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CIMA BA3 Exam
Fundamentals of Financial Accounting (Page 9 )

Updated On: 1-Feb-2026
Page 9 of 80
PDF with 393 Questions

Refer to the exhibit.



Harvey commenced business with capital of $50,000. At the end of the first financial year, he has

What was the profit for the period?

  1. $7,000 profit
  2. $7,000 loss
  3. $23,000 profit
  4. $23,000 loss

Answer(s): B



Which of the following is not a correct definition of the accounting equation?

  1. Assets = Capital + Liabilities
  2. Capital = Assets + Liabilities
  3. Liabilities = Assets - Capital
  4. Capital = Assets - Liabilities

Answer(s): B



The Accounting Standards Board is responsible for:

  1. Producing the Companies Act
  2. Governing the activities of the external auditors
  3. Producing International Accounting Standards
  4. Producing Financial Reporting Standards

Answer(s): D



A company uses the straight line method of depreciation for its plant and machinery.
Depreciation is at a rate of 20% per annum.

A major item of machinery was purchased in 2003 at a cost of $240,000. At the time, it was estimated that the plant had an estimated useful life of five years and a residual value at the end of its useful life of $20,000.

As a result of rapid changes in technology it was decided to sell the machinery in 2006 for $80,000. It is the company's policy to charge a full year's depreciation in the year of acquisition and none in the year of disposal.
What was the profit/loss arising on the disposal of the asset?

  1. $36,000 profit
  2. $16,000 profit
  3. $8,000 loss
  4. $28,000 loss

Answer(s): D



MM does not maintain complete accounting records The following information is available for the year ended 31 December 20X3.



The mark up on items sold by MM is 20%

What is the figure for purchases to be included in MM's statement of profit or loss for the year ended 31 December 20X3?

  1. $61,000
  2. $61,500
  3. $63,500
  4. $59,000

Answer(s): C



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