CPA Core 1 Unit 1 questions and and
answers
ASPE 3400 - Revenue Recognition Criteria - Answer1.) Performance Achieved (risk and rewards
transferred)
2.) Revenue can be measured reliably
3.) Collection is reasonably assured
Performance-provision of services/long term contracts - AnswerPercentage of completion method->
recognized over time, based on a reasonable method such as passage of time, cost completed,
ornumber of acts
Completed contract method: revenue is recognized on completion only
Performance- Sale of goods - AnswerPerformance competed when seller of goods has transferred
risks and rewards of ownership and there is no continuing managerial involvement
IFRS 15 Revenue recognition - Answer1. Identify the contract
2. Identify the performance obligations
3. Determine transaction price
4. Allocate transaction price
5. Recognize revenue
IFRS 15 - Identify Contract - AnswerCriteria:
— approved by both parties
— identifies goods and services
— payment terms identified
— has commercial substance
— probable that consideration will be
collected
IFRS 15 - Performance obligations - AnswerA promise to transfer either distinct goods or services, or
a series of distinct goods or services that are substantially the same and have same pattern of
transfer to the customer
, variable consideration - AnswerMeasure at expected amount or most likely amount
Right of Return - AnswerOnly recognize if estimate of returns can be made and are probable
Financing components - AnswerDiscount future payments if more than one year after revenue
recognition
non-cash consideration - AnswerMeasure at fair value of consideration recieved
4 steps of audit process - Answer1. Acceptance
2. Planning
3. Execution
4. Reporting and concluding
Steps in audit planning - Answer1. Determine strategy
2. Create plan
Components to audit strategy - AnswerScope - framework used by client
Timing- deadlines
Direction- impact of other factors, total resources required for audit
Audit plan components (RAMP approach) - AnswerRisk
Approach
Materiality
Procedures
Audit risk Model: - AnswerInherent risk x control risk x detection risk
answers
ASPE 3400 - Revenue Recognition Criteria - Answer1.) Performance Achieved (risk and rewards
transferred)
2.) Revenue can be measured reliably
3.) Collection is reasonably assured
Performance-provision of services/long term contracts - AnswerPercentage of completion method->
recognized over time, based on a reasonable method such as passage of time, cost completed,
ornumber of acts
Completed contract method: revenue is recognized on completion only
Performance- Sale of goods - AnswerPerformance competed when seller of goods has transferred
risks and rewards of ownership and there is no continuing managerial involvement
IFRS 15 Revenue recognition - Answer1. Identify the contract
2. Identify the performance obligations
3. Determine transaction price
4. Allocate transaction price
5. Recognize revenue
IFRS 15 - Identify Contract - AnswerCriteria:
— approved by both parties
— identifies goods and services
— payment terms identified
— has commercial substance
— probable that consideration will be
collected
IFRS 15 - Performance obligations - AnswerA promise to transfer either distinct goods or services, or
a series of distinct goods or services that are substantially the same and have same pattern of
transfer to the customer
, variable consideration - AnswerMeasure at expected amount or most likely amount
Right of Return - AnswerOnly recognize if estimate of returns can be made and are probable
Financing components - AnswerDiscount future payments if more than one year after revenue
recognition
non-cash consideration - AnswerMeasure at fair value of consideration recieved
4 steps of audit process - Answer1. Acceptance
2. Planning
3. Execution
4. Reporting and concluding
Steps in audit planning - Answer1. Determine strategy
2. Create plan
Components to audit strategy - AnswerScope - framework used by client
Timing- deadlines
Direction- impact of other factors, total resources required for audit
Audit plan components (RAMP approach) - AnswerRisk
Approach
Materiality
Procedures
Audit risk Model: - AnswerInherent risk x control risk x detection risk
