CCIFP Exam Review – Questions With Complete
Solutions
ASC 606 Correct Answer - Revenue recognition standard requiring
revenue to be recognized as each performance obligation is satisfied, either
over time or at a point in time, ensuring accurate financial reporting aligned
with control transfer.
OCBOA Correct Answer - Other Comprehensive Basis of Accounting, a
non-GAAP framework including cash basis, modified cash basis, or income tax
basis, used for simpler reporting by private entities.
FRF for SMEs Correct Answer - Financial Reporting Framework for
Small and Medium-sized Entities, a simplified OCBOA for private companies,
designed for tax compliance and reduced complexity.
Income Tax Basis Correct Answer - OCBOA method where financial
statements align with tax return reporting rules, focusing on tax-deductible
revenues and expenses.
Cash Basis Correct Answer - OCBOA method recognizing revenue and
expenses only when cash changes hands, ignoring accruals for simplicity.
Retainage Correct Answer - Amount withheld by the owner to ensure
project completion, not an account receivable or contract asset, reported as a
separate line item on financial statements.
Materiality Correct Answer - Information that, if omitted or misstated,
could influence a financial statement user's decision, guiding reporting
thresholds and audit focus.
Contract Receivables Correct Answer - Amounts owed from contracts,
presented separately from other receivables under GAAP to highlight
contract-specific risks and terms.
Government Receivables Correct Answer - Receivables from
government entities, considered financially stable due to public funding,
disclosed separately in financial statements.
,Tax Refunds Correct Answer - Receivables from tax authorities for
overpaid taxes, presented separately to reflect distinct collectability.
Related Party Receivables Correct Answer - Receivables from entities
with common ownership or control, requiring separate GAAP disclosure due
to potential bias or conflicts.
Billings on Uncompleted Contracts Correct Answer - GAAP disclosure for
amounts billed but not yet earned on in-progress contracts, reflecting
overbilling status.
Receivables from Unearned Income Correct Answer - GAAP disclosure
for receivables tied to revenue not yet recognized, often from advance billings
for future work.
Retainage Disclosure Correct Answer - GAAP requires disclosing
retainage expected to be collected within one year, distinguishing short-term
from long-term assets.
Concentrations of Credit Risk Correct Answer - Disclosure of significant
customer or industry concentrations that could jeopardize receivable
collection if defaults occur.
Past Due Policy Correct Answer - GAAP-required disclosure of the policy
for determining when receivables are past due or delinquent, impacting
collectability assessments.
Charge-Off Policy Correct Answer - GAAP-required disclosure of the
policy for writing off uncollectible receivables, guiding loss recognition and
financial accuracy.
Contract Assets Correct Answer - Revenue earned but not billed, often
from percentage of completion method, sometimes discounted by lenders for
financing, distinct from receivables.
Contract Liabilities Correct Answer - Obligations to deliver goods or
services for payments received, considered a 'good liability' providing free
financing until earned.
, Percentage of Completion Method Correct Answer - Revenue recognition
method based on proportion of work completed, resulting in contract assets
or liabilities due to timing differences. E.g., 40% done on $1M contract =
$400,000 revenue.
Mnemonic Correct Answer - CIDTA.
Unbalanced Items Correct Answer - Contract assets or liabilities arising
from uneven revenue and billing timing in percentage of completion,
reflecting over- or underbilling. E.g., overbilling creates a liability when
billings exceed revenue.
Input Method Correct Answer - Estimates percent complete by costs
incurred, such as labor hours or materials, for revenue recognition under ASC
606. E.g., labor hours indicate 50% project completion.
Output Method Correct Answer - Estimates percent complete by
milestones, such as units delivered or project phases completed, for revenue
recognition. E.g., 2 of 4 bridge sections complete = 50% revenue.
Revenue Recognition Restriction Correct Answer - GAAP prohibits
revenue recognition until the final contract amount is agreed upon,
preventing premature or speculative revenue. E.g., revenue deferred until
client signs final contract.
Stored Materials Correct Answer - Materials purchased but not used in a
project, excluded from cost-to-cost calculations until installed to avoid
inflating progress. E.g., $10,000 in stored steel not counted until installed.
Equipment Cost Allocation Correct Answer - Costs pooled and allocated
across contracts at a determined rate, trued-up annually to ensure accurate
cost distribution. E.g., $100,000 machine cost split across three projects.
Matching Principle Correct Answer - Accounting principle requiring
overhead costs to be matched with related revenues in the same period for
accurate profit reporting. E.g., project management salaries allocated to active
contracts.
