AIPB EXAMPREP COMPLETE QUESTIONS AND
VERIFIED ANSWERS FOR GUARANTEED PASS
◉When a CPA performs a Review ? Answer: Prepares a report
describing their limited inspection of the financial statements and found
NO MATERIAL differences from GAAP Rules.
◉What is Depreciation ? Answer: A system of allocating the cost of
fixed assets over their estimated life.
◉A company that prepares if financial statements for a tax return or will
not be looked at by a third party can use which Depreciation Rule?
Answer: IRS Rules
◉A company that prepares its financial statements for a third party, such
as a bank for potential investors, or for a company that may want to
acquire it, must use what Depreciation Rule ? Answer: GAAP
◉When a CPA performs an Audit ? Answer: Examines the companies
financial statements and expresses an opinion on whether they materially
conform to GAAP rules.
◉When a CPA performs a Compilation, they do what ? Answer:
Organizes financial data into Financial Statements Does NOT express an
,opinion on reliability of the statements or whether they conform to
GAAP.
◉Is land depreciable ? Answer: No
◉Which accounts can recording depreciation effect ? Answer:
Depreciation Expense, Accumulated Depreciation , and Inventory -Work
in Process
◉A company can use tax rules on their financial statements if...
Answer: The difference between GAAP and IRS Rules is not material.
◉A company that wants a CPA to do a review of its financial statements
depreciates its plant and equipment assets under GAAP for its federal
income tax return ? true or false Answer: false-a company that wants a
CPA to do a review of its financial statements must depreciate its plant
and equipment assets under GAAP only for its financial statements.
Depreciation on the TAX RETURN must always use TAX RULES
◉Many of the concepts underlying tax depreciation rules are similar to
the concepts underlying GAAP depreciation rules. true or false Answer:
True
, ◉What is the Purpose of Depreciation ? Answer: To spread out the cost
of the asset over the years, to match that assets cost with the revenue it
helps generate each year.
◉If a company is required to have an audit of its financial statements
then.... Answer: If GAAP depreciation is materially different form tax
depreciation, the company must use the GAAP amount for its financial
statements and the tax amount for its tax return.
◉The purpose of depreciation is to ______________ the asset's cost to
the revenue that it helps the organization earn each year over its life.
Answer: match
◉A company is required to have an independent CPA audit its year-end
financial statements if..... Answer: the company must demonstrate that
its financial statements conform with GAAP. The company's stock is
publicly traded.
◉Financial statement s prepared for company management
____________ have to use GAAP depreciation rules. Answer: do not
◉If a company uses the tax depreciation amount on its financial
statements, a CPA performing an audit will require the company to
adjust depreciation expense if the difference between the tax amount and
the GAAP amount is ____________________. Answer: material
VERIFIED ANSWERS FOR GUARANTEED PASS
◉When a CPA performs a Review ? Answer: Prepares a report
describing their limited inspection of the financial statements and found
NO MATERIAL differences from GAAP Rules.
◉What is Depreciation ? Answer: A system of allocating the cost of
fixed assets over their estimated life.
◉A company that prepares if financial statements for a tax return or will
not be looked at by a third party can use which Depreciation Rule?
Answer: IRS Rules
◉A company that prepares its financial statements for a third party, such
as a bank for potential investors, or for a company that may want to
acquire it, must use what Depreciation Rule ? Answer: GAAP
◉When a CPA performs an Audit ? Answer: Examines the companies
financial statements and expresses an opinion on whether they materially
conform to GAAP rules.
◉When a CPA performs a Compilation, they do what ? Answer:
Organizes financial data into Financial Statements Does NOT express an
,opinion on reliability of the statements or whether they conform to
GAAP.
◉Is land depreciable ? Answer: No
◉Which accounts can recording depreciation effect ? Answer:
Depreciation Expense, Accumulated Depreciation , and Inventory -Work
in Process
◉A company can use tax rules on their financial statements if...
Answer: The difference between GAAP and IRS Rules is not material.
◉A company that wants a CPA to do a review of its financial statements
depreciates its plant and equipment assets under GAAP for its federal
income tax return ? true or false Answer: false-a company that wants a
CPA to do a review of its financial statements must depreciate its plant
and equipment assets under GAAP only for its financial statements.
Depreciation on the TAX RETURN must always use TAX RULES
◉Many of the concepts underlying tax depreciation rules are similar to
the concepts underlying GAAP depreciation rules. true or false Answer:
True
, ◉What is the Purpose of Depreciation ? Answer: To spread out the cost
of the asset over the years, to match that assets cost with the revenue it
helps generate each year.
◉If a company is required to have an audit of its financial statements
then.... Answer: If GAAP depreciation is materially different form tax
depreciation, the company must use the GAAP amount for its financial
statements and the tax amount for its tax return.
◉The purpose of depreciation is to ______________ the asset's cost to
the revenue that it helps the organization earn each year over its life.
Answer: match
◉A company is required to have an independent CPA audit its year-end
financial statements if..... Answer: the company must demonstrate that
its financial statements conform with GAAP. The company's stock is
publicly traded.
◉Financial statement s prepared for company management
____________ have to use GAAP depreciation rules. Answer: do not
◉If a company uses the tax depreciation amount on its financial
statements, a CPA performing an audit will require the company to
adjust depreciation expense if the difference between the tax amount and
the GAAP amount is ____________________. Answer: material
