CPA EXAM A+ GRADE ASSURED COMPLETE SOLUTIONS AND VERIFIED ANSWERS

CPA EXAM @x




Exam Solution @x




CPA Exam Review Questions Financial Accounting & R
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eporting (FAR) 2026 A+ GRADE ASSURED COMPLETE S @x @x @x @x @x @x @x




OLUTIONS AND VERIFIED ANSWERS (7C14C) @x @x @x @x




QUESTION 1 @x




One criterion for a capital lease is that the term of the lease must equal a minimum
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percentage of the leased property's economic life at the inception of the lease. The m
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inimum percentage is: @x @x



A. 75%
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B. 41%
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C. 50%
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D. 90% @x




ANSWER

A. A lease is classified as a capital lease if one of the following criteria is met: 1. the title is transf
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erred to the lease at the end of the lease period. 2. a bargain purchase option exists 3. the lease p
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eriod is a t least 75% of the asset's life. 4. the present value of the minimum lease payments is at
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least 90% of the fair value of the asset
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QUESTION 2 @x




On January 15, Year 5 Rice Co. declared its annual cash dividend on common stock f
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or the year ended January 31, Year 5. The dividend was paid on February 9, Year 5,
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to stockholders of record as of January 28, Year 5. On what date should Rice decreas
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e retained earnings by the amount of the dividend?
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A. January 15, year 5
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B. January 31, year 5
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C. January 28, year 5
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D. February 9, year 5
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ANSWER

A. Retained earnings is decreased and a current liability for the cash dividend is recorded on the d
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eclaration date, in this case, January 15, year 5
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, QUESTION 3 @x




What type of bond matures at different points in time?
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A. Bearer Bonds
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B. Term Bonds
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C. Serial Bonds
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D. Unsecured Bonds
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ANSWER

C. Serial bonds refer to bonds within an issue that mature at different points in time. Generally, se
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rial bonds are retired according to their registration number. Note that bonds within a term bond i
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ssue all mature at the same time. Unsecured bonds are backed only by the general credit of the bo
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rrower and are not backed by any specific property. In the case of a bearer bond, there is no reco
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rd of ownership - interest is paid to the holder of the bond.
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QUESTION 4 @x




Reportable segments are not required to disclose which of the following:
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A. Inter-segment sales.
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B. Capital expenditures.
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C. Amortization expense.
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D. Long-term debt.
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ANSWER

D. Long-
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term debt and all liabilities are not required disclosures on segment data. All the other choices are
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required disclosures.
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QUESTION 5 @x




Extraordinary items are: @x @x



A. reported above the line.
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B. unusual and infrequent.
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C. unusual or infrequent.
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D. reported on the balance sheet.
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ANSWER

B. Extraordinary items are unusual and infrequent, reported below the line separate from income fr
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om continuing operations on the income statement, and would include such items as: foreign gover
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nment confiscation, earthquake damages, losses from volcanic eruptions, etc.
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QUESTION 6 @x




Presenting consolidated financial statements this year when statements of individual
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companies were presented last year is @x @x @x @x @x



A. A correction of an error.
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