F2 CIMA F2 Advanced Financial Reporting exact Exam Questions

F2 Advanced Financial Reporting

Last Update 2 hours ago Total Questions : 268

The F2 Advanced Financial Reporting content is now fully updated, with all current exam questions added 2 hours ago. Deciding to include F2 practice exam questions in your study plan goes far beyond basic test preparation.

You'll find that our F2 exam questions frequently feature detailed scenarios and practical problem-solving exercises that directly mirror industry challenges. Engaging with these F2 sample sets allows you to effectively manage your time and pace yourself, giving you the ability to finish any F2 Advanced Financial Reporting practice test comfortably within the allotted time.

Question # 31

Which of the following actions should XY ' s management take in order to reduce its investment in working capital?

Sell its long-term investments and use the proceeds to reduce its bank overdraft.

Extend credit terms with its trade customers.

Scrap its obsolete inventory and replace with new inventory.

Pay trade suppliers more quickly to take advantage of prompt payment discounts.

Question # 32

RST sells computer equipment and prepares its financial statements to 31 December.

On 30 September 20X5 RST sold computer software along with a two year maintenance package to a customer. The customer is given the right to return the goods within six months and claim a full refund if they are not satisfied with the computer software. The risk of return is considered to be insignificant for RST.

How should the revenue from this transaction and the right of return be recognised in the financial statements for the year ended 31 December 20X5?

Recognise 100% of the revenue from both the sale of goods and the maintenance contract and create a provision for the anticipated level of returns.

Do not recognise any revenue from the sale of goods or the maintenance contract and do not create a provision for the anticipated level of returns.

Recognise 12.5% of the revenue from both the sale of goods and the maintenance contract and do not create a provision for the anticipated level of returns.

Recognise 100% of the revenue from the sale of goods,12.5% of the revenue from the maintenance contract and create a provision for the anticipated level of returns.

Question # 33

CD has 200,000 equity shares with a current market value of $2.50 each. The annual dividend of $0.50 a share is about to be paid.

CD also has redeemable debt with a nominal value of $100,000. This is currently trading at $90 for each $100 of nominal value.

The cost of equity is 20% and the post tax cost of debt is 6%.

What is CD ' s weighted average cost of capital?

Give your answer in % to one decimal place.

? %

Question # 34

AB and EF are located in the same country and prepare their financial statements to 31 October in accordance with International Accounting Standards. EF supplies AB with a component that is vital to AB ' s product range. AB is considering acquiring a controlling interest in EF by 31 December 20X4 in order to guarantee future supply. The Board of EF has indicated that such an approach would be postively considered. AB would use its control to make AB the sole customer of EF.

The Finance Director of AB has been granted access to EF ' s management accounts and has conducted some initial analysis from the financial press. The results togther with comparisons for AB for the year to 31 October 20X4 are presented below:

AB and EF are forecasting revenues of S1,500,000 a nd $700,000 respectively for the year ended 31 October 20X5.

AB ' s Finance Director met with one of the directors of EF to discuss the potential impact of the acquisition.

Which of the director ' s statements below is correct?

The P/E ratio of EF will increase to 12 after acquisition in line with that of AB.

The gross profit margin of EF will increase if AB ' s bargaining power is used to negotiate lower material costs for the whole group.

Redundancy costs arising from reorganisation following acquisition will be provided for by charging EF ' s profit for the year ended 31 October 20X4.

Dividend yield for both entities will be identical after the acquisition.

Question # 35

Which of the following statements are true regarding consolidated cash flows after the acquisition of a subsidiary?

Select ALL that apply.

The subsidiary ' s cash inflows and outflows become part of the group after purchase

Cash acquired from the subsidiary upon purchase is represented as a cash inflow

Adjustments need to be made to group working capital in light of the working capital acquired from the subsidiary

Net cash paid to acquire a subsidiary is shown as a cash inflow within the cash flow from investing activities

Disclosure notes are required to show cash and cash equivalents paid or received, but not details of goodwill, assets and liabilities acquired

Further adjustments are required to cash inflows and outflows after profit has been consolidated

Question # 36

Which TWO of the following are true for an entity raising equity finance using a rights issue rather than a placing of equity shares to new investors?

The administration is more complex and therefore likely to be more costly.

The shares will sell at a higher price and therefore generate more funds.

The voting rights of existing shareholders will be unaffected if the shareholders take up their rights.

The cost of underwriting will be lower because the risk of the issue is lower.

The issue will widen the base of shareholders if all shareholders take up their rights.

Question # 37

On 1 January 20X7 GH purchased plant and equipment at a cost of $400,000. The temporary differences in respect of this plant and equipment at 31 December 20X7 and 20X8 have been calculated as follows:

Assume that there are no other temporary differences in the periods and that the corporate income tax rate is 25%. GH is expected to have significant taxable profits in the future.

Which of the following is the correct impact in GH ' s statement of financial position at 31 December 20X8 in respect of deferred tax?

Increase in the deferred tax asset.

Increase in the deferred tax liability.

Decrease in the deferred tax asset.

Decrease in the deferred tax liability.

Question # 38

LM granted 100 share options to each of its 400 employees on 1 January 20X7. The options will only vest if employees remain with LM for 3 years from the grant date. The fair value of each share option was $5 on 1 January 20X7.

20 employees left in the year to 31 December 20X7 and at that date it was estimated that a further 35 would leave over the following two years.

Which of the following journal entries did LM process to account for the share options in the year to 31 December 20X7, in accordance with IFRS2 Share-based Payments?

Dr Profit or loss $57,500 ; Cr Other reserves within equity $57,500

Dr Profit or loss $57,500 ; Cr Liabilities $57,500

Dr Profit or loss $172,500 ; Cr Other reserves within equity $172,500

Dr Profit or loss $172,500 ; Cr Liabilities $172,500

Question # 39

Operating segments are separately reportable where they exceed 15% of revenue / profits / assets. These must in total cover 80% of total revenue. Is this statement true or false?

True

False

Question # 40

When producing the consolidated statement of profit or loss and other comprehensive income, which TWO of the following will be disclosed as attributable to the equity holders of the parent company and the non-controlling interests?

Profit before tax

Profit after tax

Other comprehensive income

Total comprehensive income

Operating profit

Go to page: