Accounting CBE Practice Exam

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• How should inventories be measured under IFRS, and what is the usual lower of cost and NRV rule?
• Which statement best describes independence in professional ethics for accountants?
• How are Level 3 inputs in fair value measurement best described?
• What does a bank statement for a checking account normally show?
• When cash is received from a customer paying on account, which account is debited?
• The Medicare tax rate is which of the following?
• Which statement best describes flexible budgets?
• What are the key steps in applying the acquisition method under IFRS 3?
• In a check, who orders the bank to pay a certain amount?
• In capital budgeting, what do NPV and IRR measure, and why are they used?
• Which term describes checks that have been issued but not yet presented to the bank for payment?
• What happens when Mandy withdraws $600 from her business?
• In a buy vs lease decision, which items create tax shields?
• What happens when Falana receives $7,000 in cash for services rendered?
• Which closing entry is used when there is net income to transfer to owner's capital?
• What is the journal entry to close the income summary account showing a profit?
• Accounts Payable is classified as which type of account?
• Which of the following statements about the modified cash basis of accounting is true?
• Which statement best describes the processing function in accounting?
• Where is non-controlling interest presented in consolidated financial statements?
• In IFRS 13, which description defines the principal market?
• Which account represents Revenue?
• What is the purpose of the statement of comprehensive income?
• What is the purpose of variance analysis in budgeting?
• Which type of business makes a product to sell to customers?
• Which of the following is correct about the FUTA rate options?
• Which statement is true about the truck purchase scenario?
• How should corrections in accounts be made?
• How is fair value determined under IFRS 13?
• Which recognition method is allowed for government grants under IAS 20?
• What is a key source of information for computing employer payroll taxes?
• What is the FUTA tax rate?
• Under IFRS 3, when net assets acquired exceed the consideration transferred, the difference is recognized as:
• Under FVOCI, what happens to the cumulative gains or losses recognized in OCI when the asset is disposed?
• Which tool provides separate columns for assets, liabilities, equity, and revenue?
• Which financial statement would you consult to see changes in owner's equity during a period?
• How should intangible assets with indefinite life be tested for impairment?
• Which statement describes the effect of performing services for cash?
• What is the entry to record owner's drawing of $1,700?
• Which amount is debited as the first quarterly workers' compensation payment expense?
• Which statement about observable inputs in fair value measurement under IFRS 13 is correct?
• What is the professional skepticism concept in auditing?
• How does IFRS 2 treat share-based payments?
• In process costing, how are costs assigned?
• When services are provided on account, which accounts are affected?
• Which of the following is NOT one of the primary financial statement assertions auditors test?
• Which action increases owner's equity?
• Which account would be classified as an Asset?
• What is the role of the drawer in a check?
• Payroll expenditures are a substantial portion of total expenditures for most companies.
• After initial recognition, how is goodwill treated under IFRS 3?
• What is the entry to record paying off accounts payable of $700?
• Which statement best describes how cash flows from financing activities are typically presented?
• Who owns a partnership?
• How is a derivative instrument accounted for under IAS 39/IFRS 9?
• P. Coyote, Capital is classified as what?
• Which IFRS 9 classification describes assets measured at amortized cost?
• What is the purpose of a statement of cash flows?
• Which accounts are used when establishing a change fund?
• What entry records cash received of $1,800 against accounts receivable?
• Which is NOT a key internal control principle for safeguarding assets?
• In capital budgeting, which cash flows exclude tax effects?
• What does the statement of owner's equity summarize?
• In consolidation accounting, what determines whether a subsidiary is consolidated and how is non-controlling interest reported?
• Which closing entry is used to transfer net income to owner's capital?
• Is the statement 'A report form of balance sheet' true according to the material?
• What is a common method for depreciating PPE and how does units-of-production differ from straight-line?
• How is a change fund established?
• Do asset accounts normally have debit balances?
• If the depositor's book balance differs from the bank's book balance, has an error occurred?
• What is the maximum cumulative amount for Social Security taxable earnings?
• What is going concern assessment, and who has responsibility?
• Which account is Owner's Equity?
• Which description best characterizes the accounting cycle?
• How is goodwill impairment tested under IFRS, and what triggers impairment?
• Which item is not listed as a category in the chart of accounts described?
• Who are the owners of a corporation called?
• What is the maximum cumulative amount for Unemployment taxable earnings?
• What is a contra-asset account?
• What asset is recognized by a lessee on initial recognition under IFRS 16?
• How is the weighted average cost of capital (WACC) used in decision making?
• P. Coyote, Drawing is classified as which?
• Under IFRS 15, revenue recognition for construction contracts is influenced by whether performance is satisfied over time. Which factor indicates revenue over time?
• What are the steps involved in handling all transactions during an accounting period called?
• What term describes checks issued during a period that have not yet been presented to the bank for payment?
• What happens when a client pays $7,000 in cash for professional services rendered?
• Represents something owed to another business entity?
• What is the estimated annual cost of workers' compensation insurance for payroll of $84,000 at a rate of 0.6%?
• What transaction records payment for delivery equipment purchased on account?
• Which account is Asset?
• Under IFRS, which inventory method is generally prohibited?
• What does the chart of accounts include?
• What is Form W-4?
• In an owner's drawing transaction, which account is debited?
