CIMA Exam CIMAPRA19-F02-1 Topic 1 Question 64 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam

Question #: 64
Topic #: 1

Ratios calculated from thefinancial statements of ST Group for the years ended 31 August 20X7 and 20X6 are as follows:

Which of the followingwould have contributed to the movements in these ratios?

ADuring 20X7 ST Group acquired an associate which made arelatively smallprofit for the year.

BST Group extended its customer base which resulted in an increase inthe volume ofsales during 20X7.

CDuring 20X7 ST Groupincreased the useful life of its vehiclesto five years from four and adjusted the depreciation charge accordingly.

DThe fair value of an investment acquired in 20X7 and classified as fair value through profit or losshas increased in value by the year end.

Show Suggested Answer

Suggested Answer: B

by Reena at Jan 04, 2023, 11:25 AM

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Gabriele

14 days ago

But what about the fair value of the investment increasing? Wouldn't that also affect the ratios?

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Flo

15 days ago

Option C is the correct answer. Extending the useful life of vehicles would reduce the depreciation charge, leading to higher profits and better ratios.

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Rossana

16 days ago

I agree with you, Charlette. More sales would definitely impact the ratios.

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Charlette

19 days ago

I think the increase in sales volume would have contributed to the movements in the ratios.

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