FLORIDA CERTIFIED PUBLIC ACCOUNTANT (CPA) EXAM – PRACTICE QUESTIONS AND CORRECT
ANSWERS (VERIFIED ANSWERS) PLUS RATIONALES 2026 Q&A | INSTANT DOWNLOAD PDF.
CORE DOMAINS
Auditing and Attestation (AUD)Financial Accounting and Reporting (FAR)Regulation (REG)Business Analysis
and Reporting (BAR)Information Systems and Controls (ISC)Tax Compliance and Planning (TCP)Professional
Ethics and Florida Statutes
INTRODUCTION
The Florida Certified Public Accountant (CPA) Examination practice assessment is designed to provide a
rigorous and comprehensive review for candidates seeking licensure. The purpose of this exam is to ensure
that candidates possess the technical proficiency, analytical skills, and ethical grounding required to protect the
public interest in a complex financial landscape. The assessment covers foundational theory, regulatory
compliance, and advanced accounting principles through a mix of multiple-choice and scenario-based
questions. Emphasis is placed on real-world application, critical thinking, and professional decision-making.
Candidates are evaluated on their ability to interpret financial data, apply tax laws, and adhere to professional
standards.
SECTION ONE: QUESTIONS 1–100
1. Under the AICPA Code of Professional Conduct, which of the following actions by a CPA would most likely
be considered a discreditable act?
A. Negligently making false journal entries in a client's records.
B. Disagreeing with a client over the application of an accounting principle.
C. Filing a joint tax return with a spouse who is not a CPA.
D. Charging a fee based on the complexity of the engagement.
🟢 Correct answer: A
,🔴 RATIONALE: Negligently making or permitting false and misleading entries in the financial statements or
records of an entity is explicitly listed as an act discreditable to the profession under AICPA standards.
2. A company changes its method of inventory valuation from LIFO to FIFO. How should this change be
reported in the financial statements?
A. As a change in accounting estimate, prospectively.
B. As a prior period error correction, adjusted to beginning retained earnings.
C. As a change in accounting principle, retrospectively applied to all periods presented.
D. As a change in reporting entity, through footnote disclosure only.
🟢 Correct answer: C
🔴 RATIONALE: A change from one acceptable accounting principle to another (LIFO to FIFO) requires
retrospective application to all prior periods presented, unless it is impracticable to do so.
3. Which of the following is a specific requirement under the Florida Accountancy Statutes (Chapter 473)
regarding the composition of a CPA firm?
A. 100% of the owners must be licensed CPAs in the state of Florida.
B. At least 51% of the financial interests and voting rights must be owned by CPAs.
C. No non-CPA may have any ownership interest in a firm performing attest services.
D. The firm must be a sole proprietorship to perform audits.
🟢 Correct answer: B
🔴 RATIONALE: Florida Statutes require that a majority (at least 51%) of the ownership and voting rights of a
CPA firm be held by individuals who are licensed CPAs.
4. During an audit of a nonissuer, an auditor discovers a situation involving a significant related party
transaction that is properly disclosed. What type of opinion is most appropriate if the auditor is satisfied
with the disclosure?
,A. Qualified opinion.
B. Adverse opinion.
C. Unmodified opinion.
D. Disclaimer of opinion.
🟢 Correct answer: C
🔴 RATIONALE: If a related party transaction is properly accounted for and adequately disclosed in
accordance with the applicable financial reporting framework, an unmodified opinion is appropriate.
5. A taxpayer is looking to minimize their tax liability by shifting income to a family member in a lower tax
bracket. Which judicial doctrine prevents the taxpayer from assigning earned income to another?
A. Economic Substance Doctrine.
B. Step Transaction Doctrine.
C. Assignment of Income Doctrine.
D. Business Purpose Doctrine.
🟢 Correct answer: C
🔴 RATIONALE: The Assignment of Income Doctrine (often called the "fruit and tree" doctrine) prevents a
taxpayer from shifting the tax burden of earned income to someone else.
6. Which of the following best describes "materiality" in the context of financial statement auditing?
A. The absolute dollar amount of an error.
B. Any error that exceeds 5% of net income.
C. Information that, if omitted or misstated, would influence the judgment of a reasonable user.
D. Any fraud committed by senior management regardless of the amount.
🟢 Correct answer: C
, 🔴 RATIONALE: Materiality is a matter of professional judgment based on whether an omission or
misstatement would change the decision-making of a reasonable person relying on the financial statements.
7. Under SEC rules, a "covered person" in an audit firm is prohibited from having which of the following with
an audit client?
A. A direct financial interest.
B. A mortgage obtained under normal lending terms.
C. A credit card balance under $10,000.
D. An insurance policy with the client.
🟢 Correct answer: A
🔴 RATIONALE: Covered persons and their immediate family members are prohibited from having any direct
financial interest in an audit client to maintain independence.
8. In a governmental fund, which of the following would be recognized as a "Revenue" when it is measurable
and available?
A. Proceeds from long-term debt issuance.
B. Property tax assessments.
C. Transfers from other funds.
D. Sale of a capital asset.
🟢 Correct answer: B
🔴 RATIONALE: Under the modified accrual basis, property taxes are recognized as revenue when they are
both measurable and available to finance expenditures of the current period.
