CIMA Exam CIMAPRA19-F02-1 Topic 1 Question 109 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam

Question #: 109
Topic #: 1

PQ and WX are similar sized entities andoperate in thesame industry within Country X . Both operate from a single warehouseand have similar levels of non current asset resources.

The following ratioshave been calculated at 31 October 20X8:

If considered individually, which of the following would limit the usefulness of these ratios in assessing the comparative financial performances of PQ and WX?

ADepreciation of warehouses being charged to cost of sales by PQ and distribution costs by WX.

BOperating lease rentals for plant and equipment being charged to administration expenses by PQ and distribution costs by WX.

CYear end review of equipment resulting in WX charging an impairment loss while PQ's equipment is not impaired.

DIncreased prices for raw materials, which was passed on to customers by both entities.

Show Suggested Answer

Suggested Answer: A

by Jeannine at Mar 24, 2025, 03:40 AM

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Dana

1 days ago

The different accounting treatments for depreciation and leases between PQ and WX would definitely limit the usefulness of these ratios. It's like comparing apples and oranges.

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