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

1. The following items were among those that were reported on Lee Co.'s income statement for the year ended December 31, 1989:

The office space is used equally by Lee's sales and accounting departments. What amount of the abovelisted items should be classified as general and administrative expenses in Lee's multiple-step income statement?

A) $325,000
B) $290,000
C) $500,000
D) $410,000

2. Tanker Oil Co., a development stage enterprise, incurred the following costs during its first year of operations:

Tanker had no revenue during its first year of operation. What amount may Tanker capitalize as organizational costs?

A) $0
B) $115,000
C) $95,000
D) $55,000

3. According to the FASB conceptual framework, the usefulness of providing information in financial statements is subject to the constraint of:

A) Consistency.
B) Cost-benefit.
C) Reliability.
D) Representational faithfulness.

4. Is the cumulative effect of an inventory pricing change on prior years earnings reported on the financial statements for

A) Option A
B) Option D
C) Option C
D) Option B

5. The following question is based on the following:
Vane Co.'s trial balance of income statement accounts for the year ended December 31, 2002, included the following:

Vane's income tax rate is 30%.
In Vane's 2002 multiple-step income statement, what amount should Vane report as income from continuing operations?

A) $126,000
B) $129,500
C) $140,000
D) $147,000

Solutions: