CIMA Exam CIMAPRA17-BA3-1 Topic 1 Question 96 Discussion

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

Question #: 96
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 Sena at Sep 09, 2024, 02:27 AM

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Rasheeda

6 months ago

Wait, is the Finance Director of EFG company related to the CEO of FGE company? That would explain a lot about these statements...

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Sunny

6 months ago

E is false. The loss on disposal of PPE is recorded in the income statement, not a liability account. Gotta watch out for those tricky questions!

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Jamie

6 months ago

D is true too. The cost of repainting the office should be recorded as a repairs expense, not credited to the PPE account.

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Ilda

5 months ago

D) The cost of repainting the office is credited to the repairs expense account.

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Luisa

5 months ago

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

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Ozell

5 months ago

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

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6 months ago

A, C, and F are definitely true. The depreciation charge and loss on disposal both reduce profit, and the depreciation charge also reduces the carrying value of the PPE.

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