CPA Core 1 Study Guide Questions and
All Correct Answers.
ASPE 1506.27 - Accounting Errors - Answer An entity shall correct material prior period errors
retrospectively in the first set of financial statements completed after their discovery by:
A. Restating the comparative amounts for the prior period(s) presented in which the error
occurred;
if the error occurred before the earliest prior period presented, restating the opening balances
of assets, liabilities and equity for the earliest prior period presented.
ASPE 1506.37 - Disclosures - Answer An entity shall disclose the following:
A. The nature of the prior period error;
B. For each prior period presented, the amount of the correction for each financial statement
line item affected; and
The amount of the correction at the beginning of the earliest prior period presented.
ASPE 1506.06 - Accounting Changes - Answer An entity shall change an accounting policy only
if the change:
A. Is required by a primary source of GAAP
B. Results in the financial statements providing reliable and more relevant information about
the effects of transactions, other events or conditions on the entity's financial position, financial
performance or cash flows;
C. Is specified in paragraph 1506.09.
ASPE 1506.10 - Accounting Changes - Answer A. An entity shall account for a change in
accounting policy resulting from the initial application of a primary source of GAAP in
accordance with the specific transitional provisions, if any, in that primary source of GAAP;
B. When an entity changes an accounting policy upon initial application of a primary source of
GAAP that does not include specific transitional provisions applying to that change, or changes
an accounting policy voluntarily, it shall apply the change retrospectively.
ASPE 1506.34 - Accounting Errors - Answer Per ASPE 1506.27 Accounting changes error
corrections are treated as follows: An entity shall correct material prior period errors
retrospectively in the first set of financial statements completed after their discovery by: (a)
restating the comparative amounts for the prior period(s) presented in which the error
occurred;
ASPE 1506.23 - Accounting Estimates - Answer The effect of a change in accounting estimate,
other than a change to which paragraph 23 applies, shall be recognized prospectively by
including it in net income in:
, A. The period of the change, if the change affects that period only; or
B. The period of the change and future periods, if the change affects both.
ASPE 1506.36 - Accounting estimates, disclosures - Answer An entity shall disclose the nature
and amount fo a change in an accounting estimate that has an effect in the current period
ASPE 3031.07 - Inventory Recognition - Definition - Answer Inventories are assets:
A. HFS in the ordinary course of business;
B. In the process of production for such sale;
C. In the form of materials or supplies to be consumed in the production process or in the
rendering of services.
ASPE 3031.10 - Inventory Recognition - Measurement - Answer Inventories shall be measured
at the lower of cost and net realizable value.
NRV is the estimated selling price in the ordinary sale of the inventory. It equals proceeds less
selling costs.
ASPE 3031.11 - Inventory Recognition - Measurement - Cost - Answer The cost of inventories
shall comprise all costs of purchase, costs of conversion and other costs incurred in bringing the
inventories to their present location and condition.
ASPE 3031.11 - Inventory Recognition - Cost of Sales - Answer When inventories are sold, the
carrying amount of those inventories shall be recognized as an expense in the period in which
the related revenue is recognized. [Cost of Goods Sold]
IAS 2.06 - Inventory Valuation - Definition - Answer Inventories are assets:
A. HFS in the ordinary course of business;
B. In the process of production for such sale;
C. In the form of materials or supplies to be consumed in the production process or in the
rendering of services.
IAS 2.06 - Inventory Valuation - Measurement - Answer Inventories shall be measured at the
lower of cost and net realizable value.
IAS 2.09 - Inventory Valuation - COST - Answer The cost of inventories shall comprise all costs
of purchase, costs of conversion and other costs incurred in bringing the inventories to their
present location and condition.
All Correct Answers.
ASPE 1506.27 - Accounting Errors - Answer An entity shall correct material prior period errors
retrospectively in the first set of financial statements completed after their discovery by:
A. Restating the comparative amounts for the prior period(s) presented in which the error
occurred;
if the error occurred before the earliest prior period presented, restating the opening balances
of assets, liabilities and equity for the earliest prior period presented.
ASPE 1506.37 - Disclosures - Answer An entity shall disclose the following:
A. The nature of the prior period error;
B. For each prior period presented, the amount of the correction for each financial statement
line item affected; and
The amount of the correction at the beginning of the earliest prior period presented.
ASPE 1506.06 - Accounting Changes - Answer An entity shall change an accounting policy only
if the change:
A. Is required by a primary source of GAAP
B. Results in the financial statements providing reliable and more relevant information about
the effects of transactions, other events or conditions on the entity's financial position, financial
performance or cash flows;
C. Is specified in paragraph 1506.09.
ASPE 1506.10 - Accounting Changes - Answer A. An entity shall account for a change in
accounting policy resulting from the initial application of a primary source of GAAP in
accordance with the specific transitional provisions, if any, in that primary source of GAAP;
B. When an entity changes an accounting policy upon initial application of a primary source of
GAAP that does not include specific transitional provisions applying to that change, or changes
an accounting policy voluntarily, it shall apply the change retrospectively.
ASPE 1506.34 - Accounting Errors - Answer Per ASPE 1506.27 Accounting changes error
corrections are treated as follows: An entity shall correct material prior period errors
retrospectively in the first set of financial statements completed after their discovery by: (a)
restating the comparative amounts for the prior period(s) presented in which the error
occurred;
ASPE 1506.23 - Accounting Estimates - Answer The effect of a change in accounting estimate,
other than a change to which paragraph 23 applies, shall be recognized prospectively by
including it in net income in:
, A. The period of the change, if the change affects that period only; or
B. The period of the change and future periods, if the change affects both.
ASPE 1506.36 - Accounting estimates, disclosures - Answer An entity shall disclose the nature
and amount fo a change in an accounting estimate that has an effect in the current period
ASPE 3031.07 - Inventory Recognition - Definition - Answer Inventories are assets:
A. HFS in the ordinary course of business;
B. In the process of production for such sale;
C. In the form of materials or supplies to be consumed in the production process or in the
rendering of services.
ASPE 3031.10 - Inventory Recognition - Measurement - Answer Inventories shall be measured
at the lower of cost and net realizable value.
NRV is the estimated selling price in the ordinary sale of the inventory. It equals proceeds less
selling costs.
ASPE 3031.11 - Inventory Recognition - Measurement - Cost - Answer The cost of inventories
shall comprise all costs of purchase, costs of conversion and other costs incurred in bringing the
inventories to their present location and condition.
ASPE 3031.11 - Inventory Recognition - Cost of Sales - Answer When inventories are sold, the
carrying amount of those inventories shall be recognized as an expense in the period in which
the related revenue is recognized. [Cost of Goods Sold]
IAS 2.06 - Inventory Valuation - Definition - Answer Inventories are assets:
A. HFS in the ordinary course of business;
B. In the process of production for such sale;
C. In the form of materials or supplies to be consumed in the production process or in the
rendering of services.
IAS 2.06 - Inventory Valuation - Measurement - Answer Inventories shall be measured at the
lower of cost and net realizable value.
IAS 2.09 - Inventory Valuation - COST - Answer The cost of inventories shall comprise all costs
of purchase, costs of conversion and other costs incurred in bringing the inventories to their
present location and condition.
