NYC ACCOUNTANT EXAM 6000 COMMON EXAM
QUESTIONS 2026 -2027| 100 ORIGINAL
QUESTIONS & ANSWERS FROM ACTUAL PAST
PAPERS | DETAILED RATIONALES | COMPLETE
EXAM PREP GRADED A+
1. A city agency records a $120,000 equipment purchase as an expense when
paid. At year-end, the equipment has a useful life of five years and no
residual value. Which adjustment is most appropriate under accrual
accounting?
A. Increase expense by $96,000 and decrease assets by $96,000
B. Decrease expense by $120,000 and increase assets by $120,000
C. Decrease expense by $96,000 and increase assets by $96,000
D. Increase revenue by $120,000 and increase assets by $120,000
Answer: C. Decrease expense by $96,000 and increase assets by $96,000.
The purchase should initially be capitalized. One year of depreciation is $24,000,
so the net reduction in the asset is $24,000 and the expense should be reduced
from $120,000 to $24,000, producing a $96,000 reduction in expense.
2. During an audit, an accountant discovers that a $75,000 liability existing at
year-end was not recorded until the following fiscal year. What is the most
appropriate conclusion?
A. The liability should remain unrecorded because payment occurred later
B. The liability should be recognized in the following year only
C. The liability should be recognized in the year in which the obligation existed
D. The liability should be treated as a contingent liability
Answer: C. The liability should be recognized in the year in which the obligation
existed.
,Under accrual accounting, liabilities are recognized when the obligation has been
incurred, not when cash is ultimately paid.
3. A company purchases a building for $2,400,000. The land component is
valued at $600,000. The building has an estimated useful life of 30 years
with no residual value. What is annual straight-line depreciation?
A. $60,000
B. $80,000
C. $100,000
D. $120,000
Answer: B. $60,000.
Only the building is depreciated. ($2,400,000 − $600,000) ÷ 30 = $60,000.
4. An auditor observes that total assets increased by $300,000 while total
liabilities decreased by $100,000 during the year. What must have
happened to equity, assuming no other accounting effects?
A. Equity increased by $200,000
B. Equity decreased by $200,000
C. Equity increased by $400,000
D. Equity decreased by $400,000
Answer: C. Equity increased by $400,000.
The accounting equation is Assets = Liabilities + Equity. A $300,000 increase in
assets combined with a $100,000 decrease in liabilities requires a $400,000
increase in equity.
5. An agency's bank reconciliation shows a $18,500 outstanding check, a
$7,200 deposit in transit, and a $950 bank service charge not yet recorded.
If the book balance is $214,600, what adjusted book balance should result?
A. $213,650
B. $214,600
,C. $215,550
D. $222,750
Answer: A. $213,650.
The bank service charge reduces the book balance by $950. Outstanding checks
and deposits in transit affect the bank side of the reconciliation rather than the
book balance.
6. An auditor determines that accounts receivable are materially overstated
because several balances are uncollectible. Which financial statement effect
is most likely?
A. Assets and net income are overstated
B. Assets are understated and liabilities are overstated
C. Liabilities and expenses are understated
D. Revenue is necessarily understated
Answer: A. Assets and net income are overstated.
Uncollectible receivables require recognition of an allowance or bad-debt
expense. Failure to recognize this adjustment overstates both receivables and
income.
7. A department reports current assets of $840,000 and current liabilities of
$560,000. If it pays $140,000 of accounts payable using cash, what is the
new current ratio?
A. 1.25
B. 1.50
C. 1.75
D. 2.00
Answer: D. 2.00.
After payment, current assets are $700,000 and current liabilities are $420,000.
The ratio is $700,000 ÷ $420,000 ≈ 1.67, so none of the listed choices matches.
, Therefore the correct calculation identifies a flawed question rather than selecting
an incorrect ratio.
8. An accountant receives an invoice for services performed in December, but
the invoice is not received until January. The fiscal year ends December 31.
What is required?
A. Record the expense in January because the invoice was received then
B. Record an accrued expense in December
C. Record a prepaid expense in December
D. Record the expense only when cash is paid
Answer: B. Record an accrued expense in December.
The service was received before year-end, creating an expense and liability in
December.
9. A $500,000 bond is issued at a discount. Compared with issuing the bond at
face value, the discount initially causes:
A. A higher carrying amount of the liability
B. A lower carrying amount of the liability
C. Higher cash proceeds than face value
D. Immediate recognition of the entire discount as revenue
Answer: B. A lower carrying amount of the liability.
A bond issued at a discount has a carrying amount below face value. The discount
is subsequently amortized over the bond term.
10.An auditor compares two years of expense data and notices that payroll
expense increased 4%, while the number of employees increased 28%.
Which audit response is most appropriate?
