CIMA Certificate in Business Accounting Practice Questions — All Questions

If demand for a product rises while supply is unchanged, the price tends to:

• a.Fall
• b.Rise✓
• c.Stay the same
• d.Become zero

Excess demand relative to supply pushes prices up.

A market where many firms sell identical products with free entry is:

• a.Perfect competition✓
• b.Monopoly
• c.Oligopoly
• d.Monopsony

Perfect competition features many firms, homogeneous products, and free entry.

A monopoly is characterized by:

• a.Many small firms
• b.Perfectly elastic demand
• c.A single dominant seller✓
• d.Identical products from many sellers

A monopoly has one dominant supplier of a product.

Price elasticity of demand measures how quantity demanded responds to a change in:

• a.Income only
• b.Supply
• c.Advertising
• d.Price✓

Price elasticity relates the change in quantity demanded to a change in price.

A cost that varies in direct proportion to output is a:

• a.Fixed cost
• b.Variable cost✓
• c.Sunk cost
• d.Step cost that never changes

Variable costs change proportionally with the level of activity.

Contribution per unit equals selling price per unit minus:

• a.Variable cost per unit✓
• b.Fixed cost per unit
• c.Total cost
• d.Tax per unit

Unit contribution = selling price - variable cost per unit.

A budget is best described as:

• a.A record of past results
• b.An audit report
• c.A quantitative plan for a future period✓
• d.A tax return

A budget is a financial/quantitative plan for the future.

Break-even output in units is fixed costs divided by:

• a.Selling price
• b.Variable cost
• c.Total cost
• d.Contribution per unit✓

Break-even units = fixed costs / contribution per unit.

In double-entry bookkeeping, an increase in an asset is recorded as a:

• a.Credit
• b.Debit✓
• c.Neither
• d.Both equally

Asset increases are recorded as debits.

The statement showing assets, liabilities, and equity at a point in time is the:

• a.Statement of financial position (balance sheet)✓
• b.Income statement
• c.Cash flow statement
• d.Trial balance

The statement of financial position (balance sheet) shows position at a date.

Profit for a period is broadly:

• a.Cash received
• b.Assets minus liabilities
• c.Income less expenses✓
• d.Sales only

Profit equals income less expenses for the period.

A liability is:

• a.Something the business owns
• b.Owner's investment
• c.Revenue earned
• d.A present obligation to transfer economic benefit✓

A liability is a present obligation arising from past events.

Which is one of CIMA's fundamental ethical principles?

• a.Maximizing fees
• b.Integrity✓
• c.Aggressive selling
• d.Secrecy from regulators

Integrity is a fundamental principle, alongside objectivity, competence, confidentiality, and professional behavior.

Objectivity as an ethical principle requires members to:

• a.Not let bias or conflicts of interest override professional judgment✓
• b.Always agree with the client
• c.Maximize personal gain
• d.Avoid all clients

Objectivity means not compromising judgment due to bias or conflict.

Corporate governance is primarily concerned with:

• a.Marketing strategy
• b.Product design
• c.How an organization is directed and controlled✓
• d.Payroll processing

Governance is the system by which organizations are directed and controlled.

Confidentiality requires that a member:

• a.Share client data freely
• b.Sell client information
• c.Disclose to competitors
• d.Not disclose client information without proper authority✓

Confidentiality restricts disclosure of client information without authority or legal duty.

20% of 250 is:

• a.25
• b.50✓
• c.20
• d.75

0.20 x 250 = 50.

Simple interest on 1,000 at 5% per year for 2 years is:

• a.100✓
• b.50
• c.150
• d.200

Simple interest = 1,000 x 0.05 x 2 = 100.

If a ratio of A to B is 3:2 and total is 200, then A equals:

• a.80
• b.100
• c.120✓
• d.150

A = 200 x 3/5 = 120.