OHIO CPA EXAM PRACTICE QUESTIONS
AND CORRECT ANSWERS (VERIFIED
ANSWERS) PLUS RATIONALES 2025|2026
Q&A | INSTANT DOWNLOAD PDF
1. Which of the following is the primary purpose of an auditor's report?
A. To express an opinion on the financial statements
B. To prepare the financial statements
C. To detect fraud
D. To provide tax advice
Answer: A. To express an opinion on the financial statements
Explanation: The primary purpose of an auditor's report is to express an opinion on whether the financial
statements are presented fairly, in all material respects, in accordance with the applicable financial
reporting framework.
2. What is the auditor's responsibility regarding fraud detection?
A. To guarantee that no fraud exists
B. To detect and prevent all fraud
C. To obtain reasonable assurance that the financial statements are free from material misstatement,
whether caused by fraud or error
D. To report all instances of fraud to the SEC
Answer: C. To obtain reasonable assurance that the financial statements are free from material
misstatement, whether caused by fraud or error
Explanation: Auditors are responsible for obtaining reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or error, but they are not responsible for
guaranteeing that no fraud exists.
3. Which of the following is considered a substantive test?
,A. Inquiry of management
B. Observation of inventory counting
C. Confirmation of accounts receivable balances
D. Inspection of internal control procedures
Answer: C. Confirmation of accounts receivable balances
Explanation: Substantive tests are procedures designed to detect material misstatements at the
assertion level. Confirming accounts receivable balances is a substantive test to verify the existence and
accuracy of receivables.
4. What does the term "audit risk" refer to?
A. The risk that the auditor will issue an incorrect opinion
B. The risk that the client will not pay the audit fee
C. The risk that the auditor will not detect fraud
D. The risk that the audit will be delayed
Answer: A. The risk that the auditor will issue an incorrect opinion
Explanation: Audit risk is the risk that the auditor may unknowingly fail to appropriately modify the
opinion on financial statements that are materially misstated.
5. Which of the following is a limitation of an audit?
A. The auditor may not detect all instances of fraud
B. The auditor guarantees the accuracy of financial statements
C. The auditor prepares the financial statements
D. The auditor is responsible for internal controls
Answer: A. The auditor may not detect all instances of fraud
Explanation: Audits have inherent limitations, including the possibility that not all instances of fraud will
be detected, due to factors such as collusion or management override of controls.
6. Which of the following is an example of a current liability?
A. Bonds payable due in 5 years
B. Accounts payable
, C. Land held for investment
D. Common stock
Answer: B. Accounts payable
Explanation: Current liabilities are obligations expected to be settled within one year or within the
entity's operating cycle, whichever is longer. Accounts payable are typically settled within a short period.
7. Under IFRS, how are intangible assets with indefinite useful lives treated?
A. They are amortized over their useful lives
B. They are not amortized but tested for impairment annually
C. They are revalued to fair value each year
D. They are expensed as incurred
Answer: B. They are not amortized but tested for impairment annually
Explanation: Intangible assets with indefinite useful lives are not amortized under IFRS but are tested for
impairment annually.
8. What is the primary purpose of the statement of cash flows?
A. To provide information about the financial position of the company
B. To show the profitability of the company
C. To provide information about the cash receipts and cash payments during a period
D. To report changes in stockholders' equity
Answer: C. To provide information about the cash receipts and cash payments during a period
Explanation: The statement of cash flows provides information about the cash receipts and cash
payments during a period, helping users assess the company's liquidity, solvency, and financial flexibility.
9. Which of the following is a characteristic of a capital lease under U.S. GAAP?
A. The lease term is less than 12 months
B. The lessee does not assume ownership risks and rewards
C. The lease transfers ownership of the property to the lessee by the end of the lease term
D. The lease does not require the lessee to record an asset and liability
Answer: C. The lease transfers ownership of the property to the lessee by the end of the lease term
AND CORRECT ANSWERS (VERIFIED
ANSWERS) PLUS RATIONALES 2025|2026
Q&A | INSTANT DOWNLOAD PDF
1. Which of the following is the primary purpose of an auditor's report?
A. To express an opinion on the financial statements
B. To prepare the financial statements
C. To detect fraud
D. To provide tax advice
Answer: A. To express an opinion on the financial statements
Explanation: The primary purpose of an auditor's report is to express an opinion on whether the financial
statements are presented fairly, in all material respects, in accordance with the applicable financial
reporting framework.
2. What is the auditor's responsibility regarding fraud detection?
A. To guarantee that no fraud exists
B. To detect and prevent all fraud
C. To obtain reasonable assurance that the financial statements are free from material misstatement,
whether caused by fraud or error
D. To report all instances of fraud to the SEC
Answer: C. To obtain reasonable assurance that the financial statements are free from material
misstatement, whether caused by fraud or error
Explanation: Auditors are responsible for obtaining reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or error, but they are not responsible for
guaranteeing that no fraud exists.
3. Which of the following is considered a substantive test?
,A. Inquiry of management
B. Observation of inventory counting
C. Confirmation of accounts receivable balances
D. Inspection of internal control procedures
Answer: C. Confirmation of accounts receivable balances
Explanation: Substantive tests are procedures designed to detect material misstatements at the
assertion level. Confirming accounts receivable balances is a substantive test to verify the existence and
accuracy of receivables.
4. What does the term "audit risk" refer to?
A. The risk that the auditor will issue an incorrect opinion
B. The risk that the client will not pay the audit fee
C. The risk that the auditor will not detect fraud
D. The risk that the audit will be delayed
Answer: A. The risk that the auditor will issue an incorrect opinion
Explanation: Audit risk is the risk that the auditor may unknowingly fail to appropriately modify the
opinion on financial statements that are materially misstated.
5. Which of the following is a limitation of an audit?
A. The auditor may not detect all instances of fraud
B. The auditor guarantees the accuracy of financial statements
C. The auditor prepares the financial statements
D. The auditor is responsible for internal controls
Answer: A. The auditor may not detect all instances of fraud
Explanation: Audits have inherent limitations, including the possibility that not all instances of fraud will
be detected, due to factors such as collusion or management override of controls.
6. Which of the following is an example of a current liability?
A. Bonds payable due in 5 years
B. Accounts payable
, C. Land held for investment
D. Common stock
Answer: B. Accounts payable
Explanation: Current liabilities are obligations expected to be settled within one year or within the
entity's operating cycle, whichever is longer. Accounts payable are typically settled within a short period.
7. Under IFRS, how are intangible assets with indefinite useful lives treated?
A. They are amortized over their useful lives
B. They are not amortized but tested for impairment annually
C. They are revalued to fair value each year
D. They are expensed as incurred
Answer: B. They are not amortized but tested for impairment annually
Explanation: Intangible assets with indefinite useful lives are not amortized under IFRS but are tested for
impairment annually.
8. What is the primary purpose of the statement of cash flows?
A. To provide information about the financial position of the company
B. To show the profitability of the company
C. To provide information about the cash receipts and cash payments during a period
D. To report changes in stockholders' equity
Answer: C. To provide information about the cash receipts and cash payments during a period
Explanation: The statement of cash flows provides information about the cash receipts and cash
payments during a period, helping users assess the company's liquidity, solvency, and financial flexibility.
9. Which of the following is a characteristic of a capital lease under U.S. GAAP?
A. The lease term is less than 12 months
B. The lessee does not assume ownership risks and rewards
C. The lease transfers ownership of the property to the lessee by the end of the lease term
D. The lease does not require the lessee to record an asset and liability
Answer: C. The lease transfers ownership of the property to the lessee by the end of the lease term
