CIMAPRA19-F02-1 Exam - Topic 1 Question 36 Discussion

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

Question #: 36
Topic #: 1

AB and CDare separate entities that preparefinancial statements to 31 Mayusing international accounting standards. AB and CDprovidetechnical supportservices to the financial services industry and operate in the same country. The financial statements are identical except for the following:

* ABpurchased alloperatingequipment, paying $100,000,using a 5 year bank loan. The useful life of the equipmentwas 5 years.

* CDsigned an operating lease agreement for alloperatingequipment for 5 years paying $20,000peryear.

Bothentities charge all expenses relating tothe equipment to cost of sales.

From the information provided, whichof the following ratios wouldbereliablycomparable for AB and CD?

AGross profit margin

BReturn on capital employed

CNon current asset turnover

DProfit before tax margin

Show Suggested Answer

Suggested Answer: A

by Elly at May 04, 2022, 06:54 PM

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Davida

4 months ago

Not sure about that, the lease vs. purchase impacts their financials a lot!

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Lavonne

4 months ago

Profit before tax margin should be fine, right? Both are in the same industry.

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Kerry

4 months ago

Wait, how can non-current asset turnover be reliable? They use different methods!

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Jerilyn

4 months ago

I think return on capital employed won't be comparable due to different asset bases.

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Alfreda

5 months ago

Gross profit margin is comparable since both charge expenses to cost of sales.

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Lucia

5 months ago

This looks like a tricky one. I'll need to carefully consider the different API tiers and how to best enforce the security protocols and return formats.

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Orville

5 months ago

I think the key here is to look for the document that would specify the testing requirements for the vendor. The procurement management plan or the statement of work seem like the most likely options.

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Georgiann

5 months ago

Okay, let me think this through step-by-step. We're looking for a term that describes small units of text stored on the client to maintain state. That sounds like it could be cookies, but I want to double-check the other options just to be sure.

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