CPA PEP Core 1 2026/2027 | 125+ Questions & Answers | IFRS, ASPE, Audit, Tax, Revenue & Financial Reporting

This CPA PEP Core 1 2026/2027 exam study guide contains 125+ questions and answers covering the core technical areas students encounter in CPA PEP Core 1, with particular emphasis on financial reporting, assurance, taxation, revenue recognition, inventory, financial instruments, leases, internal controls, materiality and audit procedures. The 21-page document begins with revenue and revenue recognition under ASPE before comparing this framework with the IFRS revenue-recognition model, including contracts, performance obligations, transaction prices and recognition when performance obligations are satisfied. The financial reporting material provides extensive coverage of IFRS and ASPE. Topics include revenue from goods and services, percentage-of-completion and completed-contract approaches, bundle sales, FOB shipping point versus destination, inventory recognition and measurement, net realizable value, conversion costs, cost of goods sold, FIFO, weighted-average and specific-identification methods, depreciation, accounts and notes receivable, financial instruments and non-monetary transactions. The guide also reviews financial-asset classifications such as amortized cost, FVOCI and FVPL, along with commercial substance and the measurement principles used in non-monetary exchanges. A major portion is dedicated to audit and assurance, including the four audit stages of acceptance/continuance, planning, execution and reporting/conclusion. Students review the audit risk model (AR = IR × CR × DR), risk of material misstatement, inherent risk, control risk, detection risk, substantive procedures, tests of controls, vouching versus tracing and financial-statement assertions such as existence, occurrence, completeness, accuracy, valuation and allocation, rights and obligations, cut-off, classification and presentation. Materiality is addressed through identification of financial-statement users, selection of appropriate benchmarks and percentages, calculation of overall materiality and performance materiality, and consideration of the nature, timing and extent of audit procedures. The internal-control material covers control environment, entity risk assessment, monitoring, information and communication systems, control activities, manual and automated controls, IT general controls, segregation of duties, reconciliations, authorization, independent verification and physical or logical controls. It also distinguishes preventive from detective controls and reviews limitations created by human error, management override, collusion, unusual transactions, cost constraints and obsolete controls. This makes the document useful for candidates who need to connect audit risks with practical control recommendations and appropriate audit responses. Additional financial reporting topics include government grants, leases, assets held for sale, significant influence investments, discontinued operations, research and development, PP&E, contingent losses, onerous contracts, interim financial statements, pro forma statements and business combinations concepts. The lease section compares IFRS and ASPE requirements, including identification of a lease, finance/capital lease considerations and discount rates. The guide also reviews sheet-to-floor and floor-to-sheet inventory testing, directly connecting accounting concepts with assurance procedures. The taxation section introduces important Canadian corporate tax concepts, including Active Business Income (ABI), taxable-income adjustments, non-deductible items and deductible amounts. Examples include CCA, terminal losses, capital gains and losses, charitable and political donations, meals and entertainment, pension expenses and contributions, financing expenses and other adjustments candidates may encounter when reconciling accounting income to income for tax purposes. The final sections broaden the study material to financial analysis and advanced reporting concepts, including current ratio, debt-to-equity ratio, inventory turnover, earnings per share, acquisition differentials, groups and subsidiaries, hedging, forward contracts, fair value hedges, cash flow hedges, hedged items and hedging instruments. Together, these topics make the document a broad Core 1 revision resource rather than a single-topic question bank. Relevant students: This document is most relevant for CPA PEP Core 1 candidates, Canadian CPA students, accounting graduates entering the CPA certification program, financial reporting students, audit and assurance students, taxation students, public accounting trainees and candidates reviewing technical competencies for CPA examinations. It is particularly suitable for students seeking an integrated review of IFRS, ASPE, revenue recognition, inventory, financial instruments, leases, audit risk, assertions, internal controls, materiality, taxation and financial analysis. 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