Admission Test Certified Public Accountant (Financial Accounting & Reporting) Sample Questions:

1. What information should a public company present about revenues from its reporting segments?

A) No disclosure of revenues from foreign operations need be reported.
B) Disclose separately the amount of sales to unaffiliated customers but not the amount of intracompany sales between geographic areas.
C) Disclose as a combined amount sales to unaffiliated customers and intracompany sales between geographic areas.
D) Disclose separately the amount of sales to unaffiliated customers and the amount of intracompany sales.

2. On January 2, 1993, Quo, Inc. hired Reed to be its controller. During the year, Reed, working closely with Quo's president and outside accountants, made changes in accounting policies, corrected several errors dating from 1992 and before, and instituted new accounting policies.
Quo's 1993 financial statements will be presented in comparative form with its 1992 financial statements.
This question represents one of Quo's transactions. List A represents possible clarifications of these transactions as: a change in accounting principle, a change in accounting estimate, a correction of an error in previously presented financial statements, or neither an accounting change nor an accounting error.
Item to Be Answered
As a result of a production breakthrough, Quo determined that manufacturing equipment previously depreciated over 15 years should be depreciated over 20 years.
List A (Select one)

A) Change in accounting principal.
B) Change in accounting estimate.
C) Neither an accounting change nor an accounting error.
D) Correction of an error in previously presented financial statements.

3. In Yew Co.'s 1992 annual report, Yew described its social awareness expenditures during the year as follows:
"The Company contributed $250,000 in cash to youth and educational programs. The Company also gave $140,000 to health and human-service organizations, of which $80,000 was contributed by employees through payroll deductions. In addition, consistent with the Company's commitment to the environment, the Company spent $100,000 to redesign product packaging."
What amount of the above should be included in Yew's income statement as charitable contributions expense?

A) $490,000
B) $410,000
C) $390,000
D) $310,000

4. Which of the following statements best describes an operating procedure for issuing a new Financial Accounting Standards Board (FASB) statement?

A) The emerging issues task force must approve a discussion memorandum before it is disseminated to the public.
B) A new statement is issued only after a majority vote by the members of the FASB.
C) The exposure draft is modified per public opinion before issuing the discussion memorandum.
D) A new FASB statement can be rescinded by a majority vote of the AICPA membership.

5. The following question is based on the following:
Vane Co.'s trial balance of income statement accounts for the year ended December 31, 2002, included the following:

Vane's income tax rate is 30%.
In Vane's 2002 multiple-step income statement, what amount should Vane report as income from continuing operations?

A) $140,000
B) $147,000
C) $126,000
D) $129,500

Solutions: