Free CIMA CIMAPRA19-P03-1-ENG Exam Questions

Question 1

Company W produces mobile phone components and has recently tendered for a substantial contract. The results of the tendering process will not become available until three months from now. If the company is successful it will require 2,000 units of a commodity which is currently traded in an open commodity market for $740 per unit. However, there has been speculation that this commodity could increase substantially in price over the next three months and so the company is considering purchasing the commodity now and storing it for three months.
The funds to buy the commodity would be borrowed at an annual interest rate of 7% and the storage cost of the product would be $5.40 per unit per month. The storage costs would be paid at the end of the three month storage period.
Which of the following represents the gain or loss (to the nearest thousand dollars) that will accrue to Company W assuming that the price of the commodity rises to $800 in three months' time?

A : $62,000 gain

B : $95,000 gain

C : $88,000 gain

D : $16,000 loss

Answer: A

Question 2

SDF is a quoted company. Which of the following matters should normally be dealt with by SDF's audit committee?

A : external auditor has requested a higher fee than normal for the forthcoming financial year because new legislation will require additional audit work.

B : Head of Internal Audit is concerned that a recent internal audit investigation may have revealed serious compliance failures.

C : external auditor is concerned that an accounting policy selected by the Finance Director does not comply with the spirit of the relevant accounting standard.

D : external auditor has identified a material error, due to a clear miscalculation, in the draft financial statements.

E : Finance Director will be retiring within the next year and a replacement will have to be found.

Answer: A,B,C

Question 3

You are theManagementAccountant for a company which supplies baked food to a string of retail outlets; biscuits, cakes, savoury snacks etc.
You discover that a trainee employee, who is responsible for cleaning out the delivery vans has been taking damaged goods and packets which have reached their sales expiry date and has been selling them to friends. These products would otherwise have been discarded as waste.
The trainee in question is the nephew of one of the senior managers.
What is the correct course of action?

A : ve a quiet word with the trainee and ask him to stop.

B : ve a quiet word with the senior manager, the trainee's relative and askthem to deal with it.

C : cument the facts and escalate to the trainee's manager.

D : nothing, the product was designated as waste anyway.

Answer: C

Question 4

MNBis a multinational IT company with headquarters in Asia and with operations in all continents.
MNBisattempting toexpand its operations in Europe. This is seen as a major challenge as the European market is very well developedand highly competitive.
MNBdevelopsandmanufacturesits own products. Parts and assemblies aresourced across Asia, America and Europe. These are sometimes purchased locally as a condition of a contract, but MNB aims to include as much of its own equipmentas possible. Transfer pricesbetween MNB's subsidiariescan be set in YEN, USD, EURO, GBP. Transfer prices are revised every month in line with production times as most goods are made on short order with sales cycles running at 3-4 months.
What types of risk are being presented here?

A : litical risk

B : rrency risk

C : onomic risk

D : vironmental risk

E : aud risk

F : gal risk

Answer: A,B,C

Question 5

DFR is an online retailer that sells picture frames The software running on DFR's website enables customers to log in and make purchases by inputting an email address as a user name and a password that must contain at least eight characters, including upper and lower case letters, numbers and punctuation marks (e.g. , $ or!) Once logged in, customers can check previous orders that they have placed.
Customers can also use DFR's website to change personal details, including credit card numbers and delivery addresses Whenever they wish to use those facilities, the software sends a text message containing a six-digit number to their mobile phones They must input that number before the system will accept changes to their personal details
Which TWO of the following statements are correct?

A : It is illogical to have different security measures in place for orders and for access to personal details.

B : software treats customers' personal details as being more sensitive than their ordering histories

C : arrangement with the text message will have no effect on the security associated with changing personal details

D : tomers should be able to update the mobile phone numbers in their DFR accounts using only their email addresses and passwords for access

E : software should never show the whole of a customer's credit card number on screen, even if the customer has logged in and input the six-digit number.

Answer: A,C