Wiley CPAexcel Exam Review 2022 Practice Questions: Financial Accounting and Reporting

BOOST YOUR REVIEW WITH CPA PRACTICE QUESTIONS The Wiley CPAexcel Practice Questions four-volume set provides 2,000 multiple-choice questions (500 per part) and 20 task-based simulations (5 per part) to test your knowledge of content on all four sections of the CPA exam. The Practice Questions are the perfect companion to the Wiley CPAexcel Study Guides and are meant to reinforce this valuable study text. These practice questions map to the Wiley CPAexcel online course and are specifically designed to test your AICPA Blueprint knowledge, including how questions are worded on the CPA exam. Answer rationales so you can understand why your answer is correct Organized in sections to accompany the Wiley CPAexcel Study Guides Maps to content in the Wiley CPAexcel online course Used by leading review providers BONUS: Free 1-week access to the Wiley CPAexcel Online Test Bank for FAR (details inside the cover of this book)

Table of Contents:
Multiple Choice Questions 1 Conceptual Framework and Financial Reporting 3 Financial Accounting Standards Board (FASB) 3 Overview of U.S. GAAP 3 FASB and Standard Setting 3 Accrual Accounting 3 Financial Accounting Standards Codification 4 Conceptual Framework of Financial Reporting by Business Enterprises 5 Objective and Qualitative Characteristics 5 Assumption and Accounting Principles 5 Fair Value Framework 5 Fair Value Framework—Introduction and Definitions 5 Recognition and Measurement 5 Inputs and Hierarchy 6 Disclosure Requirements 6 Balance Sheet/Statement of Financial Position 7 Income Statement 8 Statement of Comprehensive Income 9 Statement of Changes in Equity 10 Statement of Cash Flows 11 Sources and Uses of Cash 11 Operating, Investing, and Financing Activities 11 Operating Cash Flows—Indirect Method 12 Notes to Financial Statements 12 Notes to Financial Statements 12 Risks and Uncertainties 13 Subsequent Events 13 Exit or Disposal Activities and Discontinued Operations 14 Evaluating Financial Statements 14 Ratios—Liquidity/Solvency and Operational 14 Ratios—Profitability and Equity 15 Consolidated Financial Statements 15 Introduction to Consolidated Financial Statements 15 Consolidating Process 15 Consolidation at Acquisition 15 Consolidation Subsequent to Acquisition 16 Consolidation Less than 100% Ownership 16 Intercompany (I/C) Transactions and Balances 17 Intercompany (I/C) Transactions and Balances — Introduction 17 Intercompany (I/C) Inventory Transactions 17 Intercompany (I/C) Fixed Asset Transactions 18 Intercompany (I/C) Bond Transactions 18 Intercompany (I/C) Transactions and Balances 18 Intercompany (I/C) Transactions and Balances — Introduction 18 Combined Financial Statements 19 Variable Interest Entities (VIEs) 19 SEC—Role and Standard-Setting Process 20 SEC Reporting Requirements 20 Earnings Per Share 21 Introduction to Earnings Per Share 21 Basic Earnings Per Share 21 Diluted Earnings Per Share 22 Segment Reporting 22 Interim Financial Reporting 23 Interim Reporting Principles 23 Special-Purpose Frameworks 23 Cash, Modified Cash, Income Tax 23 Private Company Council 24 Select Financial Statement Accounts 25 Cash and Cash Equivalents 25 Cash 25 Bank Reconciliations 25 Receivables 27 Accounts Receivable—Accounting and Reporting 27 Uncollectible—Direct Write-Off and Allowance 27 Allowance for Uncollectible 27 Notes Receivable 28 Criteria for Sale of Receivables 28 Factoring, Assignment, and Pledging 29 Notes Receivable—Impairment 29 Inventory 30 Introduction to Inventory 30 Periodic Inventory System and Cost Flow Assumption 30 Perpetual Inventory System and Cost Flow Assumption 31 Comparison: FIFO, LIFO, and Weighted Average 31 Dollar Value LIFO 31 Gross Margin and Relative Sales Value Method 32 Retail Inventory Method 33 Dollar Value LIFO Retail 33 Subsequent Measurement of Inventory 33 Inventory Errors 33 Losses on Purchase Commitments 34 Property, Plant and Equipment 35 Categories and Presentation 35 Capitalized Costs 35 Valuation 35 Interest Capitalization Basics 36 Interest Capitalization Limits 36 Post-Acquisition Expenditures 37 Non-Accelerated Depreciation Methods 37 Accelerated Depreciation Methods 37 Natural Resources 38 Impairment—Assets for Use and Assets Held-for-Sale 38 Nonmonetary Exchange 39 Commercial Substance 39 No Commercial Substance 40 Investments 40 Introduction—Equity and Debt Investments 40 Investments in Equity Securities 41 Equity Investments at Fair Value 41 Equity Investments at Cost 41 Equity Investments using Equity Method Accounting 42 Investments in Debt Securities 42 Debt Investments at Fair Value 42 Debt Investments at Amortized Cost 43 Investor Stock Dividends, Splits, and Rights 44 Comparison and Transfers of Investments 44 Intangible Assets—Goodwill and Other 45 Introduction to Intangible Assets 45 Goodwill 46 Research and Development Costs 46 Software Costs 47 Payables and Accrued Liabilities 47 