CPA Accountant Practice Test: Get Ready for Your CPA Exam!

The GAAP stands for:

What does GAAP provide between accounting periods?

What is the result when capital is increased in the double-entry method of accounting?

What is the purpose of the trial balance?

The retained earnings are revenue of what kind of corporation?

A decrease to revenue, such as a refund, is done by a ______________.

When would a client report the cost of a policy as an expense, in a case when the client purchased an insurance policy supposing that the accrual accounting method is still being used?

Please mark the appropriate terms for the gaps in the following statement: Common stock has a ________ balance and is a/an ______ to the corporation.

Nonna's Lasagna saw sales of $50,000 in December-primarily due to New Year’s Eve celebrations. Nonna's determined that 30% of his sales are paid in cash, while the rest are billed for their brewskies. Of the money owed, 40% is paid December, while the remaining is paid the following month. What is the increase of Accounts Receivable on New Year’s Eve?

Please mark the three words which describe the ethical responsibilities of accountants:

Please mark the three words which describe the ethical responsibilities of accountants:

Please mark the correct statement(s) regarding the following case: Nonna's Lasagna has grown beyond the imaginable. They are now a corporation and have hired an accountant. Their income statement is now showing a net income. How is this income shown on the Statement of Retained Earnings? I. It increases retained earnings. II. It is shown as dividends paid to shareholders. III. It does not impact the Statement of Retained Earnings.

During 2009, Nonna's Lasagna saw a jump in accounts receivables. It went from $10,000 at year-end in 2007 to $20,000 at year-end in 2008. With the introduction of his newest mini-rolls lasagna, lasagnnetta-s, Nonna's saw his sales go extremely high. In 2008, his sales were $120,000. How much cash did Nonna's Lasagna take in for 2008?

AMC sells hardware. Their sales have finally reached $1,000,000 annually after years of hard work. Now their accountant has discovered a mistake-AMC misclassified a $2 expense several months ago. Their accountant decides to ignore it. What accounting concept does the accountant use to justify this?

Owner’s equity or capital is calculated by:

What is another name for an income statement?

Maria, the lawyer is going to represent Nonna's Lasa in an upcoming litigation. Nonna's is being sued for representing their mini-lasagna as being salt-free, when in fact, they were of 1,5 g. salt. Maria has asked Nonna's for a retainer of $1,000 before she’ll even meet with Nonna's. The payment from Nonna's to Maria is:

Max Make-up is being sued by a former employee for $200,000. The employee is claiming race discrimination. She is Hispano-American and was terminated when Max Make-up decided that he wanted all employees to be American. Max Make-up's attorney has told them that the employee has a strong case and will probably win. How does this impact Max Make-up's accounting records?

Please mark one of the following which is subtracted from net sales to determine gross profit:

Max Make-up will shut down their Max Division. Where on the income statement would this closing be addressed?

Maria, who uses the accrual basis of accounting, hired an extra driver to help him make deliveries in December. The extra driver only works from April 1st through the 30th. Maria pays the driver on April 5th, but the expense is shown on the April income statement. Why?

The marketing expense and an overhead expense are constituents of:

Please mark the following statement as true or false: Expenses cannot be estimated on income statements.  

Please mark the correct accounts receivable turnover ratio for the year in the following case: Maria’s accounts show the following for the year: Net Sales on Account: $200,000 COGS: $150,000 Accounts Receivable at the beginning of the year: $22,500 Accounts Receivable at year end: $17,500 Inventory at the beginning of the year: $45,000 Inventory at the end of the year: $55,000

Sean's Printing discards a copier that it purchased for $100,000. If the machine’s accumulated depreciation is $99,000, what would the journal entry be to record the disposal?

If Sean’s Printing signs a contract on December 28 with Nonna's Lasagna to provide him with 1,000 going-out-of-business flyers, but the work will not be performed until January of the following year, where will this transaction be recorded on the December 31 balance sheet?

Please mark the choice that would appear first under the assets category in a balance sheet:

Please mark the contra account:

Please mark the statement you consider true regarding the difference between book value and shareholder’s equity:

Please mark the most appropriate way of transaction recording if Nonna's Lasagna, which is not publicly traded, issues common stock in exchange for a new delivery truck:

Nonna's Lasagna  shows the following balances in the books: Common Stock: $200,000 Paid in Capital in Excess of Par: $20,000 Retained Earnings: $95,000 Treasury Stock: $10,000 What is the total stockholder’s equity?  

The balance sheet will display a deferred credit as a/an:

These widgets were available in inventory for sale during the year. Here is the rise of the costs throughout the year: Beginning Inventory: 5 units at $51 Purchase 1: 12 units at $53 Purchase 2: 15 units at $54 Purchase 3: 10 units at $63 The ending inventory was 10 units. If the company uses the periodic system for inventory, what is the value of the inventory at year end using the average cost method?

Amalfi's Best decided to purchase Nonna's Lasagna. Nonna's Lasagna has a book value of $550,000. Amalfi's Best paid $655,000 in stock and cash under the purchase method. How much goodwill would Amalfi's Best be required to put on its balance sheet?

What is Amalfi's Best's debt to equity ratio if the Amalfi's Best owes  $100,000 in long term debt, $50,000 in short term loans, and has $1,000,000 in shareholder equity?

How much cash is generated from the sale if $5,000,000 in 7% bonds are issued at 104 ½?

If Amalfi's Best purchases a mozzarella producer for $150,000 and the owner retained 12.21%, what is the minority interest that is put on the balance sheet?

Lizzy has the following accounts: Accounts Receivable: $10,000 Land: $20,000 Cash: $22,000 Intangible Assets: $12,500 Inventory: $33,000 Equipment: $99,000 Prepaid Expenses: $10,000 Please mark what is the amount of Lizzy’s quick assets:

Please mark the financial statements which will be affected if Amalfi's Best notices an increase in sales and no increase in expenses: I balance sheet II income statement III statement of retained earnings

Don’s Nachos purchases land and finances that purchase by issuing a long-term bond at par. Dilbert does not have to pay interest for at least 12 months according to the terms. This purchase will lead to:

Please mark the term(s) which refer to the principal amount of the bond that the issuing corporation will pay the bondholders on the bond’s maturity date:

Please mark what would be the total that an issuing corporation would pay to a bondholder in the following 10 years if the corporation issues a 10-year $100,000 8% bond:

Quicksy Pups had a total of 100,000 shares of common stock issued. In March, they reacquired 20,000 shares and did not retire them. Please mark how many shares of outstanding stock they have:

Please mark the book value of each share of stock, if Quicksy Pups has $1,000,000 in assets after purchasing Softy Cats, along with $500,000 in liabilities:

Please mark the book value of the share of stock if a share of cumulative preferred stock has a call price of $95 and has had four years of dividends of $5 each:

The statement of cash flow reports are used for: I Investing activities II Financing activities III Operating activities IV Supplemental activities

Please mark the transactions which have a negative impact on cash:

Please mark the section on the statement of cash flows in which one will report equipment used by a corporation in its operations and sold at a loss:

Please mark the section on the statement of cash flows in which the purchase of treasury stock will be shown:

Please mark the difference between a balance sheet and a trial balance: