CPA Examination Practice Questions V2.0:
Advanced-Level Comprehensive Assessment a
well detailed exam 2025/2026 graded A+
upgraded !!!
Instructions
This examination consists of 150 multiple-choice questions covering the six core CPA exam
disciplines. Each question has one correct answer. Select the best answer from the options
provided. Answers and detailed rationales are provided after each question.
SECTION 1: FINANCIAL ACCOUNTING AND REPORTING (Questions 1–35)
1. Under IFRS 9, which of the following conditions must be met for a financial asset to be
classified as measured at fair value through other comprehensive income (FVOCI) for debt
instruments?
A. The asset is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets
B. The contractual cash flows are solely payments of principal and interest
C. Both A and B
D. The asset is designated at fair value through profit or loss upon initial recognition
Answer: C
Rationale: For debt instruments to be classified as FVOCI, the asset must be held within a
business model that achieves its objective by both collecting contractual cash flows and selling
financial assets, AND the contractual cash flows must meet the SPPI test.
,2. On January 1, Year 1, Company B enters into a lease for equipment with a 5-year term. The
lease payments are RMB 100,000 annually, payable at the end of each year. The incremental
borrowing rate is 6%. The present value of an annuity of 1 for 5 years at 6% is 4.2124. The initial
direct costs incurred by the lessee are RMB 15,000. What is the initial carrying amount of the
right-of-use asset?
A. RMB 421,240
B. RMB 436,240
C. RMB 500,000
D. RMB 515,000
Answer: B
Rationale: Right-of-use asset = Lease liability (100,000 × 4.2124 = 421,240) + Initial direct costs
(15,000) = RMB 436,240.
3. When an entity changes its accounting policy, which of the following is NOT a permissible
approach under IAS 8?
A. Retrospective application
B. Prospective application
C. Retrospective restatement
D. Current period adjustment only
Answer: D
Rationale: Under IAS 8, changes in accounting policy are applied retrospectively, or
prospectively if retrospective application is impracticable. Current period adjustment only is not
permitted.
4. A company has a building with a carrying amount of RMB 10,000,000. The building is
revalued upward to RMB 12,000,000. The revaluation surplus is recognized in other
comprehensive income. Subsequently, the building is revalued downward to RMB 9,500,000.
How should the downward revaluation be treated?
A. Recognized in profit or loss for the full amount of RMB 2,500,000
B. Recognized in other comprehensive income for the full amount
C. Recognized in other comprehensive income to the extent of the previous revaluation surplus,
and the remainder in profit or loss
D. Recognized in profit or loss only if the building is sold
,Answer: C
Rationale: The downward revaluation should first be set off against the revaluation surplus of
RMB 2,000,000 in OCI, and the remaining RMB 500,000 is recognized in profit or loss.
5. Under IFRS 15, which of the following is a condition for recognizing revenue over time?
A. The customer simultaneously receives and consumes the benefits provided by the entity's
performance
B. The entity's performance creates or enhances an asset that the customer controls
C. The entity's performance does not create an asset with an alternative use to the entity, and
the entity has an enforceable right to payment for work completed
D. All of the above
Answer: D
Rationale: IFRS 15 provides three criteria for recognizing revenue over time: simultaneous
receipt and consumption, creation/enhancement of an asset controlled by the customer, or no
alternative use with enforceable right to payment.
6. In a business combination, which of the following is NOT recognized as part of the acquisition
accounting?
A. Identifiable assets acquired
B. Liabilities assumed
C. Contingent liabilities of the acquiree
D. Goodwill internally generated by the acquiree
Answer: D
Rationale: Internally generated goodwill of the acquiree is not recognized as a separate asset in
acquisition accounting. Only identifiable assets and liabilities (including contingent liabilities)
are recognized, and goodwill is calculated as the excess over these items.
7. Under the equity method, if an investee reports a loss that exceeds the investor's carrying
amount of the investment, the investor should:
A. Continue to recognize the loss only if the investor has a commitment to provide financial
support
B. Discontinue recognizing the loss and disclose the information
C. Recognize the loss by reducing the investment to zero and then recognizing the excess loss as
, a liability
D. Record the loss as a reduction in retained earnings
Answer: A
Rationale: Under the equity method, the investor discontinues recognizing losses when the
investment carrying amount reaches zero, unless the investor has a commitment to provide
financial support.
8. Which of the following is a cash flow item classified as an investing activity under IAS 7?
A. Cash received from customers
B. Cash paid to suppliers
C. Cash paid for acquisition of property, plant and equipment
D. Cash received from issuing shares
Answer: C
Rationale: Cash paid for acquisition of PPE is classified as an investing activity. Cash from
customers and cash to suppliers are operating activities; cash from issuing shares is a financing
activity.
9. A company has the following information for the year: Net income RMB 500,000;
Depreciation RMB 80,000; Gain on sale of equipment RMB 20,000; Increase in accounts
receivable RMB 30,000; Decrease in inventory RMB 15,000; Increase in accounts payable RMB
25,000. What is the net cash provided by operating activities using the indirect method?
A. RMB 570,000
B. RMB 520,000
C. RMB 600,000
D. RMB 500,000
Answer: A
Rationale: Operating cash flow = Net income (500,000) + Depreciation (80,000) − Gain on sale
(20,000) − Increase in AR (30,000) + Decrease in inventory (15,000) + Increase in AP (25,000) =
RMB 570,000.
