CPA Certified Public Accountant

According to the FASB Conceptual Framework, which of the following is the primary objective of general-purpose financial reporting?

• ATo provide information useful to existing and potential investors, lenders, and other cre…
• BTo determine the taxable income of the reporting entity
• CTo provide information exclusively to management for internal decision-making
• DTo calculate the liquidation value of the entity

Under the FASB Conceptual Framework, relevance and faithful representation are the two fundamental qualitative characteristics of useful financial information. Which of the following is an enhancing qualitative characteristic?

• AMateriality
• BComparability
• CFaithful representation
• DRelevance

The FASB Conceptual Framework defines an asset as which of the following?

• AA present right of an entity to an economic benefit
• BA probable future economic benefit obtained or controlled by an entity as a result of pas…
• CAny resource owned by an entity with a determinable fair value
• DCash or items readily convertible to cash within one year

Which level of the GAAP hierarchy represents the most authoritative source of accounting guidance under FASB ASC Topic 105?

• AFASB Accounting Standards Codification (ASC)
• BAICPA Audit and Accounting Guides
• CFASB Concepts Statements
• DIndustry practice widely recognized as generally accepted

Under the FASB Conceptual Framework, faithful representation requires financial information to possess which three characteristics?

• ACompleteness, neutrality, and freedom from error
• BRelevance, verifiability, and timeliness
• CPredictive value, confirmatory value, and materiality
• DComparability, consistency, and understandability

A company discovers that its financial statements contain an error that is quantitatively small but could influence a user's decision because of its nature. Under the FASB Conceptual Framework, which concept best applies?

• AConservatism
• BMateriality
• CPrudence
• DCost constraint

According to the FASB Conceptual Framework, revenue is best defined as:

• AInflows of assets or settlements of liabilities from delivering goods or rendering servic…
• BAny increase in net assets during a period
• CCash receipts from customers during the period
• DThe total amount billed to customers regardless of collection

The going concern assumption in accounting means that:

• AThe entity will continue to operate for the foreseeable future, at least 12 months beyond…
• BThe entity has no debts that are currently in default
• CThe entity's auditor has issued an unqualified opinion
• DThe entity has positive net income for the current period

On a multi-step income statement, gross profit is calculated as:

• ANet sales minus cost of goods sold
• BNet sales minus all operating expenses
• CNet income plus income tax expense
• DTotal revenues minus total expenses

Which of the following items is reported in other comprehensive income (OCI) rather than net income?

• AGain on sale of equipment
• BUnrealized holding gain on available-for-sale debt securities
• CRealized gain on sale of trading securities
• DImpairment loss on goodwill

Under the indirect method of preparing the statement of cash flows, depreciation expense is:

• AAdded back to net income in the operating activities section
• BSubtracted from net income in the operating activities section
• CReported as a cash outflow in the investing activities section
• DExcluded from the statement of cash flows entirely

A company issues bonds payable for cash. On the statement of cash flows, this transaction is classified as:

• AOperating activity
• BInvesting activity
• CFinancing activity
• DNoncash investing and financing activity

Baker Corp. had net income of $200,000, 50,000 weighted-average common shares outstanding, and 10,000 dilutive stock options (using the treasury stock method, the incremental shares are 3,000). What is Baker's diluted EPS?

• A$4.00
• B$3.77
• C$3.33
• D$3.64

Under ASC 280, a reportable operating segment must meet at least one of several quantitative thresholds. Which of the following is one of those thresholds?

• AThe segment's revenue is 10% or more of the combined revenue of all operating segments
• BThe segment's assets are 5% or more of total consolidated assets
• CThe segment has at least 100 employees
• DThe segment has been operating for at least two years

Under ASC 270, which of the following is true regarding interim financial reporting?

• AEach interim period is viewed as a discrete reporting period, independent of the annual p…
• BEach interim period should be viewed as an integral part of the annual period
• CInterim reports are required to follow the same disclosure requirements as annual reports
• DLIFO liquidation gains in an interim period should always be deferred to year-end