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Financial-Accounting-and-Reporting Practice Questions

CPA Financial Accounting and Reporting Exam

Last Update 4 days ago
Total Questions : 100

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Question # 1

Which one of the following is an accurate definition of fair value of an asset?

Options:

A.  

The cost of replacing an asset with an identical item.

B.  

The price for which an asset could be sold net of disposal costs.

C.  

The amount yet to be written off over the remainder of the asset's useful life.

D.  

The price for which an asset could be sold in an orderly transaction between market participants at the measurement date.

Discussion 0
Question # 2

An element is recognised in the statement of financial position or statement of comprehensive income if

 

I.

the value of the item can be measured reliably.

II.

the value of the item can be measured accurately.

III.

it is certain that there will be future economic benefits associated with the item.

IV.

it is probable that there will be future economic benefits associated with the item.

Which of the above options are correct?

Options:

A.  

I and III only

B.  

I and IV only

C.  

II and III only

D.  

III and IV only

Discussion 0
Question # 3

Generally accepted accounting practice recognises revenue when

Options:

A.  

goods are produced.

B.  

customers order goods.

C.  

cash is received for the goods.

D.  

goods are dispatched to the customer.

Discussion 0
Question # 4

Which one of the following statements is correct about using judgement in the financial reporting process?

Options:

A.  

Accountants should not be allowed to use their own judgement.

B.  

A true and fair view cannot be assured if individual judgement is allowed.

C.  

Judgement can be allowed in the statement of comprehensive income but not in the statement of financial position.

D.  

Use of individual judgement is required to choose between alternative methods available within accounting standards.

Discussion 0
Question # 5

A decrease in assets is most likely to be recognised in the financial report as

Options:

A.  

a liability.

B.  

an expense.

C.  

revenue earned.

D.  

a change in equity.

Discussion 0
Question # 6

Which one of the following would be recognised in the statement of profit or loss and other comprehensive income?

Options:

A.  

inventory

B.  

employee wages

C.  

retained earnings

D.  

prepayment of expenses

Discussion 0
Question # 7

Which one of the following reports sets out how directors have run a company and if they implemented proper procedures to deal with matters like accountability, audits, directors' roles and responsibilities, internal controls and relations with shareholders?

Options:

A.  

director's report

B.  

chairman's statement

C.  

corporate governance statement

D.  

corporate social responsibility report

Discussion 0
Question # 8

Which one of the following describes the key advantage of the manual system of accounting?

Options:

A.  

The quality of output is not necessarily an issue.

B.  

A thorough understanding of the business can be gained through it.

C.  

Corrections are easily managed as updating or recreating the whole document is not difficult.

D.  

Processing is maintained at a reasonable speed even while dealing with large volumes of data.

Discussion 0
Question # 9

The accounting policies used by companies must result in financial reports that are

Options:

A.  

easy to read.

B.  

independently audited.

C.  

signed by the CEO or equivalent.

D.  

comparable with previous years' reports.

Discussion 0
Question # 10

Which one of the following financial statements helps provide information about factors that might affect an entity's liquidity or solvency?

Options:

A.  

statement of cash flows

B.  

statement of changes in equity

C.  

notes to the financial statements

D.  

statement of profit or loss and other comprehensive income

Discussion 0
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