California Certified Public Accountant
Exam (Uniform CPA Exam) Questions
And Correct Answers (Verified Answers)
Plus Rationales 2025 Q&A | Instant
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1. Which of the following is not a component of internal control under
COSO?
A. Control activities
B. Risk assessment
C. Materiality
D. Monitoring
Materiality is a concept, not a component of COSO’s internal control
framework. The five components are Control Environment, Risk
Assessment, Control Activities, Information and Communication, and
Monitoring.
2. An auditor issues an adverse opinion when:
A. The financial statements are fairly stated
B. The client refuses to provide management representation
C. The financial statements are materially misstated and pervasively
misleading
D. There is a lack of audit evidence
, An adverse opinion is given when the misstatements are both
material and pervasive, making the financial statements misleading.
3. Which organization is primarily responsible for setting auditing
standards for private companies in the U.S.?
A. PCAOB
B. AICPA
C. SEC
D. FASB
The AICPA sets auditing standards through the Auditing Standards
Board (ASB) for non-public entities.
4. Under accrual accounting, revenues are recognized when:
A. Cash is received
B. Earned and realizable
C. Incurred
D. Expenses are paid
Revenues are recognized when earned and realizable, regardless of
cash receipt.
5. Which financial statement reports a company's financial position at a
specific point in time?
A. Income Statement
B. Balance Sheet
C. Statement of Cash Flows
D. Statement of Retained Earnings
The balance sheet shows assets, liabilities, and equity at a specific
date.
6. The primary purpose of an audit is to:
A. Detect all fraud
B. Provide reasonable assurance about the fairness of financial
statements
, C. File tax returns
D. Eliminate business risk
Audits are designed to provide reasonable assurance that the
financial statements are free from material misstatement.
7. Which type of business structure provides limited liability to its
owners and is taxed like a partnership?
A. Sole proprietorship
B. Corporation
C. Limited Liability Company (LLC)
D. General partnership
An LLC offers limited liability and pass-through taxation.
8. The matching principle requires:
A. Expenses to match revenue by date
B. Expenses to be recorded in the same period as related revenues
C. Assets to match liabilities
D. Equity to match net income
The matching principle ensures expenses are reported in the same
period as the revenues they help generate.
9. Which cost is most likely to be considered a period cost?
A. Factory supervisor salary
B. Direct materials
C. Direct labor
D. Advertising expense
Period costs are not directly tied to production and are expensed
when incurred. Advertising is a classic example.
10. The best evidence of fair value for an asset is:
A. An appraisal
B. Historical cost
C. Quoted market price in an active market
Exam (Uniform CPA Exam) Questions
And Correct Answers (Verified Answers)
Plus Rationales 2025 Q&A | Instant
Download Pdf
1. Which of the following is not a component of internal control under
COSO?
A. Control activities
B. Risk assessment
C. Materiality
D. Monitoring
Materiality is a concept, not a component of COSO’s internal control
framework. The five components are Control Environment, Risk
Assessment, Control Activities, Information and Communication, and
Monitoring.
2. An auditor issues an adverse opinion when:
A. The financial statements are fairly stated
B. The client refuses to provide management representation
C. The financial statements are materially misstated and pervasively
misleading
D. There is a lack of audit evidence
, An adverse opinion is given when the misstatements are both
material and pervasive, making the financial statements misleading.
3. Which organization is primarily responsible for setting auditing
standards for private companies in the U.S.?
A. PCAOB
B. AICPA
C. SEC
D. FASB
The AICPA sets auditing standards through the Auditing Standards
Board (ASB) for non-public entities.
4. Under accrual accounting, revenues are recognized when:
A. Cash is received
B. Earned and realizable
C. Incurred
D. Expenses are paid
Revenues are recognized when earned and realizable, regardless of
cash receipt.
5. Which financial statement reports a company's financial position at a
specific point in time?
A. Income Statement
B. Balance Sheet
C. Statement of Cash Flows
D. Statement of Retained Earnings
The balance sheet shows assets, liabilities, and equity at a specific
date.
6. The primary purpose of an audit is to:
A. Detect all fraud
B. Provide reasonable assurance about the fairness of financial
statements
, C. File tax returns
D. Eliminate business risk
Audits are designed to provide reasonable assurance that the
financial statements are free from material misstatement.
7. Which type of business structure provides limited liability to its
owners and is taxed like a partnership?
A. Sole proprietorship
B. Corporation
C. Limited Liability Company (LLC)
D. General partnership
An LLC offers limited liability and pass-through taxation.
8. The matching principle requires:
A. Expenses to match revenue by date
B. Expenses to be recorded in the same period as related revenues
C. Assets to match liabilities
D. Equity to match net income
The matching principle ensures expenses are reported in the same
period as the revenues they help generate.
9. Which cost is most likely to be considered a period cost?
A. Factory supervisor salary
B. Direct materials
C. Direct labor
D. Advertising expense
Period costs are not directly tied to production and are expensed
when incurred. Advertising is a classic example.
10. The best evidence of fair value for an asset is:
A. An appraisal
B. Historical cost
C. Quoted market price in an active market
