CIMA Exam CIMAPRA17-BA3-1 Topic 1 Question 104 Discussion

Actual exam question for CIMA's CIMAPRA17-BA3-1 exam

Question #: 104
Topic #: 1

The Finance Director of EFG company has made the following statements regarding the recording of expenditure relating to the entity's property, plant and equipment (PPE) in the nominal ledger.

Which THREE of the following statements are true?

AThe annual depreciation charge reduces EFG's profit for the year.

BThe cost of insurance for the factory is debited to the PPE asset account.

CThe loss on the disposal of PPE reduces EFG's profit for the year

DThe cost of repainting the office is credited to the repairs expense account

EThe loss on the disposal of PPE is recorded in a liability account

FThe annual depreciation charge reduces the carrying value of PPE

Show Suggested Answer

Suggested Answer: A, C, F

by Kayleigh at Dec 10, 2024, 08:02 PM

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Tayna

2 months ago

Hmm, I'm not sure about D. Wouldn't the cost of repainting be capitalized rather than expensed? Better double-check the accounting standards on that one.

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Eve

2 months ago

Ha, I bet the exam writer was trying to trick us with that office painting one. Nice try, but I'm not falling for it!

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Caren

1 months ago

I agree, they were definitely trying to trick us with that office painting statement!

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Dalene

1 months ago

F) The annual depreciation charge reduces the carrying value of PPE

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Sophia

1 months ago

B) The cost of insurance for the factory is debited to the PPE asset account.

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Lynelle

2 months ago

A) The annual depreciation charge reduces EFG's profit for the year.

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Rikki

2 months ago

B is wrong, insurance should be an expense. And E is just silly, the loss would go to the income statement, not a liability. Easy peasy!

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Paz

2 months ago

F) The annual depreciation charge reduces the carrying value of PPE

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Galen

2 months ago

C) The loss on the disposal of PPE reduces EFG's profit for the year

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Evan

2 months ago

A) The annual depreciation charge reduces EFG's profit for the year.

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Edna

3 months ago

Definitely A, C, and F. Can't believe they're asking about office painting though - that's just maintenance, not PPE!

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Celia

2 months ago

I always get confused with these types of questions, but it's good practice to review the basics.

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Kerrie

2 months ago

Yeah, it's important to understand how different expenses are recorded in the nominal ledger.

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Georgene

2 months ago

Absolutely, proper accounting for PPE is crucial for financial reporting and decision-making.

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Xochitl

2 months ago

It's important to accurately record these transactions to reflect the true financial position of the company.

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Marguerita

2 months ago

Yeah, the office painting should be classified as a repair expense, not PPE.

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Fanny

2 months ago

I agree, A, C, and F are the correct statements. Office painting should be under repairs expense.

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Lavonne

3 months ago

I agree, A, C, and F are the correct statements.

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Kizzy

3 months ago

I believe statement B is false because insurance cost should be expensed, not capitalized.

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Blair

3 months ago

I agree with you, Charlena. Statement F is also true because depreciation does reduce the carrying value of PPE.

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Charlena

4 months ago

I think statement A is true because depreciation does reduce profit.

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