Alabama Certified Public Accountant
Exam Practice Questions And Correct
Answers (Verified Answers) Plus
Rationale 2027 Q&A| Instant
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1. Under the current Uniform CPA Examination structure, which
combination correctly identifies the three Core sections that every
candidate must complete?
A. Auditing and Attestation, Financial Accounting and Reporting, and
Business Analysis and Reporting
B. Auditing and Attestation, Financial Accounting and Reporting, and
Taxation and Regulation
C. Financial Accounting and Reporting, Regulation, and Information
Systems and Controls
D. Auditing and Attestation, Business Analysis and Reporting, and Tax
Compliance and Planning
Rationale: The CPA Examination consists of three required Core
sections—AUD, FAR, and REG—and one Discipline section selected by
the candidate.
, 2. Which of the following best describes the purpose of the Uniform
CPA Examination?
A. To determine whether an individual qualifies for employment as an
accounting clerk
B. To establish federal certification standards for corporate financial
officers
C. To assess whether candidates possess the knowledge and skills
necessary for entry-level public accountancy practice
D. To determine whether an accounting firm qualifies for peer review
Rationale: The Uniform CPA Examination is designed to assess the
knowledge and skills needed by individuals entering the public
accountancy profession.
3. A company purchases equipment for $120,000, pays $20,000 cash,
and finances the remaining amount with a note payable. What is
the immediate effect of the transaction on total assets and total
liabilities?
A. Assets increase $100,000 and liabilities increase $120,000
B. Assets increase $120,000 and liabilities increase $20,000
C. Assets increase $20,000 and liabilities increase $100,000
D. Assets increase $120,000 and liabilities increase $100,000
Rationale: The equipment increases assets by $120,000, while the cash
payment reduces assets by $20,000, producing a net asset increase of
$100,000; the note payable increases liabilities by $100,000.
, 4. A company receives $18,000 cash from a customer in advance for
services that will be performed over the next six months. How
should the receipt initially be recorded?
A. Debit revenue and credit cash
B. Debit accounts receivable and credit revenue
C. Debit cash and credit unearned revenue
D. Debit unearned revenue and credit cash
Rationale: Cash has been received before the related services are
performed, so the company recognizes an asset and a contract liability
rather than revenue at receipt.
5. Which financial statement reports an entity's revenues, expenses,
gains, and losses for a specified period?
A. Balance sheet
B. Statement of cash flows
C. Statement of changes in equity
D. Income statement
Rationale: The income statement summarizes the components of
financial performance during a reporting period and ultimately
determines net income or net loss.
6. A company uses the allowance method for uncollectible accounts.
At year-end, management estimates that $15,000 of existing
receivables will ultimately be uncollectible. If the allowance account
, currently has a $4,000 credit balance before adjustment, what
amount should be recorded as bad debt expense?
A. $4,000
B. $11,000
C. $15,000
D. $19,000
_Rationale: The desired ending credit balance in the allowance is
$15,000, but the existing $4,000 credit balance is eliminated by
recording only the required adjustment of $11,000; therefore, if the
question asks for the expense, the correct amount is $11,000, not
$15,000.
7. Under accrual accounting, when should revenue generally be
recognized for a completed service provided on account?
A. When the customer ultimately pays
B. When the invoice is mailed
C. When the revenue has been earned and the applicable recognition
criteria are satisfied
D. When management expects payment
Rationale: Accrual accounting recognizes revenue when the underlying
earning process and applicable recognition requirements have been
satisfied rather than simply when cash is collected.
Exam Practice Questions And Correct
Answers (Verified Answers) Plus
Rationale 2027 Q&A| Instant
Download Pdf.
1. Under the current Uniform CPA Examination structure, which
combination correctly identifies the three Core sections that every
candidate must complete?
A. Auditing and Attestation, Financial Accounting and Reporting, and
Business Analysis and Reporting
B. Auditing and Attestation, Financial Accounting and Reporting, and
Taxation and Regulation
C. Financial Accounting and Reporting, Regulation, and Information
Systems and Controls
D. Auditing and Attestation, Business Analysis and Reporting, and Tax
Compliance and Planning
Rationale: The CPA Examination consists of three required Core
sections—AUD, FAR, and REG—and one Discipline section selected by
the candidate.
, 2. Which of the following best describes the purpose of the Uniform
CPA Examination?
A. To determine whether an individual qualifies for employment as an
accounting clerk
B. To establish federal certification standards for corporate financial
officers
C. To assess whether candidates possess the knowledge and skills
necessary for entry-level public accountancy practice
D. To determine whether an accounting firm qualifies for peer review
Rationale: The Uniform CPA Examination is designed to assess the
knowledge and skills needed by individuals entering the public
accountancy profession.
3. A company purchases equipment for $120,000, pays $20,000 cash,
and finances the remaining amount with a note payable. What is
the immediate effect of the transaction on total assets and total
liabilities?
A. Assets increase $100,000 and liabilities increase $120,000
B. Assets increase $120,000 and liabilities increase $20,000
C. Assets increase $20,000 and liabilities increase $100,000
D. Assets increase $120,000 and liabilities increase $100,000
Rationale: The equipment increases assets by $120,000, while the cash
payment reduces assets by $20,000, producing a net asset increase of
$100,000; the note payable increases liabilities by $100,000.
, 4. A company receives $18,000 cash from a customer in advance for
services that will be performed over the next six months. How
should the receipt initially be recorded?
A. Debit revenue and credit cash
B. Debit accounts receivable and credit revenue
C. Debit cash and credit unearned revenue
D. Debit unearned revenue and credit cash
Rationale: Cash has been received before the related services are
performed, so the company recognizes an asset and a contract liability
rather than revenue at receipt.
5. Which financial statement reports an entity's revenues, expenses,
gains, and losses for a specified period?
A. Balance sheet
B. Statement of cash flows
C. Statement of changes in equity
D. Income statement
Rationale: The income statement summarizes the components of
financial performance during a reporting period and ultimately
determines net income or net loss.
6. A company uses the allowance method for uncollectible accounts.
At year-end, management estimates that $15,000 of existing
receivables will ultimately be uncollectible. If the allowance account
, currently has a $4,000 credit balance before adjustment, what
amount should be recorded as bad debt expense?
A. $4,000
B. $11,000
C. $15,000
D. $19,000
_Rationale: The desired ending credit balance in the allowance is
$15,000, but the existing $4,000 credit balance is eliminated by
recording only the required adjustment of $11,000; therefore, if the
question asks for the expense, the correct amount is $11,000, not
$15,000.
7. Under accrual accounting, when should revenue generally be
recognized for a completed service provided on account?
A. When the customer ultimately pays
B. When the invoice is mailed
C. When the revenue has been earned and the applicable recognition
criteria are satisfied
D. When management expects payment
Rationale: Accrual accounting recognizes revenue when the underlying
earning process and applicable recognition requirements have been
satisfied rather than simply when cash is collected.
