Research & Evidence-Based Practice Flashcards
7 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 7 Research & Evidence-Based Practice flashcards as text
A CPA needs to determine the proper revenue recognition for a multi-element software arrangement. Which ASC topic is MOST directly applicable?
Answer: ASC 606
ASC 606 (Revenue from Contracts with Customers) is the primary standard governing revenue recognition, including most software arrangements, replacing prior industry-specific guidance.
When using the FASB ASC research tool, what does a CPE gray paragraph indicate?
Answer: The paragraph does not apply to private companies that have adopted PCC alternatives
Gray text in FASB ASC indicates content that has been amended or does not apply to entities that have adopted Private Company Council (PCC) alternatives.
A CPA is resolving a conflict between two pieces of authoritative GAAP guidance within the FASB ASC. What should the CPA do?
Answer: Apply the more specific guidance over the more general guidance
When two authoritative GAAP standards conflict, the more specific guidance generally takes precedence over broader, more general guidance.
Under IRC Section 61, which of the following is NOT included in gross income by default?
Answer: Gifts received from a family member
IRC Section 102 explicitly excludes gifts and inheritances from gross income, making them a statutory exclusion from the broad IRC Section 61 definition.
A CPA is researching the tax treatment of a stock dividend. Which primary authority should be consulted FIRST?
Answer: IRC Section 305 and related Treasury Regulations
IRC Section 305 and its Treasury Regulations are the primary authoritative sources governing the taxability of stock dividends.
Under PCAOB AS 1105, what is the auditor's responsibility when evaluating the sufficiency of audit evidence?
Answer: Obtain sufficient appropriate evidence to provide a reasonable basis for the audit opinion
PCAOB AS 1105 requires the auditor to obtain sufficient appropriate audit evidence to reduce audit risk to an acceptably low level and support the audit opinion.
A CPA researching a valuation question for a business combination under ASC 805 needs to determine fair value. Which guidance should be used to MEASURE that fair value?
Answer: ASC 820 — Fair Value Measurement
ASC 820 provides the framework for measuring fair value and applies across all ASC topics that require or permit fair value measurement, including business combinations under ASC 805.