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

1. According to the FASB conceptual framework, which of the following statements conforms to the realization concept?

A) Product unit costs were assigned to cost of goods sold when the units were sold.
B) Depreciated equipment was sold in exchange for a note receivable.
C) Equipment depreciation was assigned to a production department and then to product unit costs.
D) Cash was collected on accounts receivable.

2. The summary of significant accounting policies should disclose the:

A) Terms for convertible debt to be exchanged for common stock.
B) Maturity dates of noncurrent debts.
C) Concentration of credit risk of all financial instruments by geographical region.
D) Criteria for determining which investments are treated as cash equivalents.

3. Which of the following should be disclosed in a summary of significant accounting policies?
I. Management's intention to maintain or vary the dividend payout ratio.
II. Criteria for determining which investments are treated as cash equivalents.
III. Composition of the sales order backlog by segment.

A) I only.
B) I and III.
C) II and III.
D) II only.

4. YIV, Inc. is a multidivisional corporation, which has both intersegment sales and sales to unaffiliated customers. YIV should report segment financial information for each division meeting which of the following criteria?

A) Segment operating profit or loss is 10% or more of consolidated profit or loss.
B) Segment revenue is 10% or more of combined revenue of all the company segments.
C) Segment revenue is 10% or more of consolidated revenue.
D) Segment operating profit or loss is 10% or more of combined operating profit or loss of all company segments.

5. What is the underlying concept that supports the immediate recognition of a contingent loss?

A) Consistency.
B) Substance over form.
C) Conservatism.
D) Matching.

Solutions: