Independence Day Deal! Unlock 25% OFF Today – Limited-Time Offer - Ends In 00:00:00 Coupon code: SAVE25
Welcome to Pass4Success

- Free Preparation Discussions
Mail Us support@pass4success.com
Location PL
Mob_nav_barsMENU

CIMA Exam CIMAPRA19-F02-1 Topic 1 Question 109 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam
Question #: 109
Topic #: 1
[All CIMAPRA19-F02-1 Questions]

PQ and WX are similar sized entities andoperate in thesame industry within Country X . Both operate from a single warehouseand have similar levels of non current asset resources.

The following ratioshave been calculated at 31 October 20X8:

If considered individually, which of the following would limit the usefulness of these ratios in assessing the comparative financial performances of PQ and WX?

Show Suggested Answer Hide Answer
Suggested Answer: A

by Jeannine at Mar 24, 2025, 03:40 AM

Limited Time Offer

25%

Off

Get Premium CIMAPRA19-F02-1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel
Dean
1 months ago
The depreciation and lease issues are definitely red flags. It's like trying to compare the speed of a car and a motorcycle while one's in reverse and the other's in fifth gear.
upvoted 0 times
...
Brett
1 months ago
This is like a game of 'spot the difference' - you need to make sure the entities are using the same accounting methods to get a fair comparison. Otherwise, it's like trying to play chess with a Rubik's cube.
upvoted 0 times
...
Roy
2 months ago
Increased raw material prices affecting both entities equally shouldn't really impact the comparative analysis, in my opinion. The other factors seem more relevant.
upvoted 0 times
Dean
7 days ago
C) Year end review of equipment resulting in WX charging an impairment loss while PQ's equipment is not impaired.
upvoted 0 times
...
Britt
9 days ago
C) Year end review of equipment resulting in WX charging an impairment loss while PQ's equipment is not impaired.
upvoted 0 times
...
Margarita
10 days ago
B) Operating lease rentals for plant and equipment being charged to administration expenses by PQ and distribution costs by WX.
upvoted 0 times
...
Valentin
18 days ago
B) Operating lease rentals for plant and equipment being charged to administration expenses by PQ and distribution costs by WX.
upvoted 0 times
...
Alysa
26 days ago
A) Depreciation of warehouses being charged to cost of sales by PQ and distribution costs by WX.
upvoted 0 times
...
Daniel
1 months ago
A) Depreciation of warehouses being charged to cost of sales by PQ and distribution costs by WX.
upvoted 0 times
...
...
Catalina
2 months ago
The impairment loss for WX's equipment could be a significant factor affecting the performance comparison. Without a similar adjustment for PQ, the ratios won't provide an accurate picture.
upvoted 0 times
Audry
1 months ago
C) Year end review of equipment resulting in WX charging an impairment loss while PQ's equipment is not impaired.
upvoted 0 times
...
Davida
1 months ago
A) Depreciation of warehouses being charged to cost of sales by PQ and distribution costs by WX.
upvoted 0 times
...
...
Dana
2 months ago
The different accounting treatments for depreciation and leases between PQ and WX would definitely limit the usefulness of these ratios. It's like comparing apples and oranges.
upvoted 0 times
...
Jose
2 months ago
But what about option A? Depreciation charged to different expenses could also skew the ratios.
upvoted 0 times
...
Alana
2 months ago
I agree with Reiko, if one entity has an impairment loss, it would affect the comparison.
upvoted 0 times
...
Reiko
3 months ago
I think option C would limit the usefulness of the ratios.
upvoted 0 times
...

Save Cancel
az-700  pass4success  az-104  200-301  200-201  cissp  350-401  350-201  350-501  350-601  350-801  350-901  az-720  az-305  pl-300  

Warning: Cannot modify header information - headers already sent by (output started at /pass.php:70) in /pass.php on line 77