CPA PEP Core 1 Test Questions with
Actual Detailed Answers.
Assets – Answer resources controlled by an entity, arising from past events, from which
economic benefit will flow.
Liabilities - Answer present obligations of an Entity, arising from past events, for which an
outlay of economic benefit will be needed to settle
Equity - Answer the residual interest of an Entity's assets after deducting the liabilities
Revenue - Answer the inflow of cash, receivables or other consideration arising from the
ordinary activities of an enterprise, usually from the sale of goods, provision of a service or the
use of enterprise resources yielding interest, royalties and dividends. Revenue is net of items
such as trade and volume discounts, returns and allowances, and sales taxes.
Expenses - Answer comprised of both expenses and losses; expenses arrise from the normal
operations of a business; losses may or may not arrise from the normal operations
Dividends - Answer payments of cash from a corporation to its stock holders
ASPE revenue - Answer ASPE 3400
1. requirements as to performance have been satisfied.
2. compensation is measurable
3. collection is assured
IFRS revenue from contracts with customers - Answer IFRS 15
1. parties to the contract have approved and are committed to the respective obligations.
2. each party's rights regarding goods and services to be transferred is identifiable
3. payent terms are identifiable
4. contract has commercial substance
5. collections is probable
Joint venture - Answer when parties go in on a new business together. Each participating party
now only has a claim to the net assets (equity stake) in the new venture.
1. IFRS - accounted for using the equity method
2. ASPE - acc for using either equity or cost
, IFRS 5 step revenue recognition - Answer 1. Agreement
2. Performance obligations
3. Consideration
4. Allocation
5. Recognition
ASPE asset impairment - Answer ASPE 3063
1. establish need for test
2. establish asset group for testing
3. compare asset group to undiscounted cashflows
4. if carry value>undicounted cashflows, write down to fair value
contingent liability - Answer a potential liability arrising from a past event, for which a future
independent event will determine if an outflow of economic benefit will be required.
ASPE 3290, IAS 37
Revenue - Answer inflow of cash receivables or other consideration as a result of normal
business activity, and must be on that entity's behalf
Revenue Recognition for ASPE (3) - Answer 1. Performance is achieved
2. Revenue can be reliably measured
3. Collection is reasonably assured
Sale of Goods in ASPE is achieved when - Answer risk and rewards are transferred from seller
to buyer
Percentage of Completion Method - Answer recognizes revenue and gross profit each period
based upon progress.
Completed contract method - Answer recognition of revenue for a long-term contract when
the project is complete.
What makes revenue from interest, royalties and dividends different? - Answer Passive
income, do not require any action from the earner
Bundle Sale - Answer A sale that contains multiple deliverables
Actual Detailed Answers.
Assets – Answer resources controlled by an entity, arising from past events, from which
economic benefit will flow.
Liabilities - Answer present obligations of an Entity, arising from past events, for which an
outlay of economic benefit will be needed to settle
Equity - Answer the residual interest of an Entity's assets after deducting the liabilities
Revenue - Answer the inflow of cash, receivables or other consideration arising from the
ordinary activities of an enterprise, usually from the sale of goods, provision of a service or the
use of enterprise resources yielding interest, royalties and dividends. Revenue is net of items
such as trade and volume discounts, returns and allowances, and sales taxes.
Expenses - Answer comprised of both expenses and losses; expenses arrise from the normal
operations of a business; losses may or may not arrise from the normal operations
Dividends - Answer payments of cash from a corporation to its stock holders
ASPE revenue - Answer ASPE 3400
1. requirements as to performance have been satisfied.
2. compensation is measurable
3. collection is assured
IFRS revenue from contracts with customers - Answer IFRS 15
1. parties to the contract have approved and are committed to the respective obligations.
2. each party's rights regarding goods and services to be transferred is identifiable
3. payent terms are identifiable
4. contract has commercial substance
5. collections is probable
Joint venture - Answer when parties go in on a new business together. Each participating party
now only has a claim to the net assets (equity stake) in the new venture.
1. IFRS - accounted for using the equity method
2. ASPE - acc for using either equity or cost
, IFRS 5 step revenue recognition - Answer 1. Agreement
2. Performance obligations
3. Consideration
4. Allocation
5. Recognition
ASPE asset impairment - Answer ASPE 3063
1. establish need for test
2. establish asset group for testing
3. compare asset group to undiscounted cashflows
4. if carry value>undicounted cashflows, write down to fair value
contingent liability - Answer a potential liability arrising from a past event, for which a future
independent event will determine if an outflow of economic benefit will be required.
ASPE 3290, IAS 37
Revenue - Answer inflow of cash receivables or other consideration as a result of normal
business activity, and must be on that entity's behalf
Revenue Recognition for ASPE (3) - Answer 1. Performance is achieved
2. Revenue can be reliably measured
3. Collection is reasonably assured
Sale of Goods in ASPE is achieved when - Answer risk and rewards are transferred from seller
to buyer
Percentage of Completion Method - Answer recognizes revenue and gross profit each period
based upon progress.
Completed contract method - Answer recognition of revenue for a long-term contract when
the project is complete.
What makes revenue from interest, royalties and dividends different? - Answer Passive
income, do not require any action from the earner
Bundle Sale - Answer A sale that contains multiple deliverables
