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CIMAPRA17-BA3-1 Exam - Topic 3 Question 129 Discussion

In the year ended 31 December 20X1, XYZ receives an email confirming that a major customer has gone into liquidation and will be unable to pay its suppliers.Which of the following is the impact of adjusting for this event?
D) Receivables decrease and profits decrease
A) Profits increase and allowance increases.
B) Receivables decrease and allowance increases
C) Receivables unchanged and profits decrease

CIMAPRA17-BA3-1 Exam - Topic 3 Question 129 Discussion

Actual exam question for CIMA's CIMAPRA17-BA3-1 exam
Question #: 129
Topic #: 3
[All CIMAPRA17-BA3-1 Questions]

In the year ended 31 December 20X1, XYZ receives an email confirming that a major customer has gone into liquidation and will be unable to pay its suppliers.

Which of the following is the impact of adjusting for this event?

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Suggested Answer: D

by Anthony at Jul 01, 2026, 03:00 PM

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Marge
9 hours ago
Exactly, we need to account for the bad debt.
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Sol
6 days ago
True, but B captures the allowance increase well.
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Kristofer
11 days ago
But if we adjust, profits should reflect the loss.
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Tambra
16 days ago
D seems right too. Receivables and profits both drop.
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Marge
21 days ago
I agree, B makes sense. The customer can't pay.
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Sol
26 days ago
I think it's B. Receivables decrease and allowance increases.
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Jerry
1 month ago
Not sure about this, seems like profits should drop.
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Graciela
1 month ago
Totally agree with B, makes the most sense!
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Martina
1 month ago
Wait, how can profits increase in this situation?
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Viva
2 months ago
I think it's D) Receivables decrease and profits decrease.
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Corrina
2 months ago
Definitely B) Receivables decrease and allowance increases.
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Dallas
2 months ago
I thought that if a customer goes into liquidation, we have to decrease both receivables and profits, but I can't recall the exact details.
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Gaston
2 months ago
I remember that when we increase the allowance for doubtful accounts, it usually means profits decrease. So maybe it's option D?
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Shawnda
2 months ago
I'm a bit unsure, but I feel like if the customer can't pay, we definitely need to adjust the receivables down.
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Dannie
2 months ago
I think this is similar to a practice question we did on bad debts, where we had to adjust receivables based on customer defaults.
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