Common Certified Public Accountants CPA Questions and Answers

Common Certified Public Accountants (CPA) exam-style questions and answers that cover
a variety of key accounting topics including financial accounting, auditing, taxation, business
law, and ethics.



1. Financial Accounting - Statement of Cash Flows

Question:
Which of the following is classified as a financing activity in the statement of cash flows?
A) Cash received from customers
B) Cash paid for the purchase of inventory
C) Cash paid to settle a lawsuit
D) Cash proceeds from issuing stock

Answer:
D) Cash proceeds from issuing stock.

 Financing activities include transactions related to obtaining or repaying capital. This
includes issuing stock, borrowing money, or repaying debt.



2. Accounting for Assets - Depreciation

Question:
A company purchases equipment for N100,000 with a residual value of N10,000 and an
estimated useful life of 5 years. What is the annual depreciation using the straight-line
method?

Answer:
Straight-line depreciation formula:

Depreciation=Cost−Residual ValueUseful Life\text{Depreciation} = \frac{\text{Cost} - \
text{Residual Value}}{\text{Useful Life}} Depreciation=100,000−10,0005=90,0005=18,000\
text{Depreciation} = \frac{100,000 - 10,000}{5} = \frac{90,000}{5} = 18,000

Final Answer: The annual depreciation is N18,000.



3. Auditing - Types of Audit Opinions

Question:
Which of the following is an example of an unqualified audit opinion?
A) The auditor could not obtain sufficient evidence.

, B) The financial statements are free of material misstatements.
C) The financial statements are materially misstated.
D) The auditor disagrees with management.

Answer:
B) The financial statements are free of material misstatements.

 An unqualified opinion indicates that the financial statements present a true and fair view,
free from material misstatements.



4. Taxation - Corporate Income Tax

Question:
A company has a taxable income of N1,000,000. The corporate tax rate is 30%. What is the tax
liability of the company?

Answer:
Tax liability is calculated by multiplying taxable income by the tax rate:

Tax Liability=Taxable Income×Tax Rate\text{Tax Liability} = \text{Taxable Income} \times \
text{Tax Rate} Tax Liability=1,000,000×30%=300,000\text{Tax Liability} = 1,000,000 \times
30\% = 300,000

Final Answer: The tax liability is N300,000.



5. Business Law - Contract Law

Question:
Which of the following is not a requirement for a valid contract?
A) Offer and acceptance
B) Mutual consent
C) Legality of subject matter
D) Written form

Answer:
D) Written form

 Not all contracts need to be in writing to be valid. Some contracts, like verbal
agreements, may still be legally binding if the other requirements are met.