CPA FAR TEST |ACTUAL QUESTIONS AND
VERIFIED ANSWERS|BRAND NEW 2026-2027
UPDATE|GRADED A+
Question 1
Which of the following accounts is most likely associated with an accrued expense?
a. Depreciation Expense
b. Salaries Payable
c. Unearned Revenue
d. Accounts Receivable
CORRECT ANSWER
Salaries Payable
Question 2
The cash basis of accounting:
a. is a basis for when to record revenues and expenses.
b. is required by Generally Accepted Accounting Principles.
c. records expenses when they are incurred.
d. records revenues only when they have been earned
CORRECT ANSWER
is a basis for when to record revenues and expenses
Question 3
Which of the following is false?
a. Adjusting entries are made at the end of an accounting period
1
, b. Adjusting entries are not necessary under the cash basis of accounting
c. The cash account will always be affected by adjusting journal entries
d. Adjusting journal entries always affect at least one revenue or expense account and at
least one asset or liability account
CORRECT ANSWER
The cash account will always be affected by adjusting journal entries
Question 4
On December 31, a company receives a $5,000 payment for services not yet rendered and
a $500 electric bill for the month of December. Under the accrual basis of accounting, this
company would recognize:
a. $4,500 of revenue and $500 of expense.
b. $5,000 of revenue and $0 of expense.
c. $5,000 of revenue and $500 of expense.
d. $0 of revenue and $500 of expense.
CORRECT ANSWER
$0 of revenue and $500 of expense
Question 5
A company prepays rent of $500 and receives a $3,000 payment for services not yet
rendered. Under the accrual basis of accounting, these two transactions will:
a. increase net income $2,500.
b. increase net income $3,000.
c. decrease net income $500.
d. have no effect on net income.
CORRECT ANSWER
have no effect on net income
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VERIFIED ANSWERS|BRAND NEW 2026-2027
UPDATE|GRADED A+
Question 1
Which of the following accounts is most likely associated with an accrued expense?
a. Depreciation Expense
b. Salaries Payable
c. Unearned Revenue
d. Accounts Receivable
CORRECT ANSWER
Salaries Payable
Question 2
The cash basis of accounting:
a. is a basis for when to record revenues and expenses.
b. is required by Generally Accepted Accounting Principles.
c. records expenses when they are incurred.
d. records revenues only when they have been earned
CORRECT ANSWER
is a basis for when to record revenues and expenses
Question 3
Which of the following is false?
a. Adjusting entries are made at the end of an accounting period
1
, b. Adjusting entries are not necessary under the cash basis of accounting
c. The cash account will always be affected by adjusting journal entries
d. Adjusting journal entries always affect at least one revenue or expense account and at
least one asset or liability account
CORRECT ANSWER
The cash account will always be affected by adjusting journal entries
Question 4
On December 31, a company receives a $5,000 payment for services not yet rendered and
a $500 electric bill for the month of December. Under the accrual basis of accounting, this
company would recognize:
a. $4,500 of revenue and $500 of expense.
b. $5,000 of revenue and $0 of expense.
c. $5,000 of revenue and $500 of expense.
d. $0 of revenue and $500 of expense.
CORRECT ANSWER
$0 of revenue and $500 of expense
Question 5
A company prepays rent of $500 and receives a $3,000 payment for services not yet
rendered. Under the accrual basis of accounting, these two transactions will:
a. increase net income $2,500.
b. increase net income $3,000.
c. decrease net income $500.
d. have no effect on net income.
CORRECT ANSWER
have no effect on net income
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