Microsoft
Amazon
CompTIA
Salesforce
Cisco®
SAP
PMI
ISC
ISACA
VMware
HP
Palo Alto Networks
EC-Council
LPI
Google
Fortinet
All Vendors
  2. Home
  3. Exam List
  4. AICPA
  5. CPA-Financial

CPA Financial Accounting and Reporting
CPA-Financial Exam

In the hierarchy of generally accepted accounting principles, APB Opinions have the same authority as AICPA:

  1. Statements of Position.
  2. Industry Audit and Accounting Guides.
  3. Issues Papers.
  4. Accounting Research Bulletins.

Answer(s): D

Explanation:

Choice "d" is correct. AICPA Accounting Research Bulletins, FASB Standards, FASB Interpretations, FASB Staff Positions, FASB Statement 133 Implementation Issues, and APB Opinions and Interpretations are the most authoritative sources of generally accepted accounting principles. Choice "a" is incorrect. AICPA Statements of Position, AICPA Accounting and Auditing Guides, and FASB Technical Bulletins are secondary sources of generally accepted accounting principles. Choice "b" is incorrect. AICPA Statements of Position, AICPA Accounting and Auditing Guides, and FASB Technical Bulletins are secondary sources of generally accepted accounting principles. Choice "c" is incorrect. AICPA Issues Papers and Practice Bulletins, FASB Concepts Statements, and other authoritative pronouncements are tertiary sources for generally accepted accounting principles.



What is the underlying concept that supports the immediate recognition of a contingent loss?

  1. Substance over form.
  2. Consistency.
  3. Matching.
  4. Conservatism.

Answer(s): D

Explanation:

Choice "d" is correct. Conservatism is a prudent reaction to uncertainty to try to ensure that uncertainty and risks inherent in business situations are adequately considereD. Recognition of a contingent loss is the recording of an amount representing uncertainty and risk in a business situation. SFAC 2, SFAS 5 para. 82
Choice "a" is incorrect. The substance over form concept presumes that the transaction form may not dictate the accounting treatment.
Choice "b" is incorrect. Consistency is conformity from period to period with unchanging policies and procedures. SFAC 2
Choice "c" is incorrect. The matching principle dictates that expenses be matched with the related revenues generated or the time period in which the expense is incurred and known. SFAS #5 cites
matching as the one concept supporting the immediate recognition of a contingent loss, but it is not the primary underlying concept. SFAS 5 para. 76



According to the FASB conceptual framework, the process of reporting an item in the financial statements of an entity is:

  1. Allocation.
  2. Matching.
  3. Realization.
  4. Recognition.

Answer(s): D

Explanation:

Choice "d" is correct. Recognition is the process of recording an item in the financial statements of an entity. SFAC 5 para. 6
Choice "a" is incorrect. Allocation is the accounting process of assigning or distributing an amount according to a plan or a formulA. SFAC 6 para. 142
Choice "b" is incorrect. Matching of costs and revenues is simultaneous or combined recognition of the revenues and expenses that result directly and jointly from the same transactions or other events. SFAC 6 para. 146
Choice "c" is incorrect. Realization is the process of converting noncash resources and rights into money. SFAC 6 para. 143



What are the Statements of Financial Accounting Concepts intended to establish?

  1. Generally accepted accounting principles in financial reporting by business enterprises.
  2. The meaning of "Present fairly in accordance with generally accepted accounting principles."
  3. The objectives and concepts for use in developing standards of financial accounting and reporting.
  4. The hierarchy of sources of generally accepted accounting principles.

Answer(s): C

Explanation:

Choice "c" is correct. Statements of Financial Accounting Concepts are intended to establish the objectives and concepts that the Financial Accounting Standards Board will use in developing standards of financial accounting and reporting. SFAC 1 para. 3 Choice "a" is incorrect. The Statements of Financial Accounting Concepts do not specify financial accounting standards prescribing accounting procedures or practices. SFAC 1 para. 3 Choice "b" is incorrect. Auditing standards develop the meaning of "Present fairly in accordance with generally accepted accounting principles."
Choice "d" is incorrect. The hierarchy of sources of generally accepted accounting principles is determined by GAAP.




Abdul
I passed the exam on Monday morning and was amazed at how much this site had covered, fortunately that's it for another three years. The tests really did help so thanks!!
- Doha
Upvote


Rose
I passed that exam the first time. And I thank you folks for that. I could not have passed it with out your help.
- South Africa
Upvote


Shourya
I've just done my exam and passed (890) - your materials are spot on.
- UNITED STATES
Upvote


90%
I have sat and passed.
- Haidarabad
Upvote


Jessica
Thanks to this site! i passed my 310-055 exam with 90%
- UNITED STATES
Upvote


George
I passed my VCP Exam this week with an 87. I hadn't taken a cert exam in 10 years. Your product was very helpful and helped me hone the areas where I was lacking. Thank you.
- UNITED ARAB EMIRATES
Upvote


David B.
I would like to thank this site for the great support and passing 920-105 exam with excellent result. Thanks once again!
- UNITED STATES
Upvote


Bruce Gord
Thanks Well I just passed the exam with high score. Anyway, thanks for providing the good material.
- Malaysia
Upvote


Parag
Hi, Let me appreciate your Study Guide. I passed the exam with 92%. All the questions were from the study guide. I am still wondering where I went wrong for not scoring 100%. I will not hesitate to recommend your site to my friends and colleagues. Thanks
- UNITED STATES
Upvote


J M
Hello, I purchased your 640-801 last week and I was able to pass my exam with 96%. The questions were all the same. I wondering how you guys do it? Keep up the good job. I appreciate your service and your best price. Thanks
- UNITED STATES
Upvote

Read more ...