10. Under IAS 36, the recoverable amount of an asset is defined as the higher of:
Advanced-Level Comprehensive Assessment a
well detailed exam 2025/2026 graded A+
upgraded !!!
Instructions
This examination consists of 150 multiple-choice questions covering the six core CPA exam
disciplines. Each question has one correct answer. Select the best answer from the options
provided. Answers and detailed rationales are provided after each question.
SECTION 1: FINANCIAL ACCOUNTING AND REPORTING (Questions 1–35)
1. Under IFRS 9, which of the following conditions must be met for a financial asset to be
classified as measured at fair value through other comprehensive income (FVOCI) for debt
instruments?
A. The asset is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets
B. The contractual cash flows are solely payments of principal and interest
C. Both A and B
D. The asset is designated at fair value through profit or loss upon initial recognition
Answer: C
Rationale: For debt instruments to be classified as FVOCI, the asset must be held within a
business model that achieves its objective by both collecting contractual cash flows and selling
financial assets, AND the contractual cash flows must meet the SPPI test.
,2. On January 1, Year 1, Company B enters into a lease for equipment with a 5-year term. The
lease payments are RMB 100,000 annually, payable at the end of each year. The incremental
borrowing rate is 6%. The present value of an annuity of 1 for 5 years at 6% is 4.2124. The initial
direct costs incurred by the lessee are RMB 15,000. What is the initial carrying amount of the
right-of-use asset?
A. RMB 421,240
B. RMB 436,240
C. RMB 500,000
D. RMB 515,000
Answer: B
Rationale: Right-of-use asset = Lease liability (100,000 × 4.2124 = 421,240) + Initial direct costs
(15,000) = RMB 436,240.
3. When an entity changes its accounting policy, which of the following is NOT a permissible
approach under IAS 8?
A. Retrospective application
B. Prospective application
C. Retrospective restatement
D. Current period adjustment only
Answer: D
Rationale: Under IAS 8, changes in accounting policy are applied retrospectively, or
prospectively if retrospective application is impracticable. Current period adjustment only is not
permitted.
4. A company has a building with a carrying amount of RMB 10,000,000. The building is
revalued upward to RMB 12,000,000. The revaluation surplus is recognized in other
comprehensive income. Subsequently, the building is revalued downward to RMB 9,500,000.
How should the downward revaluation be treated?
A. Recognized in profit or loss for the full amount of RMB 2,500,000
B. Recognized in other comprehensive income for the full amount
C. Recognized in other comprehensive income to the extent of the previous revaluation surplus,
and the remainder in profit or loss
D. Recognized in profit or loss only if the building is sold
,Answer: C
Rationale: The downward revaluation should first be set off against the revaluation surplus of
RMB 2,000,000 in OCI, and the remaining RMB 500,000 is recognized in profit or loss.
5. Under IFRS 15, which of the following is a condition for recognizing revenue over time?
A. The customer simultaneously receives and consumes the benefits provided by the entity's
performance
B. The entity's performance creates or enhances an asset that the customer controls
C. The entity's performance does not create an asset with an alternative use to the entity, and
the entity has an enforceable right to payment for work completed
D. All of the above
Answer: D
Rationale: IFRS 15 provides three criteria for recognizing revenue over time: simultaneous
receipt and consumption, creation/enhancement of an asset controlled by the customer, or no
alternative use with enforceable right to payment.
6. In a business combination, which of the following is NOT recognized as part of the acquisition
accounting?
A. Identifiable assets acquired
B. Liabilities assumed
C. Contingent liabilities of the acquiree
D. Goodwill internally generated by the acquiree
Answer: D
Rationale: Internally generated goodwill of the acquiree is not recognized as a separate asset in
acquisition accounting. Only identifiable assets and liabilities (including contingent liabilities)
are recognized, and goodwill is calculated as the excess over these items.
7. Under the equity method, if an investee reports a loss that exceeds the investor's carrying
amount of the investment, the investor should:
A. Continue to recognize the loss only if the investor has a commitment to provide financial
support
B. Discontinue recognizing the loss and disclose the information
C. Recognize the loss by reducing the investment to zero and then recognizing the excess loss as
, a liability
D. Record the loss as a reduction in retained earnings
Answer: A
Rationale: Under the equity method, the investor discontinues recognizing losses when the
investment carrying amount reaches zero, unless the investor has a commitment to provide
financial support.
8. Which of the following is a cash flow item classified as an investing activity under IAS 7?
A. Cash received from customers
B. Cash paid to suppliers
C. Cash paid for acquisition of property, plant and equipment
D. Cash received from issuing shares
Answer: C
Rationale: Cash paid for acquisition of PPE is classified as an investing activity. Cash from
customers and cash to suppliers are operating activities; cash from issuing shares is a financing
activity.
9. A company has the following information for the year: Net income RMB 500,000;
Depreciation RMB 80,000; Gain on sale of equipment RMB 20,000; Increase in accounts
receivable RMB 30,000; Decrease in inventory RMB 15,000; Increase in accounts payable RMB
25,000. What is the net cash provided by operating activities using the indirect method?
A. RMB 570,000
B. RMB 520,000
C. RMB 600,000
D. RMB 500,000
Answer: A
Rationale: Operating cash flow = Net income (500,000) + Depreciation (80,000) − Gain on sale
(20,000) − Increase in AR (30,000) + Decrease in inventory (15,000) + Increase in AP (25,000) =
RMB 570,000.
10. Under IAS 36, the recoverable amount of an asset is defined as the higher of:
