CIMA Exam CIMAPRA17-BA3-1 Topic 1 Question 84 Discussion

Actual exam question for CIMA's CIMAPRA17-BA3-1 exam

Question #: 84
Topic #: 1

[All CIMAPRA17-BA3-1 Questions]

A decrease in the allowances for receivables would result in:

AAn increase in working capital

BA decrease in working capital

CAn increase in liabilities

DA decrease in net profit

Show Suggested Answer

Suggested Answer: B

by Kanisha at Apr 10, 2024, 09:37 PM

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Nan

1 months ago

Wait, so they're decreasing the allowances for receivables? That's like saying, 'Hey, we're going to be even more optimistic about those deadbeat customers actually paying us back!' Good luck with that one, folks.

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Tommy

B) A decrease in working capital

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Fausto

2 days ago

A) An increase in working capital

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Shay

1 months ago

This one's tricky, but I'm going with B) A decrease in working capital. If the company is lowering its allowances, that means it's expecting to collect more of those outstanding receivables, which would free up cash and reduce working capital.

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Felix

4 days ago

But wouldn't it also mean an increase in liabilities? If they're reducing allowances, that means they're expecting to collect more, which would increase their assets and liabilities.

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Carolann

8 days ago

I think you're right, B) A decrease in working capital makes sense. It means the company is expecting to collect more of the receivables.

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Jonell

2 months ago

D) A decrease in net profit makes the most sense to me. Lowering the allowances for receivables is like being more optimistic about collecting on those accounts, which would boost the bottom line.

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Tawanna

11 hours ago

C) An increase in liabilities

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Rodolfo

7 days ago

B) A decrease in working capital

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Brandon

15 days ago

C) An increase in liabilities

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Ezekiel

16 days ago

B) A decrease in working capital

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Catarina

1 months ago

A) An increase in working capital

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Carissa

1 months ago

A) An increase in working capital

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Luther

2 months ago

Hmm, I'm not so sure. Wouldn't a decrease in the allowances for receivables lead to a decrease in working capital since there would be less cash available? I'll have to think about this one a bit more.

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Sommer

2 months ago

I think it would actually lead to a decrease in net profit.

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Hector

2 months ago

I disagree, I believe it would result in an increase in liabilities.

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Corazon

2 months ago

I think a decrease in allowances for receivables would result in a decrease in working capital.

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Apolonia

2 months ago

I think the correct answer is D) A decrease in net profit. A decrease in the allowances for receivables would mean the company is recognizing more revenue, which would lead to an increase in net profit.

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