Free Practice CIMA CIMAPRO19-F02-1-ENG Exam Questions 2026

Stay ahead with 100% Free F2 Advanced Financial Reporting CIMAPRO19-F02-1-ENG Dumps Practice Questions

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Total 270 Questions | Updated On: May 23, 2026

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Question 1

An entity undertakes an issue of new debt which has the effect of reducing the entity's weighted average cost of capital (WACC).

Which of the following would best explain why the WACC will have fallen?

A : The entity was 100% equity financed prior to the issue of the debt.

B : The risk to the shareholders has reduced leading to a fall in the cost of equity.

C : The new debt is being used to replace existing debt that had a lower cost.

D : The new debt is being used to replace existing debt that had the same cost.

Answer: A

Question 2

Which of the following are limitations of financial statement figures for ratio analysis? Select the ALL that apply.

A : Only provides historic data

B : Only provides financial information

C : Limited information to identify trends over time

D : Provide only summarised information

E : Contains complicated information that needs to be summarised

F : Only provides forecast data

Answer: A,B,C,D

Question 3

WX acquired60% of theequitysharesof CD on 1 January 20X3. WX sold5% of the equityshares it heldfor $60,000on 31 December 20X5. At that datethe net assetsof CD were $120,000and thefair value of the non-controlling interestin CDwas measured at$21,000.No goodwill arose on the original acquisition of CD.

When preparing its consoldiated financial statements, WX will process which of the following adjustments to its group retained earnings?

A : A debit of $39,000

B : A credit of $54,000

C : A credit of $39,000

D : A debit of $54,000

Answer: B

Question 4

GG's gearing is currently 50% compared to the industry average of 40% (both measured as debt/equity). GG's debt is all in the form of a single bank loan that is repayable in five years' time. The directors of GG are seeking to raise finance for a new project and they are considering an additional bank loan from the same bank.

Which of the following would prevent the bank from lending the finance for the project in the form of a new bank loan?

A : A covenant on the existing bank loan that restricts the level of dividend that can be paid.

B : A projected decrease in interest cover that would breach a covenant on the existing loan.

C : The revaluation of GG's property that shows an increase in its value since the existing bank loan was taken out.

D : A projected lack of profits to be able to claim tax relief on the additional interest arising from the new loan.

Answer: B

Question 5

RST sells computer equipment and prepares its financial statements to 31 December.

On 30 September 20X5 RST soldcomputer software along with a two year maintenance package to a customer. The customer is given the right to return the goods within six months and claim a full refund if they are not satisfied with the computer software. The risk of return is considered to be insignificant for RST.

How should the revenue from this transaction and the right of return be recognised in thefinancial statements for the year ended 31 December 20X5?

A : Recognise 100% of the revenue from both the sale of goods and the maintenance contract and create aprovision for the anticipated level of returns.

B : Do not recognise any revenue from the sale of goods or the maintenance contract and do not create aprovision for the anticipated level of returns.

C : Recognise 12.5% of the revenue from both the sale of goods and the maintenance contract and do not create aprovision for the anticipated level of returns.

D : Recognise 100% of the revenue from the sale of goods,12.5% of the revenue from the maintenance contract and create aprovision for the anticipated level of returns.

Answer: D

Page: 1 / 54

Total 270 Questions | Updated On: May 23, 2026

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