9. An auditor performs a test of controls to ensure that all sales invoices are matched with shipping
documents. This test primarily addresses which assertion?
ANSWERS (VERIFIED ANSWERS) PLUS RATIONALES 2026 Q&A | INSTANT DOWNLOAD PDF.
CORE DOMAINS
Auditing and Attestation (AUD)Financial Accounting and Reporting (FAR)Regulation (REG)Business Analysis
and Reporting (BAR)Information Systems and Controls (ISC)Tax Compliance and Planning (TCP)Professional
Ethics and Florida Statutes
INTRODUCTION
The Florida Certified Public Accountant (CPA) Examination practice assessment is designed to provide a
rigorous and comprehensive review for candidates seeking licensure. The purpose of this exam is to ensure
that candidates possess the technical proficiency, analytical skills, and ethical grounding required to protect the
public interest in a complex financial landscape. The assessment covers foundational theory, regulatory
compliance, and advanced accounting principles through a mix of multiple-choice and scenario-based
questions. Emphasis is placed on real-world application, critical thinking, and professional decision-making.
Candidates are evaluated on their ability to interpret financial data, apply tax laws, and adhere to professional
standards.
SECTION ONE: QUESTIONS 1–100
1. Under the AICPA Code of Professional Conduct, which of the following actions by a CPA would most likely
be considered a discreditable act?
A. Negligently making false journal entries in a client's records.
B. Disagreeing with a client over the application of an accounting principle.
C. Filing a joint tax return with a spouse who is not a CPA.
D. Charging a fee based on the complexity of the engagement.
🟢 Correct answer: A
,🔴 RATIONALE: Negligently making or permitting false and misleading entries in the financial statements or
records of an entity is explicitly listed as an act discreditable to the profession under AICPA standards.
2. A company changes its method of inventory valuation from LIFO to FIFO. How should this change be
reported in the financial statements?
A. As a change in accounting estimate, prospectively.
B. As a prior period error correction, adjusted to beginning retained earnings.
C. As a change in accounting principle, retrospectively applied to all periods presented.
D. As a change in reporting entity, through footnote disclosure only.
🟢 Correct answer: C
🔴 RATIONALE: A change from one acceptable accounting principle to another (LIFO to FIFO) requires
retrospective application to all prior periods presented, unless it is impracticable to do so.
3. Which of the following is a specific requirement under the Florida Accountancy Statutes (Chapter 473)
regarding the composition of a CPA firm?
A. 100% of the owners must be licensed CPAs in the state of Florida.
B. At least 51% of the financial interests and voting rights must be owned by CPAs.
C. No non-CPA may have any ownership interest in a firm performing attest services.
D. The firm must be a sole proprietorship to perform audits.
🟢 Correct answer: B
🔴 RATIONALE: Florida Statutes require that a majority (at least 51%) of the ownership and voting rights of a
CPA firm be held by individuals who are licensed CPAs.
4. During an audit of a nonissuer, an auditor discovers a situation involving a significant related party
transaction that is properly disclosed. What type of opinion is most appropriate if the auditor is satisfied
with the disclosure?
,A. Qualified opinion.
B. Adverse opinion.
C. Unmodified opinion.
D. Disclaimer of opinion.
🟢 Correct answer: C
🔴 RATIONALE: If a related party transaction is properly accounted for and adequately disclosed in
accordance with the applicable financial reporting framework, an unmodified opinion is appropriate.
5. A taxpayer is looking to minimize their tax liability by shifting income to a family member in a lower tax
bracket. Which judicial doctrine prevents the taxpayer from assigning earned income to another?
A. Economic Substance Doctrine.
B. Step Transaction Doctrine.
C. Assignment of Income Doctrine.
D. Business Purpose Doctrine.
🟢 Correct answer: C
🔴 RATIONALE: The Assignment of Income Doctrine (often called the "fruit and tree" doctrine) prevents a
taxpayer from shifting the tax burden of earned income to someone else.
6. Which of the following best describes "materiality" in the context of financial statement auditing?
A. The absolute dollar amount of an error.
B. Any error that exceeds 5% of net income.
C. Information that, if omitted or misstated, would influence the judgment of a reasonable user.
D. Any fraud committed by senior management regardless of the amount.
🟢 Correct answer: C
, 🔴 RATIONALE: Materiality is a matter of professional judgment based on whether an omission or
misstatement would change the decision-making of a reasonable person relying on the financial statements.
7. Under SEC rules, a "covered person" in an audit firm is prohibited from having which of the following with
an audit client?
A. A direct financial interest.
B. A mortgage obtained under normal lending terms.
C. A credit card balance under $10,000.
D. An insurance policy with the client.
🟢 Correct answer: A
🔴 RATIONALE: Covered persons and their immediate family members are prohibited from having any direct
financial interest in an audit client to maintain independence.
8. In a governmental fund, which of the following would be recognized as a "Revenue" when it is measurable
and available?
A. Proceeds from long-term debt issuance.
B. Property tax assessments.
C. Transfers from other funds.
D. Sale of a capital asset.
🟢 Correct answer: B
🔴 RATIONALE: Under the modified accrual basis, property taxes are recognized as revenue when they are
both measurable and available to finance expenditures of the current period.
9. An auditor performs a test of controls to ensure that all sales invoices are matched with shipping
documents. This test primarily addresses which assertion?
