CIMA Exam CIMAPRA19-F01-1 Topic 5 Question 44 Discussion

Actual exam question for CIMA's CIMAPRA19-F01-1 exam

Question #: 44
Topic #: 5

XYZ operates in Country A where tax rules state that entertaining costs and donations to political parties are disallowable for tax purposes.

XYZ calculated both its accounting and taxable profits for the year ended 31 December 20X2 after deducting $10,000 of entertaining costs.

It is considering what impact the ruling that "entertaining costs are disallowable for tax purposes" will have on its two profit figures.

Which of the following correctly states the impact of the ruling on the profits already calculated?

AAccounting profit will not be affected but taxable profit will increase by $10,000.

BBoth accounting and taxable profits will increase by $10,000.

CAccounting profit will decrease by $10,000 and taxable profit will increase by $10,000.

DBoth accounting and taxable profits will decrease by $10,000.

Show Suggested Answer

Suggested Answer: A

by Arlette at May 08, 2022, 09:29 AM

Limited Time Offer

25%

Off

Contribute your Thoughts:

Submit Cancel

Currently there are no comments in this discussion, be the first to comment!