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CIMA P1 - Management Accounting
What is CIMA?
The Chartered Institute of Management Accountants (CIMA) is a
UK professional accountancy body whose focus is on the training
and qualifying of accountants in business. It represents financial
managers and accountants who work in industry, commerce, notfor-profit and public sector organizations.
CIMA P1 - Management Accounting
It combines accounting, finance and management with the leading edge
techniques needed to drive successful businesses. Management accountants
operate in financial and non-financial roles throughout organizations and carry out
all their training and experience requirements within business itself, providing
them with a unique insight into how their organizations operate.
Here are some questions that you will get same in your
Question No 1:
A purchasing manager is deciding how many units of a product to purchase
for the winter season. The demand for the product is uncertain. The
purchasing manager has prepared a regret matrix showing the regret
based on the contribution that each of the possible outcomes would earn.
Quantity purchased (units)
$180,000 $120,000 $22,000
If the manager applies the minimax regret criterion to make decisions, which quantity would be purchased?
A 10,000 units
B 15,000 units
C 20,000 units
D 25,000 units
The maximum regret if 10,000 units are purchased is
The maximum regret if 15,000 units are purchased is
The maximum regret if 20,000 units are purchased is
The maximum regret if 25,000 units are purchased is
Therefore if the manager wants to minimise the
maximum regret 20,000 units will be purchased.
The correct answer is C.
Question No 2:
A company is considering an investment project for which the possible
cash inflows and their respective probabilities are given in the table below:
The cash flows for Year 1 and Year 2 are independent. The initial cash outflow for the project is $300,000. The
company’s cost of capital is 10% per annum. Ignore tax and inflation.
Expected cash inflow in Year 1 = ($200k x 0.2) +
($300k x 0.7) + ($360k x 0.1) = $286k
Expected cash inflow in Year 2 = ($100 x 0.6) + ($320 x
0.4) = $188k
Expected net present value Year
Net present value
Cash flow Discount
Question No 3:
A certificate of deposit is best described as:
A. A debt instrument which offers a fixed rate of interest over a fixed period
of time and with a fixed redemption value.
B. A negotiable instrument which provides evidence of a fixed term deposit
with a bank.
C. A document which sets out a commitment to deposit a sum of money at
a specified point in time.
D. A certificate which shows ownership of part of the share capital of a
Question No 4:
A company is considering offering its customers an early settlement
discount. The company currently receives payments from customers on
average 65 days after the invoice date. The company is considering
offering a 2% early settlement discount for payment within 30 days of the
The effective annual interest rate of the early settlement discount using
compound interest methodology and assuming a 365 day year is: