support@Free-Braindumps.com
Register Login
Cisco
CompTIA
ISC
EC-Council
EXIN
Fortinet
ITIL
Juniper
Microsoft
VMware
Avaya
SAP
Google
NVIDIA
Salesforce
Amazon
Palo Alto Networks
ISC2
CrowdStrike
Anthropic
All Vendors
  1. Home
  2. Exams
  3. CIMA
  4. F2

Free F2 Exam Braindumps
Advanced Financial Reporting Questions 96–100 (page: 21)

Updated On: 10-Feb-2026
Page 21 of 55
PDF with 268 Questions

JK is seeking to raise finance for a project and the directors would prefer to take out a fixed rate bank loan repayable over the next 5 years. The project will increase the profit of JK even after taking into account the additional interest costs.
Which of the following statements about the use of a bank loan in this situation is true?

  1. In the long term servicing a bank loan is more expensive than servicing equity shares due to the higher risk for the lender.
  2. The interest on a bank loan is deducted from profit before dividends can be declared to equity shareholders each year.
  3. Because the assets of a business belong to the equity shareholders, a bank loan should NOT be secured on the assets of the business.
  4. A bank loan has high issue costs compared to an issue of equity shares because it takes longer to arrange.

Answer(s): B



W and Y are very similar entities with the same level of profit before interest and tax. However, W has gearing of 95% and Y has gearing of 30%.
Which of the following statements is true?

  1. Investing in W carries a higher level of risk than investing in Y.
  2. A greater proportion of profit will be available out of which to declare a dividend in W.
  3. Investors in Y will expect a higher return than investors in W.
  4. Y has a greater commitment to meet interest payments than W.

Answer(s): A



PQ is a retail business. In recent years they have improved their financial performance and increased their revenue. The following ratios have been calculated for the years ended 31 December 20X4 and 20X3:



Which of the following explanations of PQ's financial performance is consistent with these ratios?

  1. In 20X4 PQ reduced the unit selling price resulting in an increase in volumes sold and an increase in overall revenue.
  2. PQ changed suppliers early in 20X4 because the new supplier agreed to supply the same goods at a cheaper price.
  3. In 20X4 taxation legislation was amended which reduced the rate of corporate income tax by 3.5%.
  4. In 20X4 PQ sold a retail outlet resulting in a significant gain on disposal which has been deducted from administrative expenses.

Answer(s): B



UV entered into a five year non-cancellable operating lease for an asset two years ago. Lease payments are settled annually in arrears.
At the year end, UV no longer requires this leased asset as they have decided to discontinue the product line that it was used for.
At this date UV had made two out of the five lease payments.
Which of the following statements about the unavoidable lease payments is true in accordance with IAS 37 Provisions, Contingent Liabilities and Assets?

  1. A provision should be recognised for the unavoidable lease payments with a corresponding charge to profit or loss.
  2. A provision should be recognised for the unavoidable lease payments with a corresponding charge to other comprehensive income.
  3. The amount of the unavoidable lease payments should be disclosed in the financial statements with no corresponding accounting entry.
  4. The amount of the unavoidable lease payments should be ignored in the financial statements.

Answer(s): A



CORRECT TEXT
FG's statement of profit or loss account for year ended 31 December 20X1 is:



What is the operating profit margin for FG for the year ended 31 December 20X1? Give your answer to the nearest whole %.
? %

  1. 14

Answer(s): A



  PDF
Viewing page 21 of 55
Viewing questions 101 - 105 out of 268 questions


Post your Comments and Discuss CIMA F2 exam prep with other Community members:

AI Tutor AI Tutor 👋 I’m here to help!