Texas Certified Public Accountant Licensing Exam –
Practice Questions And Correct Answers (Verified
Answers) Plus Rationales 2025/2026 Q&A | Instant
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1. Which of the following is not a primary purpose of financial accounting?
A. Providing information to investors
B. Assisting management in decision-making
C. Reporting to regulatory agencies
D. Preparing tax returns
Answer: D
Financial accounting focuses on providing external stakeholders with decision-
useful information; preparing tax returns is the role of tax accounting.
2. The principle that requires expenses to be recognized in the same period as
the related revenues is:
A. Consistency principle
B. Matching principle
C. Conservatism principle
D. Full disclosure principle
Answer: B
The matching principle ensures that expenses are reported in the same period as
the revenues they help generate.
3. Under GAAP, revenue is recognized when:
,A. Cash is received
B. The performance obligation is satisfied
C. A contract is signed
D. The invoice is issued
Answer: B
ASC 606 requires recognition when performance obligations are satisfied, not
necessarily when cash changes hands.
4. Which of the following financial statements shows the company’s financial
position at a point in time?
A. Income Statement
B. Statement of Cash Flows
C. Balance Sheet
D. Statement of Retained Earnings
Answer: C
The balance sheet presents assets, liabilities, and equity at a specific date.
5. Which section of the AICPA Code of Professional Conduct deals with
independence requirements for auditors?
A. Section 1 – Integrity
B. Section 1.200 – Independence
C. Section 1.100 – Responsibilities
D. Section 1.400 – Confidentiality
Answer: B
Section 1.200 outlines independence requirements for assurance engagements.
6. What is the main purpose of an audit engagement?
,A. Detecting fraud
B. Expressing an opinion on financial statements
C. Assuring management of profitability
D. Preparing financial statements
Answer: B
Auditors express an opinion on whether financial statements are fairly presented,
not guarantee fraud detection.
7. Which of the following accounts would appear on the statement of cash flows
under operating activities?
A. Payment for new equipment
B. Dividends paid
C. Salaries expense
D. Issuance of bonds
Answer: C
Salaries expense is an operating cash outflow, while equipment and bonds are
investing/financing activities.
8. In Texas, to become licensed as a CPA, an applicant must have completed at
least:
A. 120 semester hours
B. 150 semester hours
C. 135 semester hours
D. 180 semester hours
Answer: B
Texas, like most states, requires 150 semester hours to qualify for licensure.
, 9. Which inventory method assumes that the oldest inventory costs are assigned
to cost of goods sold first?
A. FIFO
B. LIFO
C. Weighted Average
D. Specific Identification
Answer: A
FIFO assigns the earliest costs to COGS, leaving newer costs in ending inventory.
10. An unqualified audit opinion indicates:
A. A material misstatement
B. The auditor has reservations
C. The financial statements are fairly presented
D. A departure from GAAP
Answer: C
An unqualified (clean) opinion means the financial statements are free of material
misstatements.
11. Which type of audit opinion is issued when financial statements are
materially misstated but not pervasive?
A. Adverse
B. Disclaimer
C. Qualified
D. Unqualified
Answer: C
A qualified opinion indicates material misstatements, but they are not pervasive
enough to warrant an adverse opinion.
Practice Questions And Correct Answers (Verified
Answers) Plus Rationales 2025/2026 Q&A | Instant
Download Pdf
1. Which of the following is not a primary purpose of financial accounting?
A. Providing information to investors
B. Assisting management in decision-making
C. Reporting to regulatory agencies
D. Preparing tax returns
Answer: D
Financial accounting focuses on providing external stakeholders with decision-
useful information; preparing tax returns is the role of tax accounting.
2. The principle that requires expenses to be recognized in the same period as
the related revenues is:
A. Consistency principle
B. Matching principle
C. Conservatism principle
D. Full disclosure principle
Answer: B
The matching principle ensures that expenses are reported in the same period as
the revenues they help generate.
3. Under GAAP, revenue is recognized when:
,A. Cash is received
B. The performance obligation is satisfied
C. A contract is signed
D. The invoice is issued
Answer: B
ASC 606 requires recognition when performance obligations are satisfied, not
necessarily when cash changes hands.
4. Which of the following financial statements shows the company’s financial
position at a point in time?
A. Income Statement
B. Statement of Cash Flows
C. Balance Sheet
D. Statement of Retained Earnings
Answer: C
The balance sheet presents assets, liabilities, and equity at a specific date.
5. Which section of the AICPA Code of Professional Conduct deals with
independence requirements for auditors?
A. Section 1 – Integrity
B. Section 1.200 – Independence
C. Section 1.100 – Responsibilities
D. Section 1.400 – Confidentiality
Answer: B
Section 1.200 outlines independence requirements for assurance engagements.
6. What is the main purpose of an audit engagement?
,A. Detecting fraud
B. Expressing an opinion on financial statements
C. Assuring management of profitability
D. Preparing financial statements
Answer: B
Auditors express an opinion on whether financial statements are fairly presented,
not guarantee fraud detection.
7. Which of the following accounts would appear on the statement of cash flows
under operating activities?
A. Payment for new equipment
B. Dividends paid
C. Salaries expense
D. Issuance of bonds
Answer: C
Salaries expense is an operating cash outflow, while equipment and bonds are
investing/financing activities.
8. In Texas, to become licensed as a CPA, an applicant must have completed at
least:
A. 120 semester hours
B. 150 semester hours
C. 135 semester hours
D. 180 semester hours
Answer: B
Texas, like most states, requires 150 semester hours to qualify for licensure.
, 9. Which inventory method assumes that the oldest inventory costs are assigned
to cost of goods sold first?
A. FIFO
B. LIFO
C. Weighted Average
D. Specific Identification
Answer: A
FIFO assigns the earliest costs to COGS, leaving newer costs in ending inventory.
10. An unqualified audit opinion indicates:
A. A material misstatement
B. The auditor has reservations
C. The financial statements are fairly presented
D. A departure from GAAP
Answer: C
An unqualified (clean) opinion means the financial statements are free of material
misstatements.
11. Which type of audit opinion is issued when financial statements are
materially misstated but not pervasive?
A. Adverse
B. Disclaimer
C. Qualified
D. Unqualified
Answer: C
A qualified opinion indicates material misstatements, but they are not pervasive
enough to warrant an adverse opinion.
