FLORIDA CPA EXAM PRACTICE EXAM
PRACTICE QUESTIONS WITH CORRECT
ANSWERS (VERIFIED ANSWERS) PLUS
RATIONALES 2026 Q&A | INSTANT
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1. Which of the following is the primary objective of financial
reporting?
A. To maximize profit
B. To provide information useful for decision-making
C. To comply with tax regulations
D. To evaluate employee performance
Financial reporting is intended to provide information useful to
investors, creditors, and other decision-makers.
2. The allowance method for uncollectible accounts ensures that:
A. Accounts receivable are reported at net realizable value
B. All bad debts are immediately written off
C. Revenue is overstated
D. Cash collections are delayed
This method estimates uncollectible accounts and reports
receivables at the amount expected to be collected.
3. Under accrual accounting, revenues are recognized when:
A. Cash is received
B. Services are performed or goods are delivered
C. An invoice is sent
D. Expenses are paid
, Accrual accounting recognizes revenue when earned, not
necessarily when cash is received.
4. Which inventory costing method results in the highest ending
inventory during periods of rising prices?
A. FIFO
B. LIFO
C. Weighted average
D. Specific identification
FIFO (First-In, First-Out) assigns the oldest costs to cost of goods
sold, leaving recent higher costs in ending inventory.
5. Which financial statement shows a company’s financial position at
a specific point in time?
A. Income statement
B. Statement of cash flows
C. Balance sheet
D. Statement of retained earnings
The balance sheet presents assets, liabilities, and equity at a
specific date.
6. When a company issues bonds at a premium, the market interest
rate is:
A. Equal to the coupon rate
B. Lower than the coupon rate
C. Higher than the coupon rate
D. Unrelated to the coupon rate
A bond sells at a premium when its stated rate is higher than the
market rate.
7. The matching principle in accounting requires that:
A. Revenues and expenses are recorded at the same time
B. Expenses are recognized only when cash is paid
, C. Expenses are matched with the revenues they help generate
D. Assets are matched with liabilities
This ensures income is accurately reported by associating related
expenses with earned revenue.
8. Depreciation of fixed assets is recorded to:
A. Reduce taxable income
B. Reflect asset consumption over time
C. Increase cash flows
D. Avoid maintenance costs
Depreciation allocates the cost of an asset over its useful life to
match expense with revenue.
9. Which of the following is a contra-asset account?
A. Accounts receivable
B. Accumulated depreciation
C. Cash
D. Equipment
Accumulated depreciation offsets the related asset account,
reducing its book value.
10. In a perpetual inventory system, the inventory account is
updated:
A. Monthly
B. At the end of the year
C. Continuously with each purchase or sale
D. Only when a physical count is done
A perpetual system updates inventory in real-time with each
transaction.
11. Which of the following ratios measures liquidity?
A. Debt-to-equity ratio
B. Current ratio
PRACTICE QUESTIONS WITH CORRECT
ANSWERS (VERIFIED ANSWERS) PLUS
RATIONALES 2026 Q&A | INSTANT
DOWNLOAD PDF
1. Which of the following is the primary objective of financial
reporting?
A. To maximize profit
B. To provide information useful for decision-making
C. To comply with tax regulations
D. To evaluate employee performance
Financial reporting is intended to provide information useful to
investors, creditors, and other decision-makers.
2. The allowance method for uncollectible accounts ensures that:
A. Accounts receivable are reported at net realizable value
B. All bad debts are immediately written off
C. Revenue is overstated
D. Cash collections are delayed
This method estimates uncollectible accounts and reports
receivables at the amount expected to be collected.
3. Under accrual accounting, revenues are recognized when:
A. Cash is received
B. Services are performed or goods are delivered
C. An invoice is sent
D. Expenses are paid
, Accrual accounting recognizes revenue when earned, not
necessarily when cash is received.
4. Which inventory costing method results in the highest ending
inventory during periods of rising prices?
A. FIFO
B. LIFO
C. Weighted average
D. Specific identification
FIFO (First-In, First-Out) assigns the oldest costs to cost of goods
sold, leaving recent higher costs in ending inventory.
5. Which financial statement shows a company’s financial position at
a specific point in time?
A. Income statement
B. Statement of cash flows
C. Balance sheet
D. Statement of retained earnings
The balance sheet presents assets, liabilities, and equity at a
specific date.
6. When a company issues bonds at a premium, the market interest
rate is:
A. Equal to the coupon rate
B. Lower than the coupon rate
C. Higher than the coupon rate
D. Unrelated to the coupon rate
A bond sells at a premium when its stated rate is higher than the
market rate.
7. The matching principle in accounting requires that:
A. Revenues and expenses are recorded at the same time
B. Expenses are recognized only when cash is paid
, C. Expenses are matched with the revenues they help generate
D. Assets are matched with liabilities
This ensures income is accurately reported by associating related
expenses with earned revenue.
8. Depreciation of fixed assets is recorded to:
A. Reduce taxable income
B. Reflect asset consumption over time
C. Increase cash flows
D. Avoid maintenance costs
Depreciation allocates the cost of an asset over its useful life to
match expense with revenue.
9. Which of the following is a contra-asset account?
A. Accounts receivable
B. Accumulated depreciation
C. Cash
D. Equipment
Accumulated depreciation offsets the related asset account,
reducing its book value.
10. In a perpetual inventory system, the inventory account is
updated:
A. Monthly
B. At the end of the year
C. Continuously with each purchase or sale
D. Only when a physical count is done
A perpetual system updates inventory in real-time with each
transaction.
11. Which of the following ratios measures liquidity?
A. Debt-to-equity ratio
B. Current ratio
