AOF NAFTRACK Certification KEY EXAM
QUESTIONS AND CORRECT ANSWERS
AICPA - CORRECT ANSWERS American Institute of Certified Public Accountants
What is the purpose of the AICPA? - CORRECT ANSWERS The American Institute of
Certified Public Accountants is a non-profit professional organization representing certified
public accountants (CPA) in the United States.
The AICPA's mission is to power the success of global business, CPAs, CGMAs and specialty
credentials by providing the most relevant knowledge, resources and advocacy, and protecting
the evolving public interest.
Horizontal Analysis - CORRECT ANSWERS Compares previous/historic performance with
current performance
Vertical Analysis - CORRECT ANSWERS Focuses on the numbers (i.e. revenue and
expenses) of a specific time period
How is vertical and horizontal analysis similar or different? - CORRECT ANSWERS The
primary difference between vertical analysis and horizontal analysis is that vertical analysis is
focused on the relationships between the numbers in a single reporting period, or one moment
in time, while horizontal analysis can cover several time periods.
Trial Balance - CORRECT ANSWERS Prepares for future entries
Features assets, liabilities, equity, drawings, revenues, and expenses
Income Statement - CORRECT ANSWERS Evaluates net income or any other relevant net
gain/loss, such as net purchases, depending on what is being accounted
, Statement of Changes in Owner's Equity - CORRECT ANSWERS Owner's equity at start of
period
Add: owner's investment
Net income
Subtotal
Deduct: owner's drawings
Owner's equity at end of period
Balance Sheet - CORRECT ANSWERS Total assets and liabilities
Consists of three main sections - assets, liabilities, and equity
Typically prepared at the end of an accounting period
Sole Proprietorship - CORRECT ANSWERS Owned by a single individual
Simple to control but owner is ultimately responsible for everything, including debt
Partnership - CORRECT ANSWERS Owned by two or more individuals
Fosters collaboration and spreads out responsibilities but decision making and conflicts may
become problematic
Corporation - CORRECT ANSWERS Legal entities separate from their owners, offering
limited liability to shareholders
More paperwork, compliances, and taxes, but can raise capital through stocks
LLC (Limited Liability Company) - CORRECT ANSWERS Blend features of partnerships and
corporations
QUESTIONS AND CORRECT ANSWERS
AICPA - CORRECT ANSWERS American Institute of Certified Public Accountants
What is the purpose of the AICPA? - CORRECT ANSWERS The American Institute of
Certified Public Accountants is a non-profit professional organization representing certified
public accountants (CPA) in the United States.
The AICPA's mission is to power the success of global business, CPAs, CGMAs and specialty
credentials by providing the most relevant knowledge, resources and advocacy, and protecting
the evolving public interest.
Horizontal Analysis - CORRECT ANSWERS Compares previous/historic performance with
current performance
Vertical Analysis - CORRECT ANSWERS Focuses on the numbers (i.e. revenue and
expenses) of a specific time period
How is vertical and horizontal analysis similar or different? - CORRECT ANSWERS The
primary difference between vertical analysis and horizontal analysis is that vertical analysis is
focused on the relationships between the numbers in a single reporting period, or one moment
in time, while horizontal analysis can cover several time periods.
Trial Balance - CORRECT ANSWERS Prepares for future entries
Features assets, liabilities, equity, drawings, revenues, and expenses
Income Statement - CORRECT ANSWERS Evaluates net income or any other relevant net
gain/loss, such as net purchases, depending on what is being accounted
, Statement of Changes in Owner's Equity - CORRECT ANSWERS Owner's equity at start of
period
Add: owner's investment
Net income
Subtotal
Deduct: owner's drawings
Owner's equity at end of period
Balance Sheet - CORRECT ANSWERS Total assets and liabilities
Consists of three main sections - assets, liabilities, and equity
Typically prepared at the end of an accounting period
Sole Proprietorship - CORRECT ANSWERS Owned by a single individual
Simple to control but owner is ultimately responsible for everything, including debt
Partnership - CORRECT ANSWERS Owned by two or more individuals
Fosters collaboration and spreads out responsibilities but decision making and conflicts may
become problematic
Corporation - CORRECT ANSWERS Legal entities separate from their owners, offering
limited liability to shareholders
More paperwork, compliances, and taxes, but can raise capital through stocks
LLC (Limited Liability Company) - CORRECT ANSWERS Blend features of partnerships and
corporations
