QUESTION: 13

Which of the following is the most appropriate definition of the term 'factoring'?

Where a business sells its accounts receivable to a third party at a discount
Where a business borrows a loan with short-term conditions from a third party
Where a business sells equity to third parties to gain short-term finance
Where a business is provided with a highly flexible regular source of short-term finance by a bank

Answer(s): A

QUESTION: 14

Company Y is using some of the money from a share issue to purchase a new office building. The company is also using some of the money to purchase inventories.
Which method of financing is this?

Conservative financing
Matching financing
Aggressive financing

Answer(s): A

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QUESTION: 15

Which of the following are techniques that can be used by a company to ensure they receive timely payment of receivables? Select ALL that apply:

Offering cash or early payment discount
Charging interest on late payments
Assessing credit risk of customers before they are given credit
Offering extended credit to return customers
Offering free items

Answer(s): A,B,C

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QUESTION: 16

Mr AM is the owner of Waxco Ltd. Mr AM was born in India, but currently resides in the US

He has gained dual Indian and American citizenship.
Mr AM first registered Waxco Ltd in the USA when he started the company ten years ago. However, because of lower costs, the company moved its central management station to Germany two years ago. Waxco Ltd has other smaller offices such as call centres across Asia, in locations such as Pakistan and Cambodia, however Waxco Ltd only currently sell goods in the US
Which of the countries mentioned are relevant for determining Waxco Ltd's competent jurisdiction?
The USA
Germany
India
Pakistan
Cambodia

Answer(s): A,B

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Free CIMA F1 Financial Reporting Exam Questions (page: 5)

QUESTION: 13

QUESTION: 14

QUESTION: 15

QUESTION: 16

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