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Admission Test Certified Public Accountant (Financial Accounting & Reporting) Sample Questions:

1. A transaction that is unusual, but not infrequent, should be reported separately as a(an):

A) Component of income from continuing operations, net of applicable income taxes.
B) Extraordinary item, net of applicable income taxes.
C) Extraordinary item, but not net of applicable income taxes.
D) Component of income from continuing operations, but not net of applicable income taxes.

2. During the second quarter of 1988, Buzz Company sold a piece of equipment at a $12,000 gain. What portion of the gain should Buzz report in its income statement for the second quarter of 1988?

A) $0
B) $6,000
C) $12,000
D) $4,000

3. The summary of significant accounting policies should disclose the:

A) Terms for convertible debt to be exchanged for common stock.
B) Concentration of credit risk of all financial instruments by geographical region.
C) Maturity dates of noncurrent debts.
D) Criteria for determining which investments are treated as cash equivalents.

4. Which of the following information should be included in Melay, Inc.'s 1992 summary of significant accounting policies?

A) Future common share dividends are expected to approximate 60% of earnings.
B) Business segment 1992 sales are Alay $1M, Belay $2M, and Celay $3M.
C) During 1992, the Delay component was sold.
D) Property, plant, and equipment is recorded at cost with depreciation computed principally by the straight-line method.

5. Which of the following is correct concerning financial statement disclosure of accounting policies?

A) The format and location of accounting policy disclosures are fixed by generally accepted accounting principles.
B) Disclosures should duplicate details disclosed elsewhere in the financial statements.
C) Disclosure of accounting policies is an integral part of the financial statements.
D) Disclosures should be limited to principles and methods peculiar to the industry in which the company operates.

Solutions: