CFI FMVA 6 EXAM 2025 QUESTIONS
AND ANSWERS
Accounting Principles and Standards - ....ANSWER ...-
Which of the following best describes accounting principles in general? -
....ANSWER ...-They outline the fundamental rules and concepts and establish the
framework on which detailed accounting standards are based.
A sound accounting framework allows for all of the following benefits except: -
....ANSWER ...-Identical items being reported on the financial statements of
different companies
3. - ....ANSWER ...-Conservatism principle:: It provides guidance on how to record
transactions when there is uncertainty.
Historical Cost:It states that assets and liabilities are recorded on the financial
statements at the cost at which they were acquired or assumed.
Objectivity; It states that financial statements must be free from bias and based on
verifiable evidence.
Economic Entity: It states that transactions carried out by a business are separated from
those conducted by its owner.
Matching:It states that the expenses of a business should be recorded in the periods in
which the corresponding revenues are earned.
…FOR STUDENTS ONLY…©️2025 ALL RIGHTS RESERVED… 1
,On March 1st, Mr. Smithe signed up for a fitness program at Fit Co. and paid $960 for
the entire program upfront. The program includes a total of 12 sessions and two sessions
are delivered each month. How much revenue from Mr. Smithe should Fit Co. recognize
at the end of March? - ....ANSWER ...-160
Which of the following characteristics does not enhance the usefulness of financial
information? - ....ANSWER ...-Relevance
Identify the statement that is most accurate. - ....ANSWER ...-Financial
information that has confirmatory value provides feedback that either confirms or
changes previous evaluations.
Which of the following is not a correct description of how an operating lease is
recognized on the financial statements? - ....ANSWER ...-The amortization
expense of the right-of-use asset is calculated using the straight-line depreciation
method over the lease term.
Company Inc. enters into a 10-year finance lease at the beginning of 2021 for a total of
$250,000. The annual lease payment is $25,000 (payable at the end of each year) and the
rate implicit in the lease is 5%. No initial direct costs are incurred. How much interest
expense should be recognized in 2021? - ....ANSWER ...-9,652
Which of the following statements about income taxes is not correct? -
....ANSWER ...-Deductible temporary differences give rise to deferred tax
liabilities, meaning that more tax is payable in the future.
10. - ....ANSWER ...-Deductible Temporary differences
Generally arise when the tax base of the assets is greater than the carrying amount
…FOR STUDENTS ONLY…©️2025 ALL RIGHTS RESERVED… 2
, Generally arise when there are differences that result in current accounting income being
greater than taxable income
Give rise to deferred tax assets
Taxable Temporary Diffferences
Arise when the tax base of the liabilities is greater than the carrying amount
Arise when the carrying amount of the liabilities is greater than the tax base
Taxable Temporary Differences
Calculate the deferred tax liability given the following items incurred in 2020 by
Company B. Bonuses are tax deductible only in the year in which they are paid. -
....ANSWER ...-372
Company Co. has 1,000 employees and it decides to grant each of the employees 200
share options as part of its new rewards plan. The options are exercisable over 5 years
and subject only to the condition that the company's stock price must be at least 30%
higher than its original issue price. Company Co.'s share-based payments are subject to:
- ....ANSWER ...-Non-vesting condition
Company A has 800 employees, and it decides to grant each of the employees 50 share
options as part of its new rewards plan. The options are exercisable over 5 years and
subject to a 3-year service condition. The fair value of each option at the grant date is
$16. The company estimates that 80% of its employees will meet the service condition
required for receiving the options. Calculate the total share-based payment expense for
Company A assuming that 80% of the employees actually meet the service condition. -
....ANSWER ...-512,000
…FOR STUDENTS ONLY…©️2025 ALL RIGHTS RESERVED… 3
AND ANSWERS
Accounting Principles and Standards - ....ANSWER ...-
Which of the following best describes accounting principles in general? -
....ANSWER ...-They outline the fundamental rules and concepts and establish the
framework on which detailed accounting standards are based.
A sound accounting framework allows for all of the following benefits except: -
....ANSWER ...-Identical items being reported on the financial statements of
different companies
3. - ....ANSWER ...-Conservatism principle:: It provides guidance on how to record
transactions when there is uncertainty.
Historical Cost:It states that assets and liabilities are recorded on the financial
statements at the cost at which they were acquired or assumed.
Objectivity; It states that financial statements must be free from bias and based on
verifiable evidence.
Economic Entity: It states that transactions carried out by a business are separated from
those conducted by its owner.
Matching:It states that the expenses of a business should be recorded in the periods in
which the corresponding revenues are earned.
…FOR STUDENTS ONLY…©️2025 ALL RIGHTS RESERVED… 1
,On March 1st, Mr. Smithe signed up for a fitness program at Fit Co. and paid $960 for
the entire program upfront. The program includes a total of 12 sessions and two sessions
are delivered each month. How much revenue from Mr. Smithe should Fit Co. recognize
at the end of March? - ....ANSWER ...-160
Which of the following characteristics does not enhance the usefulness of financial
information? - ....ANSWER ...-Relevance
Identify the statement that is most accurate. - ....ANSWER ...-Financial
information that has confirmatory value provides feedback that either confirms or
changes previous evaluations.
Which of the following is not a correct description of how an operating lease is
recognized on the financial statements? - ....ANSWER ...-The amortization
expense of the right-of-use asset is calculated using the straight-line depreciation
method over the lease term.
Company Inc. enters into a 10-year finance lease at the beginning of 2021 for a total of
$250,000. The annual lease payment is $25,000 (payable at the end of each year) and the
rate implicit in the lease is 5%. No initial direct costs are incurred. How much interest
expense should be recognized in 2021? - ....ANSWER ...-9,652
Which of the following statements about income taxes is not correct? -
....ANSWER ...-Deductible temporary differences give rise to deferred tax
liabilities, meaning that more tax is payable in the future.
10. - ....ANSWER ...-Deductible Temporary differences
Generally arise when the tax base of the assets is greater than the carrying amount
…FOR STUDENTS ONLY…©️2025 ALL RIGHTS RESERVED… 2
, Generally arise when there are differences that result in current accounting income being
greater than taxable income
Give rise to deferred tax assets
Taxable Temporary Diffferences
Arise when the tax base of the liabilities is greater than the carrying amount
Arise when the carrying amount of the liabilities is greater than the tax base
Taxable Temporary Differences
Calculate the deferred tax liability given the following items incurred in 2020 by
Company B. Bonuses are tax deductible only in the year in which they are paid. -
....ANSWER ...-372
Company Co. has 1,000 employees and it decides to grant each of the employees 200
share options as part of its new rewards plan. The options are exercisable over 5 years
and subject only to the condition that the company's stock price must be at least 30%
higher than its original issue price. Company Co.'s share-based payments are subject to:
- ....ANSWER ...-Non-vesting condition
Company A has 800 employees, and it decides to grant each of the employees 50 share
options as part of its new rewards plan. The options are exercisable over 5 years and
subject to a 3-year service condition. The fair value of each option at the grant date is
$16. The company estimates that 80% of its employees will meet the service condition
required for receiving the options. Calculate the total share-based payment expense for
Company A assuming that 80% of the employees actually meet the service condition. -
....ANSWER ...-512,000
…FOR STUDENTS ONLY…©️2025 ALL RIGHTS RESERVED… 3
