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

1. Mellow Co. depreciated a $12,000 asset over five years, using the straight-line method with no salvage value. At the beginning of the fifth year, it was determined that the asset will last another four years. What amount should Mellow report as depreciation expense for year 5?

A) $900
B) $600
C) $2,400
D) $1,500

2. Which of the following accounting pronouncements is the most authoritative?

A) FASB Technical Bulletin.
B) AICPA Statement of Position.
C) AICPA Accounting Principles Board Opinion.
D) FASB Statement of Financial Accounting Concepts.

3. Lore Co. changed from the cash basis of accounting to the accrual basis of accounting during 1994. The cumulative effect of this change should be reported in Lore's 1994 financial statements as a:

A) Component of income after extraordinary item.
B) Component of income before extraordinary item.
C) Prior period adjustment resulting from the change in accounting principle.
D) Prior period adjustment resulting from the correction of an error.

4. Several sources of GAAP consulted by an auditor are in conflict as to the application of an accounting principle. Which of the following should the auditor consider the most authoritative?

A) AICPA Accounting Interpretations.
B) AICPA Technical Practice Aids.
C) FASB Statements of Financial Accounting Concepts.
D) FASB Technical Bulletins.

5. The following information pertains to Aria Corp. and its divisions for the year ended December 31, 1988:

Aria and all of its divisions are engaged solely in manufacturing operations. Aria has a reportable segment if that segment's revenue exceeds:

A) $264,000
B) $200,000
C) $260,000
D) $204,000

Solutions: