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CIMA Exam CIMAPRA19-F02-1 Topic 4 Question 101 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam
Question #: 101
Topic #: 4
[All CIMAPRA19-F02-1 Questions]

Which of the followingreduce the usefulnessof ratio analysis when comparing entities that operate in the same industry?

Select ALL that apply.

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Suggested Answer: A, B, D, E

by Chun at Sep 14, 2024, 02:04 AM

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Carolann
7 months ago
I'm starting to think the person who wrote this question has a vendetta against ratio analysis. Where's the love?
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Ressie
7 months ago
This question is giving me a headache. I'd rather be analyzing financial ratios than taking this exam.
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Jesus
6 months ago
E) Ratio calculations being based on historical information.
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Melvin
6 months ago
B) Accounting estimates in respect of depreciation being different between entities.
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Lorrine
6 months ago
A) The revenue figure being aggregated from many different activities and sources.
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Chaya
7 months ago
F? Really? Ratios being quick and easy to calculate is a disadvantage? What kind of question is this?
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Lenna
7 months ago
D and E are also important factors. Revaluing assets and using historical data can really skew the ratios.
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Tyisha
6 months ago
C) The effect of a material and unusual item being disclosed separately in the notes.
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Titus
6 months ago
B) Accounting estimates in respect of depreciation being different between entities.
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Benedict
7 months ago
A) The revenue figure being aggregated from many different activities and sources.
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Shantay
7 months ago
But what about option C? I think disclosing material and unusual items separately can also impact the comparison.
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Bettyann
8 months ago
A and B for sure. How can you compare entities when they have different accounting practices? That's just ridiculous.
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Catalina
7 months ago
A and B for sure. How can you compare entities when they have different accounting practices?
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Jackie
7 months ago
B) Accounting estimates in respect of depreciation being different between entities.
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Eloisa
7 months ago
A) The revenue figure being aggregated from many different activities and sources.
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Slyvia
8 months ago
I agree with Donte. Different accounting estimates and revaluing assets can definitely skew the ratios.
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Donte
8 months ago
I think options A, B, and D reduce the usefulness of ratio analysis.
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