FINANCIAL ACCOUNTING AND REPORTING - CPA EXAM QUESTIONS WITH CORRECT ANSWERS 2025

FINANCIAL ACCOUNTING AND REPORTING - CPA
EXAM QUESTIONS WITH CORRECT ANSWERS 2025
IfGthereGisGcommercialGsubstanceGtoGanGexchange,GtheGexchangeGisGmeasuredGat:G-GCORRECTGANSWERG-
FairGValue.GTheGgainGisGequalGtoGtheGoldGasset'sGfairGvalueGandGit'sGbookGvalue.GIfGtheGfairGvalueGwasG30Gan
dGitsGbookGvalueGisG25,GtheGgainGisG5.



HowGdoesGretailGinventoryGmethodGestablishGlowerGofGcostGorGmarketGvaluationGforGendingGinventory?G-
GCORRECTGANSWERG-ByGexcludingGnetGmarkdownsGfromGtheGcostGtoGretailGratio.




CanGconsolidatedGfinancialGstatementsGbeGpreparedGfromGaGbusinessGcombinationGthatGwasGaccountedGfo
rGusingGtheGacquisitionGmethodGORGtheGpoolingGofGinterestsGmethod?G-GCORRECTGANSWERG-
YesGtoGboth.GTheGpoolingGofGinterestGmethodGCANNOTGbeGusedGanymoreGforGbusinessGcombinations,Gcom
binationsGthatGhappenedGbeforeGthatGstillGneedGtoGbeGconsolidated.



DoesGaGforeignGsubGusingGtheGlocalGcurrencyGasGitsGfunctionalGcurrencyGhasGtheirGfinancialsGtranslatedGorGr
emeasured?G-GCORRECTGANSWERG-Translated.



DoesGaGforeignGsubGusingGUSGdollarsGasGitsGfunctionalGcurrencyGhasGtheirGfinancialsGtranslatedGorGremeasu
red?G-GCORRECTGANSWERG-Remeasured.



UnderGtranslation,GcommonGstockGisGtranslatedGatGtheGwhatGexchangeGrate?G-GCORRECTGANSWERG-
TheGhistoricGexchangeGrate.



500GsharesGofG6%,G$100GparGcallableGpreferredGstockGareGcalledGatG$101.GTheGsharesGwereGissuedGatG$103
GperGshare.GWhatGisGtheGjournalGentryGtoGrecordGtheGretirement?G-GCORRECTGANSWERG-

DRGpreferredGstockGforG50,000DRGPIC-
preferredGforG1,500CRGPICGretirementGofGpreferredGforG1,000CRGCashGforG50,500



WorkingGcapital:G-GCORRECTGANSWERG-currentGassetsG-GcurrentGliabilities



AcidGtest:G-GCORRECTGANSWERG-(cashG+GnetGreceivables)/currentGliabilities



AccGRecGturnover:G-GCORRECTGANSWERG-Sales/GavgGnetGreceivables

,InventoryGturnover:G-GCORRECTGANSWERG-COGS/GavgGinventory



TimesGinterestGearned:G-GCORRECTGANSWERG-EBIT/GinterestGexpense



ReturnGonGtotalGassets:G-GCORRECTGANSWERG-(netGincomeG+Gafter-taxGinterestGexpense)/GavgGtotalGassets



ReturnGonGequity:G-GCORRECTGANSWERG-NetGincomeG/GavgGownersGequity



DividendGpayoutGratioG-GCORRECTGANSWERG-CommonGdividendsG/GnetGincome



WhatGareGtheG2GprimaryGqualitativeGcharacteristics?G-GCORRECTGANSWERG-
RelevanceGandGFaithfulGrepresentation



2GcomponentsGofGrelevance:G-GCORRECTGANSWERG-PredictiveGvalueGandGconfirmatoryGvalue



3GcomponentsGofGFaithfulGRepresentationG-GCORRECTGANSWERG-
Completeness,Gneutrality,GandGfreeGfromGmaterialGerror



WhatGareGtheG4GenhancingGcharacteristics?G-GCORRECTGANSWERG-
Comparability,Gverifiability,Gtimeliness,GandGunderstandability



TimesGinterestGearnedGis:G-GCORRECTGANSWERG-
incomeGbeforeGinterestGandGincomeGtaxGoverGinterestGexpense



WhatGisGaGcentralGcharacteristicGofGaGjointGventure?G-GCORRECTGANSWERG-
SharedGcontrol.GNoneGofGtheGparticipatingGpartiesGareGlikelyGtoGhaveGunilateralGcontrolGofGtheGjointGventur
e.



WhatGisGtheGdefensive-intervalGratio?G-GCORRECTGANSWERG-
TheGratioGofGquickGassetsGtoGdailyGoperatingGexpenditures.GTheGratioGisGshowingGtheGlengthGofGtimeGinGday
sGthatGtheGfirmGcanGoperateGwithGitsGpresentGliquidGresources-GsoGit'sGaGliquidityGmeasure.

, InventoryGturnoverGratio:G-GCORRECTGANSWERG-COGS/GavgGinventoryGforGtheGperiod



WhereGareGG/LGonGremeasurmentGandGtranslationGbooked?G-GCORRECTGANSWERG-
RemeasurementGisGonGtheGincomeGstatement,GtranslationGgoGinGanGequityGaccount.GRemeasurementGisGw
henGtheGforeignGsub'sGcurrencyGisGtheGUSGdollar.GIt'sGtranslationGifGtheGsub'sGcurrencyGisGtheGlocalGforeignG
currency.



ReceivablesGturnoverGratio:G-GCORRECTGANSWERG-NetGsalesG/GavgGnetGaccountsGreceivable



WhatGstatementsGareGusuallyGincludedGinGpersonalGfinancialGstatements?G-GCORRECTGANSWERG-
AGstatementGofGfinancialGconditionGandGaGstatementGofGchangesGinGnetGworth.



IfGaGdonationGisGconditional,GhowGshouldGitGbeGaccountedGfor?G-GCORRECTGANSWERG-
AsGaGrefundableGadvance.



ForGdonationGofGspecializedGservicesGtoGaGnonprofit,GatGwhatGvalueGshouldGtheyGbeGrecognized?G-
GCORRECTGANSWERG-FairGvalue.




ForGaGNP,GareGcontributionsGspreadGoverGaGfewGyearsGrestrictedGorGnonGrestricted?G-GCORRECTGANSWERG-
TheGcontributionGinGtheGcurrentGyearGisGnonGrestricted(unlessGitGcomesGwithGanGactualGrestriction),GandGth
eGcontributionsGforGfutureGyearsGareGrecognizedGatGpresentGvalueGandGareGRESTRICTED.



WhenGareGtheGpaymentsGforGanG"AnnuityGDue"Gmade?G-GCORRECTGANSWERG-
AtGtheGbeginningGofGeachGperiod.



HowGisGaGleaseGpaymentGcalculatedGwhenGtheGleaseGpaymentsGareGdueGatGtheGbeginningGofGtheGperiod?G-
GCORRECTGANSWERG-YouGdivideGtheGFAIRGVALUEGofGtheGleasedGequipmentGbyGtheGANNUITYGDUEGrate.




WhatGisGtheGjournalGentryGatGtheGinceptionGofGaGcapitalGleaseGandGtheGpaymentsGareGdueGatGtheGbeginnin
gGofGeachGperiod?G-GCORRECTGANSWERG-
DR:GLeasedGassetGforGitsGfairGvalueGamountCR:GLeaseGLiabilityGforGplugGamountCR:GCashGforGtheGpaymentG
amount