Solutions
ASC 606 Correct Answer - Revenue recognition standard requiring
revenue to be recognized as each performance obligation is satisfied, either
over time or at a point in time, ensuring accurate financial reporting aligned
with control transfer.
OCBOA Correct Answer - Other Comprehensive Basis of Accounting, a
non-GAAP framework including cash basis, modified cash basis, or income tax
basis, used for simpler reporting by private entities.
FRF for SMEs Correct Answer - Financial Reporting Framework for
Small and Medium-sized Entities, a simplified OCBOA for private companies,
designed for tax compliance and reduced complexity.
Income Tax Basis Correct Answer - OCBOA method where financial
statements align with tax return reporting rules, focusing on tax-deductible
revenues and expenses.
Cash Basis Correct Answer - OCBOA method recognizing revenue and
expenses only when cash changes hands, ignoring accruals for simplicity.
Retainage Correct Answer - Amount withheld by the owner to ensure
project completion, not an account receivable or contract asset, reported as a
separate line item on financial statements.
Materiality Correct Answer - Information that, if omitted or misstated,
could influence a financial statement user's decision, guiding reporting
thresholds and audit focus.
Contract Receivables Correct Answer - Amounts owed from contracts,
presented separately from other receivables under GAAP to highlight
contract-specific risks and terms.
Government Receivables Correct Answer - Receivables from
government entities, considered financially stable due to public funding,
disclosed separately in financial statements.
,Tax Refunds Correct Answer - Receivables from tax authorities for
overpaid taxes, presented separately to reflect distinct collectability.
Related Party Receivables Correct Answer - Receivables from entities
with common ownership or control, requiring separate GAAP disclosure due
to potential bias or conflicts.
Billings on Uncompleted Contracts Correct Answer - GAAP disclosure for
amounts billed but not yet earned on in-progress contracts, reflecting
overbilling status.
Receivables from Unearned Income Correct Answer - GAAP disclosure
for receivables tied to revenue not yet recognized, often from advance billings
for future work.
Retainage Disclosure Correct Answer - GAAP requires disclosing
retainage expected to be collected within one year, distinguishing short-term
from long-term assets.
Concentrations of Credit Risk Correct Answer - Disclosure of significant
customer or industry concentrations that could jeopardize receivable
collection if defaults occur.
Past Due Policy Correct Answer - GAAP-required disclosure of the policy
for determining when receivables are past due or delinquent, impacting
collectability assessments.
Charge-Off Policy Correct Answer - GAAP-required disclosure of the
policy for writing off uncollectible receivables, guiding loss recognition and
financial accuracy.
Contract Assets Correct Answer - Revenue earned but not billed, often
from percentage of completion method, sometimes discounted by lenders for
financing, distinct from receivables.
Contract Liabilities Correct Answer - Obligations to deliver goods or
services for payments received, considered a 'good liability' providing free
financing until earned.
, Percentage of Completion Method Correct Answer - Revenue recognition
method based on proportion of work completed, resulting in contract assets
or liabilities due to timing differences. E.g., 40% done on $1M contract =
$400,000 revenue.
Mnemonic Correct Answer - CIDTA.
Unbalanced Items Correct Answer - Contract assets or liabilities arising
from uneven revenue and billing timing in percentage of completion,
reflecting over- or underbilling. E.g., overbilling creates a liability when
billings exceed revenue.
Input Method Correct Answer - Estimates percent complete by costs
incurred, such as labor hours or materials, for revenue recognition under ASC
606. E.g., labor hours indicate 50% project completion.
Output Method Correct Answer - Estimates percent complete by
milestones, such as units delivered or project phases completed, for revenue
recognition. E.g., 2 of 4 bridge sections complete = 50% revenue.
Revenue Recognition Restriction Correct Answer - GAAP prohibits
revenue recognition until the final contract amount is agreed upon,
preventing premature or speculative revenue. E.g., revenue deferred until
client signs final contract.
Stored Materials Correct Answer - Materials purchased but not used in a
project, excluded from cost-to-cost calculations until installed to avoid
inflating progress. E.g., $10,000 in stored steel not counted until installed.
Equipment Cost Allocation Correct Answer - Costs pooled and allocated
across contracts at a determined rate, trued-up annually to ensure accurate
cost distribution. E.g., $100,000 machine cost split across three projects.
Matching Principle Correct Answer - Accounting principle requiring
overhead costs to be matched with related revenues in the same period for
accurate profit reporting. E.g., project management salaries allocated to active
contracts.