Introduction to Current Liabilities 47 Specific Current Liabilities 48 Payroll and Compensated Absences 49 Contingencies, Commitments, and Guarantees 49 Contingent Liability Principles 49 Examples of Contingent Liabilities 50 Financial Liabilities and Long-Term Debt 50 Notes Payable 50 Bonds Payable 51 Bond Accounting Principles 51 Bond Complications 51 Bond Fair Value Option 51 Modification and Debt Retirement 52 Refinancing Short-Term Obligations 52 Debt Retirement 52 Troubled Debt 52 Debt Covenant Compliance 53 Distinguishing Liabilities from Equity 53 Equity 53 Owners’ Equity Basics 53 Stock Issuance 54 Treasury Stock 55 Dividends 55 Stock Dividends and Splits 55 Dividend Allocation 56 Stock Rights, Retained Earnings 56 Book Value Per Share 57 Select Transactions 58 Revenue Recognition 58 Five Steps of Revenue Recognition 58 Determining Transaction Price 58 Allocating Transaction Price 59 Special Issues in Revenue Recognition 59 Contract Modifications and Other Considerations 60 Accounting for Construction Contracts 60 Accounting for Construction Contracts 60 Share-Based Payments 61 Stock Options 61 "Stock Awards" 62 Stock Appreciation Rights 63 Income Taxes 63 Income Tax Basics 63 Permanent Differences 63 Tax Accrual Entry 64 Tax Allocation Process 64 Valuation Allowance for Deferred Tax Assets 65 Uncertain Tax Positions 65 Net Operating Losses 66 Accounting Changes and Error Corrections 66 Types of Changes and Accounting Approaches 66 Retrospective Application 66 Prospective Application 66 Accounting Errors—Restatement 67 Business Combinations 67 Introduction to Business Combinations 67 Acquisition Method of Accounting 67 Introduction to the Acquisition Method of Accounting 67 Determining the Cost of the Business Acquired 68 Recognizing/Measuring Assets, Liabilities and Noncontrolling Interest 68 Recognizing/Measuring Goodwill or Bargain Purchase 68 Post-Acquisition Issues 69 Disclosure Requirements—Acquisition Method 69 Recording Business Combinations 70 Financial Instruments 70 Financial Instruments Introduction 70 Financial Instruments Disclosures 70 Derivatives and Hedging 71 Derivatives Introduction 71 Hedging Introduction 71 Fair Value Hedges 71 Cash Flow Hedges 72 Foreign Currency Hedges 72 Effectiveness and Disclosure 72 Foreign Currency Denominated Transactions 72 Introduction and Definitions 72 Import Transaction 73 Foreign Currency Hedges 73 Introduction to Forward and Option Contracts 73 Natural (Economic) Hedge 73 Hedging Forecasted Transactions and Firm Commitment 74 Hedging Asset/Liability, Available-for-Sale, or Foreign Operations 74 Speculation and Summary 74 Conversion of Foreign Financial Statements 75 Introduction to Conversion of Foreign Financial Statements 75 Conversion Using Translation 75 Conversion Using Remeasurement 75 Remeasurement and Translation 75 Leases 76 Background, Short-Term Leases, and Operating Leases 76 Finance Lease Basics 76 Finance Leases—Lessee 76 Sales-Type Leases—Lessor 77 Direct Financing Leases—Lessor 77 Sale-Leasebacks and Disclosures 77 Additional Aspects of Leases 77 Not-for-Profit Organizations 78 Introduction to Types of Not-For-Profit Entities and Standard Setting 78 Financial Reporting 78 Donations, Pledges, Contributions, and Net Assets 78 Special Issues—Recent Developments 79 Special Industries: Healthcare and Colleges 79 Health Care Organizations 79 Colleges and Universities 80 State and Local Governments 81 State and Local Government Concepts 81 Introduction to Governmental Organizations 81 GASB Concept Statements 81 Fund Accounting 81 Measurement Focus Basis of Accounting 81 Budgetary Accounting 82 Encumbrance Accounting 82 Deferred Outflows and Deferred Inflows of Resources 83 Net Position and Fund Balance 83 Governmental Funds 84 Proprietary Funds 84 Fiduciary Funds 84 The Annual Comprehensive Financial Report 85 Determining the Financial Reporting Entity 85 Major Funds and Fund-Level Reporting 85 Deriving Government-Wide Financial Statements and Reconciliation Requirements 86 Typical items and specific types of transactions and events 86 Interfund Transactions, Construction Projects, and Infrastructure 86 Long-term Liabilities Other Than Bonded Debt 87 Terminology and Non-exchange Transactions 87 Special Items—Recent Developments 88 Answers and Explanations 89 Task-Based Simulations 149 Conceptual Framework and Financial Reporting 151 General-Purpose Financial Statements: Statement of Cash Flows 151 Sources and Uses of Cash 151 Financial Accounting Standards Board (FASB): Fair Value Framework 152 Disclosure Requirements 152 Consolidated Financial Statements: Intercompany (I/C) Transactions and Balances 162 Intercompany (I/C) Inventory Transactions 162 Select Financial Statement Accounts 177 Long-Term Debt (Financial Liabilities): Bonds Payable 177 Bond Accounting Principles 177 Select Transactions 183 Revenue Recognition 183 Special Issues in Revenue Recognition 183

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