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Admission Test Financial-Accounting-Reporting Exam Syllabus Topics:

SectionObjectives
Topic 1: Conceptual Framework and Financial Reporting- Financial statement presentation
- Disclosure requirements
- FASB conceptual framework
Topic 2: Financial Statements and Transactions- Revenue recognition (ASC 606)
- Balance sheet and statement of cash flows
- Income statement and comprehensive income
Topic 3: Assets and Liabilities Accounting- Leases (ASC 842)
- Fixed assets and intangible assets
- Liabilities and contingencies
- Cash, receivables, and inventory
Topic 4: Equity, Investments, and Business Combinations- Business combinations and consolidations
- Bonds and debt instruments
- Stockholders' equity
Topic 5: Specialized Accounting Topics- Accounting changes and error corrections
- Pensions and post-employment benefits
- Foreign currency transactions
Topic 6: Governmental and Not-for-Profit Accounting- Governmental fund accounting
- Not-for-profit financial reporting

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

On January 2, 1993, Quo, Inc. hired Reed to be its controller. During the year, Reed, working closely with Quo's president and outside accountants, made changes in accounting policies, corrected several errors dating from 1992 and before, and instituted new accounting policies.
Quo's 1993 financial statements will be presented in comparative form with its 1992 financial statements.
This question represents one of Quo's transactions. List A represents possible clarifications of these transactions as: a change in accounting principle, a change in accounting estimate, a correction of an error in previously presented financial statements, or neither an accounting change nor an accounting error.
Item to Be Answered
The equipment that Quo manufactures is sold with a five-year warranty. Because of a production breakthrough, Quo reduced its computation of warranty costs from 3% of sales to 1% of sales.
List A (Select one)

  • A. Neither an accounting change nor an accounting error.
  • B. Change in accounting principal.
  • C. Change in accounting estimate.
  • D. Correction of an error in previously presented financial statements.
Reveal Solution  Discussion  0

Correct Answer: C  🗳️

Earnings per share data should be reported on the income statement for:

  • A. Option D
  • B. Option A
  • C. Option B
  • D. Option C
Reveal Solution  Discussion  0

Correct Answer: C  🗳️

On January 2, 1989, Union Co. purchased a machine for $264,000 and depreciated it by the straight-line method using an estimated useful life of eight years with no salvage value. On January 2, 1992, Union determined that the machine had a useful life of six years from the date of acquisition and will have a salvage value of $24,000. An accounting change was made in 1992 to reflect the additional data. The accumulated depreciation for this machine should have a balance at December 31, 1992, of:

  • A. $160,000
  • B. $146,000
  • C. $154,000
  • D. $176,000
Reveal Solution  Discussion  0

Correct Answer: B  🗳️

In single period statements, which of the following should not be reflected as an adjustment to the opening balance of retained earnings?

  • A. Cumulative effect of a change from the percentage of completion to the completed contract method of accounting for long-term construction projects.
  • B. Cumulative effect of a change from LIFO to FIFO in valuing merchandise inventory.
  • C. Effect of a failure to provide for uncollectible accounts in the previous period.
  • D. Effect of a decrease in the estimated useful life of depreciable equipment.
Reveal Solution  Discussion  0

Correct Answer: D  🗳️

Coffey Corp.'s trial balance of Income Statement Accounts for the year ended December 31, 1988 as follows:

Coffey's income tax rate is 30%. The gain on debt extinguishment is considered a usual and recurring part of Coffey's operations. Coffey prepares a multiple-step income statement for 1988.
Income from operations before income tax is:

  • A. $240,000
  • B. $230,000
  • C. $190,000
  • D. $200,000
Reveal Solution  Discussion  0

Correct Answer: A  🗳️

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