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CIMAPRA17-BA3-1 Exam - Topic 3 Question 120 Discussion

What will be the effect on the draft financial statements if the closing inventory figure is increased?
C) A decrease in cost of sales, an increase in gross profit and an increase in closing inventory in the balance sheet
A) An increase in cost of sales and an increase in the inventory figure in the balance sheet
B) A decrease in cost of sales, a decrease in gross profit and an increase in the inventory figure in the balance sheet
D) An increase in cost of sales, a decrease in gross profit and an increase in closing inventory in the balance sheet

CIMAPRA17-BA3-1 Exam - Topic 3 Question 120 Discussion

Actual exam question for CIMA's CIMAPRA17-BA3-1 exam
Question #: 120
Topic #: 3
[All CIMAPRA17-BA3-1 Questions]

What will be the effect on the draft financial statements if the closing inventory figure is increased?

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Suggested Answer: C

by Delisa at Jan 05, 2026, 05:16 AM

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Roy
2 months ago
No way, it’s D. Higher inventory leads to higher costs and lower profit.
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Paulene
2 months ago
Option C could be right. Increased inventory boosts gross profit.
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Whitney
2 months ago
I agree, B makes sense. Gross profit will drop too.
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Jani
2 months ago
I think it’s option B. Higher inventory means lower cost of sales.
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Fausto
2 months ago
Not sure about that, seems too simple to me.
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Galen
3 months ago
I think it’s option C, right? More inventory, more profit!
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Dorcas
3 months ago
Wait, how does that decrease gross profit? Sounds off.
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William
3 months ago
Totally agree, it affects gross profit too!
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Barabara
3 months ago
Closing inventory up means cost of sales goes down.
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Kanisha
3 months ago
Haha, this question is like a game of financial Tetris! Increase the inventory, decrease the cost of sales, and watch the profits soar. Option C is the way to go, folks.
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Mayra
3 months ago
Wait, wait, wait... if I increase my inventory, doesn't that mean I have more stuff to sell? Shouldn't that increase my cost of sales? This is making my head spin.
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Janine
4 months ago
Aha, I see what's going on here! Increasing the closing inventory means you have more stuff on hand, so your cost of sales goes down and your gross profit goes up. Option C is the way to go.
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Flo
4 months ago
Hmm, I'm not sure about this one. Wouldn't increasing the inventory figure also increase the cost of sales? I'm leaning towards option D.
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Carissa
4 months ago
Option C is the correct answer. Increasing the closing inventory figure will decrease the cost of sales and increase the gross profit.
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Oliva
5 months ago
I'm really uncertain about this one; I thought increasing inventory would always mean higher costs, but maybe it’s the opposite?
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Ruth
5 months ago
If I recall correctly, higher closing inventory should increase gross profit, so I might lean towards option C.
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Lang
5 months ago
I remember a practice question where increasing inventory led to a higher balance sheet figure, but I can't recall the exact impact on gross profit.
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Theodora
5 months ago
I think increasing closing inventory would actually decrease cost of sales, but I'm not sure how that affects gross profit.
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Pansy
5 months ago
I think the key here is understanding how an increase in closing inventory flows through the financial statements. If inventory goes up, cost of sales must go down, which means gross profit will increase. The balance sheet will also show a higher inventory figure. I'm leaning towards C as the best answer.
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Markus
5 months ago
Ugh, I'm struggling with this one. I know inventory is related to cost of sales, but I'm getting mixed up on the exact effects. I'll have to review my notes and try some practice questions to solidify this concept.
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Romana
6 months ago
Okay, let's see. If closing inventory increases, that means cost of sales must decrease, since less was used in production. So that would lead to an increase in gross profit. The inventory figure on the balance sheet would also go up. I'm pretty confident C is the right answer.
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Alesia
6 months ago
I'm a bit unsure about this one. I know an increase in closing inventory affects the balance sheet, but I'm not sure how it impacts the income statement. I'll need to think this through carefully.
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Veta
6 months ago
Hmm, this seems straightforward. I think the answer is C - a decrease in cost of sales, an increase in gross profit, and an increase in closing inventory.
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Krystal
I think A is the right choice. Increased cost of sales is crucial here.
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Vincent
2 months ago
I see your point, but I lean towards B. It makes more sense to decrease gross profit.
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