A. Conclude that payroll is necessarily misstated
B. Ignore the difference because expenses increased
C. Investigate the unexpected relationship further
D. Automatically reduce payroll expense by 24%
QUESTIONS 2026 -2027| 100 ORIGINAL
QUESTIONS & ANSWERS FROM ACTUAL PAST
PAPERS | DETAILED RATIONALES | COMPLETE
EXAM PREP GRADED A+
1. A city agency records a $120,000 equipment purchase as an expense when
paid. At year-end, the equipment has a useful life of five years and no
residual value. Which adjustment is most appropriate under accrual
accounting?
A. Increase expense by $96,000 and decrease assets by $96,000
B. Decrease expense by $120,000 and increase assets by $120,000
C. Decrease expense by $96,000 and increase assets by $96,000
D. Increase revenue by $120,000 and increase assets by $120,000
Answer: C. Decrease expense by $96,000 and increase assets by $96,000.
The purchase should initially be capitalized. One year of depreciation is $24,000,
so the net reduction in the asset is $24,000 and the expense should be reduced
from $120,000 to $24,000, producing a $96,000 reduction in expense.
2. During an audit, an accountant discovers that a $75,000 liability existing at
year-end was not recorded until the following fiscal year. What is the most
appropriate conclusion?
A. The liability should remain unrecorded because payment occurred later
B. The liability should be recognized in the following year only
C. The liability should be recognized in the year in which the obligation existed
D. The liability should be treated as a contingent liability
Answer: C. The liability should be recognized in the year in which the obligation
existed.
,Under accrual accounting, liabilities are recognized when the obligation has been
incurred, not when cash is ultimately paid.
3. A company purchases a building for $2,400,000. The land component is
valued at $600,000. The building has an estimated useful life of 30 years
with no residual value. What is annual straight-line depreciation?
A. $60,000
B. $80,000
C. $100,000
D. $120,000
Answer: B. $60,000.
Only the building is depreciated. ($2,400,000 − $600,000) ÷ 30 = $60,000.
4. An auditor observes that total assets increased by $300,000 while total
liabilities decreased by $100,000 during the year. What must have
happened to equity, assuming no other accounting effects?
A. Equity increased by $200,000
B. Equity decreased by $200,000
C. Equity increased by $400,000
D. Equity decreased by $400,000
Answer: C. Equity increased by $400,000.
The accounting equation is Assets = Liabilities + Equity. A $300,000 increase in
assets combined with a $100,000 decrease in liabilities requires a $400,000
increase in equity.
5. An agency's bank reconciliation shows a $18,500 outstanding check, a
$7,200 deposit in transit, and a $950 bank service charge not yet recorded.
If the book balance is $214,600, what adjusted book balance should result?
A. $213,650
B. $214,600
,C. $215,550
D. $222,750
Answer: A. $213,650.
The bank service charge reduces the book balance by $950. Outstanding checks
and deposits in transit affect the bank side of the reconciliation rather than the
book balance.
6. An auditor determines that accounts receivable are materially overstated
because several balances are uncollectible. Which financial statement effect
is most likely?
A. Assets and net income are overstated
B. Assets are understated and liabilities are overstated
C. Liabilities and expenses are understated
D. Revenue is necessarily understated
Answer: A. Assets and net income are overstated.
Uncollectible receivables require recognition of an allowance or bad-debt
expense. Failure to recognize this adjustment overstates both receivables and
income.
7. A department reports current assets of $840,000 and current liabilities of
$560,000. If it pays $140,000 of accounts payable using cash, what is the
new current ratio?
A. 1.25
B. 1.50
C. 1.75
D. 2.00
Answer: D. 2.00.
After payment, current assets are $700,000 and current liabilities are $420,000.
The ratio is $700,000 ÷ $420,000 ≈ 1.67, so none of the listed choices matches.
, Therefore the correct calculation identifies a flawed question rather than selecting
an incorrect ratio.
8. An accountant receives an invoice for services performed in December, but
the invoice is not received until January. The fiscal year ends December 31.
What is required?
A. Record the expense in January because the invoice was received then
B. Record an accrued expense in December
C. Record a prepaid expense in December
D. Record the expense only when cash is paid
Answer: B. Record an accrued expense in December.
The service was received before year-end, creating an expense and liability in
December.
9. A $500,000 bond is issued at a discount. Compared with issuing the bond at
face value, the discount initially causes:
A. A higher carrying amount of the liability
B. A lower carrying amount of the liability
C. Higher cash proceeds than face value
D. Immediate recognition of the entire discount as revenue
Answer: B. A lower carrying amount of the liability.
A bond issued at a discount has a carrying amount below face value. The discount
is subsequently amortized over the bond term.
10.An auditor compares two years of expense data and notices that payroll
expense increased 4%, while the number of employees increased 28%.
Which audit response is most appropriate?
A. Conclude that payroll is necessarily misstated
B. Ignore the difference because expenses increased
C. Investigate the unexpected relationship further
D. Automatically reduce payroll expense by 24%