• Which account would be classified as an Asset?
• Which statement about translation of monetary items is true?
• What is the purpose of IAS 20 government assistance accounting?
• Define gross profit and net profit.
• What is the entry to record purchasing a truck for $50,000 with $7,000 cash and $43,000 accounts payable?
• Which of the following is the correct SUTA rate?
• What best describes a material misstatement and how it is quantified?
• What happens if the Income Statement Credit column exceeds the Debit column?
• Which account would be classified as an Asset?
• Instead of T accounts, what do businesses typically use?
• Which of the following is a limitation of relying on bank balance differences to detect errors?
• What accounting system records revenue when received and capitalizes fixed assets?
• Which entry records service revenue of $16,000?
• What are impairment indicators for non-financial assets?
• What is the entry to record rent expense of $1,600?
• Which of the following is a liability account?
• Do source documents provide the input for the accounting process?
• What is the primary purpose of the Change Fund?
• How should after-tax cash flows be used in a buy vs lease decision?
• Which statement about performing services for cash is true?
• Which account is classified as Owner's Equity?
• Which option best defines a liability?
• A four-column account is used in place of T accounts to organize information.
• Which account increases with a debit and is an asset?
• Which statement about contribution margin and its use in CVP is accurate?
• Which accounting framework generally prohibits the use of LIFO for financial reporting?
• Which of the following is an impairment indicator for non-financial assets?
• What is the key distinction between job-order costing and process costing?
• What is the processing function in accounting?
• What is the journal entry to close the drawing account?
• Which statement correctly defines control risk?
• What is the Social Security tax rate?
• Is the Change Fund a special ledger account used to track day-to-day cash shortages and overages?
• Which statement about the use of four-column accounts is accurate?
• What information is disclosed under IFRS 8 segment reporting?
• How is impairment of a non-financial asset assessed under IAS 36?
• What is the principal accounting officer of a company called?
• When might a deferred tax asset be impaired or not recognized under IAS 12?
• Under IFRS 16, how is a lessee's lease recognized on initial recognition?
• What does IFRS 8 segment reporting require beyond segment revenues and results?
• What is the total payroll tax expense calculated?
• Which entry records wages expense of $3,000?
• Source documents provide input for the accounting process.
• What is the purpose of a worksheet in accounting?
• What is the entry to record paying off accounts payable of $4,100?
• Which items are monetary items?
• Which statement best describes bank balance differences when reconciling accounts?
• Which statement correctly distinguishes a controlling interest from a non-controlling interest in consolidated financial statements?
• Which account is classified as an Asset?
• How is materiality typically determined in planning an audit?
• Which term describes the risk that misstatement will not be prevented or detected by a company's internal controls?
• What does the income statement show?
• What is the purpose of activity-based costing (ABC) in overhead allocation?
• Which account is an Expense?
• Describe the difference between finance leases and operating leases for a lessee under IFRS 16.
• Fees Earned is which classification?
• Which amount represents the maximum Social Security taxable earnings?
• What is the difference between FVTPL and FVOCI in IFRS 9?
• Recoverable amount in IAS 36 is defined as the higher of which amounts?
• Do Social Security, Medicare, FUTA, and SUTA taxes have separate liability accounts?
• How is the petty cash fund established in the journal?
• What must every person authorized to sign checks for a business complete?
• Do the cash basis and accrual basis of accounting result in the same measures of net income?
• What is the journal entry for the first quarterly payment of workers' compensation insurance?
• Which entry records payment of an accounts payable using cash?
• What is the core principle of IFRS 15 revenue recognition?
• Which statement best describes the rights and obligations assertion in auditing?
• Which of the following is a main classification under IFRS 9?
• What is the processing function in accounting?
• What is the impairment treatment difference between finite-life and indefinite-life intangible assets?
• What is the SUTA tax rate?
• How do static and flexible budgets differ, and when is each used?
• Which of the following statements about the modified cash basis is true?
• Under IFRS 3, which statement about non-controlling interest measurement is true?
• A positive net present value indicates the project:
• When is the end-of-period worksheet completed?
• Which option best describes the purpose of the four-column account compared with a traditional T account?
• What is the CVP concept of contribution margin?
• What entry records utilities expense of $255?
• Payroll expenditures are typically a relatively small part of total expenditures for most companies.
• Which statement about hedge accounting is true?
• In standard costing, what do a materials price variance and a materials quantity variance measure?
• The owners of a corporation are called what?
• What is an income statement?
• What is the Medicare tax rate?
• Which of the following is not a listed payroll tax rate?
• Where is non-controlling interest presented in consolidated financial statements?
• What is substantive testing, and how does it differ from tests of controls?
• Which entry would increase a revenue account?
• Which option describes a primary advantage of a four-column account over a T account?
• What is the difference between temporary and deductible differences for deferred tax under IAS 12?
• Payroll expenditures are typically a large component of total expenditures.
• How is cash flow prepared using the indirect method?
• What is the purpose of the income summary account?
• Which account is used to summarize the difference between revenues and expenses?
• Advertising Expense is which classification?
• Under IFRS 15, when is revenue recognized for construction contracts?
• What amounts would be added to the bank statement balance during reconciliation?
• What are permanent accounts?
• The Utility Expense account is classified as which type of account?
• What is the entry to record service revenue of $5,300?