CIMA Exam CIMAPRA17-BA3-1 Topic 3 Question 102 Discussion

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

Question #: 102
Topic #: 3

In the year ended 31 December 20X1, XYZ receives an email confirming that a major customer has gone into liquidation and will be unable to pay its suppliers.

Which of the following is the impact of adjusting for this event?

AProfits increase and allowance increases.

BReceivables decrease and allowance increases

CReceivables unchanged and profits decrease

DReceivables decrease and profits decrease

Show Suggested Answer

Suggested Answer: D

by Kasandra at Oct 23, 2024, 05:10 AM

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Rosamond

11 days ago

Haha, A is just ridiculous. Profits increase? Really? That's the last thing that's gonna happen when a big customer goes under. D is the only logical choice here.

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Barney

13 days ago

I agree with you, Christene. If a major customer goes into liquidation, it would make sense for profits to decrease.

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Christene

14 days ago

I think the impact of adjusting for this event is that profits decrease.

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Zena

14 days ago

I'm going with B. Receivables decrease and allowance increases. You gotta make sure you account for the uncollectible debt, you know?

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Caprice

2 days ago

Yeah, B makes sense. It's important to account for the fact that the customer can't pay.

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Yasuko

6 days ago

I agree, B seems like the right choice. We need to adjust for the uncollectible debt.

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Gerald

20 days ago

Definitely D. Receivables decrease and profits decrease. That's the impact of a major customer going into liquidation. Can't believe they even included A and C as options!

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