-based approach to corporate governance.
  E. A principle-based approach will mean the entity must comply or explain and a rules- based approach will have appropriate penalties for transgression.

• Question 85:

  Which of the following is NOT an objective of corporate governance?

  A. To ensure accountability and transparency
  B. To maximize shareholder value at any cost
  C. To enhance long-term sustainability of the business
  D. To protect the interests of stakeholders
  B. To maximize shareholder value at any cost

• Question 86:

  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?

  A. The currency that mainly influences selling prices of the entity's goods and services.
  B. The currency that mainly influences labour, material and other costs.
  C. The currency used for published financial reports.
  D. The currency of the country whose competitive forces determine prices of goods and services.
  C. The currency used for published financial reports.

• Question 87:

  HOTSPOT

  AB sells to ST, a group entity, 10,000 units at $2.50 each. The market value was $6 each.

  The effect on AB of the transfer pricing legislation on this transaction would be to:

  

  

• Question 88:

  JKL prepares its financial statements to 31 December each year. For the year ended 31 December 20X5 inventory was held for 76 days on average.

  The directors of JKL decide to reduce the average inventory level to $6.5 million from 1 January 20X6 JKL's revenue for 20X6 is $54 million on which a gross profit margin of 20% is earned.

  Assuming that the average receivables and payables days remain constant what will be the effect of the expected reduction in inventory on JKL's working capital cycle for the year ended 31 December 20X6?

  A. An increase of 32 days
  B. An increase of 21 days
  C. A reduction of 32 days
  D. A reduction of 21 days
  B. An increase of 21 days

• Question 89:

  Which of the following would NOT be a source of taxation rules for a country?

  A. Double tax treaties
  B. Directives from international bodies
  C. International accounting standards
  D. Precedents based on previous legislation
  C. International accounting standards

• Question 90:

  What does the deduction method of giving double taxation relief mean?

  A. Tax relief is gained by adding the foreign tax from the foreign income so that the gross amount will be subject to tax in the country of residency.
  B. Tax paid in one country may be allowed as a tax deduction another country. Relief is normally restricted to the lower of the foreign or country of residency tax.
  C. Tax relief is gained by deducting the foreign tax from the foreign income so that only the "net" amount will be subject to tax in the country of residency.
  D. Tax paid in one country may be allowed as a tax credit in another country. Relief is normally restricted to the higher of the foreign or country of residency tax.
  C. Tax relief is gained by deducting the foreign tax from the foreign income so that only the "net" amount will be subject to tax in the country of residency.