Mixed Deck — All Certified Public Accountant Topics Flashcards
100 cards from real Certified Public Accountant practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 20 Mixed Deck — All Certified Public Accountant Topics flashcards as text
Residual risk is best defined as:
Answer: The risk remaining after management applies risk responses
Residual risk is the risk that remains after management has implemented risk responses and internal controls.
A CPA acting as a forensic accountant testifying as an expert witness must ensure their testimony is:
Answer: Objective, based on sufficient data, and within their area of expertise
AICPA forensic standards and FRE 702 require expert testimony to be objective, grounded in sufficient facts or data, and within the expert's area of specialized knowledge.
Under PCAOB standards, the auditor's report on internal control over financial reporting for a public company must include:
Answer: The auditor's opinion on management's assessment and the effectiveness of ICFR
PCAOB AS 2201 requires the auditor to express an opinion on both management's assessment of ICFR and the actual effectiveness of ICFR.
A CPA discovers a material misstatement in a client's financial statements after the audit report has been issued. Which stakeholder should be notified FIRST?
Answer: The client's management and those charged with governance
Per AU-C Section 560, the CPA should first inform management and those charged with governance before determining further action regarding subsequent discovery of facts.
What is the primary competency framework for Certified Public Accountant professionals?
Answer: Structured competency standards defined by the certifying body
This is fundamental to Certified Public Accountant practice. Structured competency standards defined by the certifying body represents the professional standard for professional standards in the Certified Public Accountant certification framework.
Which of the following is an example of a substantive analytical procedure?
Answer: Comparing current-year gross margin to prior-year gross margin
Comparing current-year gross margin percentage to prior years is an analytical procedure that evaluates financial data by studying plausible relationships.
How should an Certified Public Accountant professional approach a novel situation not covered by standard procedures?
Answer: Apply foundational principles, assess risks, consult resources, and document the rationale for decisions
This is fundamental to Certified Public Accountant practice. Apply foundational principles, assess risks, consult resources, and document the rationale for decisions represents the professional standard for practical in the Certified Public Accountant certification framework.
Which encryption standard is currently recommended by NIST for protecting highly sensitive financial data?
Answer: AES-256
AES-256 (Advanced Encryption Standard with 256-bit keys) is the current NIST-recommended standard for protecting sensitive data and is considered computationally infeasible to brute-force.
How should Certified Public Accountant professionals evaluate new technology tools?
Answer: Assess functionality, reliability, security, cost-effectiveness, and alignment with professional needs
This is fundamental to Certified Public Accountant practice. Assess functionality, reliability, security, cost-effectiveness, and alignment with professional needs represents the professional standard for technology in the Certified Public Accountant certification framework.
In capital budgeting, what is the internal rate of return (IRR) used to evaluate?
Answer: The discount rate that makes NPV equal to zero
IRR is the discount rate at which the net present value of all future cash flows equals zero, and it is compared to the required rate of return to decide on project acceptance.
Under the Uniform Partnership Act, which of the following acts requires unanimous consent of all partners?
Answer: Admitting a new partner
Admitting a new partner requires unanimous consent of all existing partners.
Under the passive activity loss rules (IRC Section 469), when can a real estate professional deduct rental losses against ordinary income without limitation?
Answer: When the taxpayer materially participates in real property trades or businesses
A qualifying real estate professional who spends more than 750 hours and more than half of their personal service time in real property activities can deduct rental losses against ordinary income.
What does the 'conceptual framework' approach in the AICPA Code require a CPA to do when facing an ethical conflict?
Answer: Identify threats to compliance, evaluate significance, and apply safeguards
The conceptual framework requires CPAs to identify and evaluate threats to fundamental principles, assess their significance, and apply safeguards to eliminate or reduce them to an acceptable level.
Under the federal tax code, which method of accounting must a C corporation with average annual gross receipts over $30 million generally use?
Answer: Accrual method
C corporations (other than farming businesses and qualified personal service corporations) with average annual gross receipts over $30 million (2024 threshold) must use the accrual method.
Under the Sarbanes-Oxley Act (SOX), which section requires management to assess and report on the effectiveness of internal controls over financial reporting?
Answer: Section 404
SOX Section 404 requires management to annually assess and report on the effectiveness of internal controls over financial reporting, with external auditor attestation for large accelerated filers.
For the 2024 tax year, what is the standard deduction amount for a single filer under age 65?
Answer: $14,600
For 2024, the standard deduction for a single filer under age 65 is $14,600, an increase from the $13,850 amount in 2023.
Which fund type is used to account for a government's general operations and services?
Answer: General Fund
The General Fund accounts for most of a government's basic services and general operations that are not accounted for in other funds.
A CPA is auditing a pension plan and finds the projected benefit obligation (PBO) exceeds the fair value of plan assets by $2 million. Under ASC 715, what must the employer report?
Answer: Record a $2 million net pension liability on the balance sheet
ASC 715 requires the funded status of a defined benefit plan to be recognized on the balance sheet; an underfunded plan results in a net pension liability.
Which measure best quantifies the potential loss from a risk at a specific confidence level over a defined time horizon?
Answer: Value at Risk (VaR)
Value at Risk (VaR) quantifies the maximum expected loss over a defined period at a given confidence level (e.g., 95% or 99%).
Under AICPA standards, when can a CPA charge a contingent fee for services?
Answer: For tax matters if there is a reasonable expectation of IRS review
CPAs may charge contingent fees in tax matters where there is a reasonable expectation that the fee arrangement will not impair independence, such as representing a client in an IRS examination.