35 Basic Accounting Test Questions

35 Basic Accounting Test Questions

(Choices A) The inventory turnover ratio measures the number of times inventory is sold and replaced within a period and is calculated as COGS / Average inventory. The debt service fund is a governmental fund type used to account for resources designated for interest and principal expenditures on the entity’s debt obligations. Subsequently, when the cash is used, the expenditure is recognized in the fund that makes the payment. In this scenario, the partnership has elected to amortize (not capitalize) the organizational costs.

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  • Even though a corporation’s penalty for underpay-ing federal estimated taxes is in the nature of interest, it is treated as an addition to tax, and as such, the penalty is not deductible.

(Choice A) Day-of-sale recognition incorrectly implies no risk of return. The city should report $0 as expenditure under the general fund since the payment for the expenditures was made from the debt service fund. Interest of $5,000 and principal of $20,000 should both be reported in the debt service fund for a total of $25,000. An amount of $0 should be reported under permanent fund (like an endowment) since there is no restriction on the principal.

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In the future, the house may be renovated and the lumber salvaged as reclaimed wood, which would convert it back to personal property. (Choices A and B) Air rights and mineral rights cannot be separated from the use of the land phone etiquette and are therefore real property. For instance, mineral rights are different than the minerals themselves. A mineral rights owner has title to the minerals plus the right to enter (use) the land and extract the minerals.

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  • A variety of activity ratios can be used to evaluate the performance of a company.
  • Control risk (CR) is the risk that internal control will fail to prevent a material misstatement.
  • The debt service fund is a governmental fund type used to account for resources designated for interest and principal expenditures on the entity’s debt obligations.
  • GAAP requires that revenue be recognized at the conclusion of a five-step recognition process.
  • This month, the AICPA has released an additional 140 free CPA Exam questions to all candidates.

This month, the AICPA has released an additional 140 free CPA Exam questions to all candidates. These questions are recently used questions on actual past CPA exam tests. These questions could be very helpful for understanding what types of questions have been tested to candidates in the very recent past.

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The AICPA sample tests only include answer explanations for the task-based simulations or TBSs. Therefore, as you answer the TBS questions, you can see the correct answers. Each answer explanation links to a specific AICPA Blueprint, which outlines the exam topics. So, for example, the CPA audit exam questions and answers for the sample AUD TBSs will include a brief explanation and a note about which AUD blueprint topic the simulation tests.

I also love the detailed explanation after each question as they are descriptive and clear. It has been extremely beneficial to me understanding the concepts presented in the lectures and how to apply them to specific situations. I also love the ease of creating and navigating through all of the tests that I have created. The AICPA builds the CPA Exam using Blueprints and publishes the Blueprints for candidates and review providers to see. The Blueprints communicate what will be on the exam, how the content coverage will be distributed, and at what level each concept will be tested.

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However, $350,000 of this cost was contributed by the employees, and is therefore not an expense for Wall Corp. Only the amount contributed by Wall is an expense for the company (Choice D). (Choice B) Inherent risk is the RMM due to factors other than internal control (eg, complexity of transactions). It does not affect, and is not affected by, the assessed level of CR. (Choice A) An auditor evaluates the effectiveness of an entity’s internal control to assess CR, not the other way around.

(Choice B) A neural network is a type of machine learning that uses algorithms modeled after the human brain and nervous system to recognize patterns. One common use is to suggest potential future purchases based on a user’s previous buying experiences. CPAs also use these criteria to determine whether management’s system description is fairly stated. However, the fair use exception is one of the limitations on a copyright owner’s exclusive rights. The fair use exception allows copyrighted material to be used without permission for purposes that are fair under the facts and circumstances.

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