CALIFORNIA CERTIFIED PUBLIC
ACCOUNTANT EXAM, QUESTIONS AND
CORRECT ANSWERS (VERIFIED ANSWERS)
PLUS RATIONALES 2026 Q&A | INSTANT
DOWNLOAD PDF
1. Which of the following is an example of a primary assertion about
classes of transactions?
A. Completeness
B. Existence
C. Rights and obligations
D. Presentation and disclosure
Answer: A
Rationale: Completeness is an assertion about whether all transactions
that should have been recorded have been recorded; it pertains to
classes of transactions.
2. Which accounting principle requires expenses to be matched with
revenues?
A. Revenue recognition principle
B. Matching principle
C. Cost principle
D. Full disclosure principle
,Answer: B
Rationale: The matching principle ensures that expenses are recognized
in the same period as the revenues they helped generate.
3. A company issued bonds at a premium. Which of the following is
correct?
A. Cash received is less than face value
B. Cash received equals face value
C. Cash received is more than face value
D. Cash received is recorded as a discount
Answer: C
Rationale: A premium occurs when bonds are issued for more than their
face value.
4. Which of the following is a control activity?
A. Risk assessment
B. Independent checks
C. Monitoring
D. Communication of policies
Answer: B
Rationale: Independent checks of performance are considered control
activities under internal control frameworks.
5. Under U.S. GAAP, inventory is written down to market if:
A. Market value exceeds cost
B. Cost exceeds market value
,C. Market value equals cost
D. Inventory is obsolete only
Answer: B
Rationale: Under the lower of cost or market rule, inventory is written
down when its market value is less than its cost.
6. Which of the following financial statements reports changes in
equity?
A. Balance sheet
B. Statement of cash flows
C. Statement of retained earnings
D. Income statement
Answer: C
Rationale: The statement of retained earnings (or statement of changes
in equity) shows changes in equity accounts during the period.
7. A company receives a lawsuit settlement. Which accounting
principle governs recognition?
A. Revenue recognition principle
B. Conservatism principle
C. Historical cost principle
D. Matching principle
Answer: B
Rationale: Conservatism guides accountants to recognize potential
losses when they are probable and can be reasonably estimated.
, 8. Which of the following best describes an attest engagement?
A. Preparation of tax returns
B. Audit of financial statements
C. Compilation of financial statements
D. Management consulting
Answer: B
Rationale: Attest engagements involve a CPA providing a report on
subject matter that is the responsibility of another party, e.g., audits.
9. A current ratio is calculated as:
A. Current assets ÷ Current liabilities
B. Current liabilities ÷ Current assets
C. Total assets ÷ Total liabilities
D. Total liabilities ÷ Total assets
Answer: A
Rationale: The current ratio measures liquidity by comparing current
assets to current liabilities.
10. Which of the following is a temporary account?
A. Accounts receivable
B. Retained earnings
C. Service revenue
D. Equipment
Answer: C
Rationale: Temporary accounts (revenues, expenses, dividends) are
closed to retained earnings at period-end.
ACCOUNTANT EXAM, QUESTIONS AND
CORRECT ANSWERS (VERIFIED ANSWERS)
PLUS RATIONALES 2026 Q&A | INSTANT
DOWNLOAD PDF
1. Which of the following is an example of a primary assertion about
classes of transactions?
A. Completeness
B. Existence
C. Rights and obligations
D. Presentation and disclosure
Answer: A
Rationale: Completeness is an assertion about whether all transactions
that should have been recorded have been recorded; it pertains to
classes of transactions.
2. Which accounting principle requires expenses to be matched with
revenues?
A. Revenue recognition principle
B. Matching principle
C. Cost principle
D. Full disclosure principle
,Answer: B
Rationale: The matching principle ensures that expenses are recognized
in the same period as the revenues they helped generate.
3. A company issued bonds at a premium. Which of the following is
correct?
A. Cash received is less than face value
B. Cash received equals face value
C. Cash received is more than face value
D. Cash received is recorded as a discount
Answer: C
Rationale: A premium occurs when bonds are issued for more than their
face value.
4. Which of the following is a control activity?
A. Risk assessment
B. Independent checks
C. Monitoring
D. Communication of policies
Answer: B
Rationale: Independent checks of performance are considered control
activities under internal control frameworks.
5. Under U.S. GAAP, inventory is written down to market if:
A. Market value exceeds cost
B. Cost exceeds market value
,C. Market value equals cost
D. Inventory is obsolete only
Answer: B
Rationale: Under the lower of cost or market rule, inventory is written
down when its market value is less than its cost.
6. Which of the following financial statements reports changes in
equity?
A. Balance sheet
B. Statement of cash flows
C. Statement of retained earnings
D. Income statement
Answer: C
Rationale: The statement of retained earnings (or statement of changes
in equity) shows changes in equity accounts during the period.
7. A company receives a lawsuit settlement. Which accounting
principle governs recognition?
A. Revenue recognition principle
B. Conservatism principle
C. Historical cost principle
D. Matching principle
Answer: B
Rationale: Conservatism guides accountants to recognize potential
losses when they are probable and can be reasonably estimated.
, 8. Which of the following best describes an attest engagement?
A. Preparation of tax returns
B. Audit of financial statements
C. Compilation of financial statements
D. Management consulting
Answer: B
Rationale: Attest engagements involve a CPA providing a report on
subject matter that is the responsibility of another party, e.g., audits.
9. A current ratio is calculated as:
A. Current assets ÷ Current liabilities
B. Current liabilities ÷ Current assets
C. Total assets ÷ Total liabilities
D. Total liabilities ÷ Total assets
Answer: A
Rationale: The current ratio measures liquidity by comparing current
assets to current liabilities.
10. Which of the following is a temporary account?
A. Accounts receivable
B. Retained earnings
C. Service revenue
D. Equipment
Answer: C
Rationale: Temporary accounts (revenues, expenses, dividends) are
closed to retained earnings at period-end.
