AICPA Newly Released MCQs July'20

2020 AICPA Newly Released Questions—Financial
FINANCIAL
July 2020
AICPA Newly
Released MCQs
Page 1 of 45
Registered to Daljeet Singh (#1411612)

2020 AICPA Financial Newly Released MCQs—Medium (Moderate) Rating
1. MCQ-12604
The Super Toy Store inventory records at December 31, revealed the following:
Inventory on hand, December 31 $350,000

Merchandise purchased F.O.B. shipping point, shipped by vendor on
December 31, expected delivery date—January 4 118,000
Merchandise shipped to customers on December 28
F.O.B. destination, expected delivery date–January 3 75,000
Goods held on consignment by Super Toy Store, not included in inventory
on hand 38,000
What was Super Toy Store's ending inventory at December 31?

A. $350,000
B. $393,000
C. $468,000
D. $543,000
Unit & Module to be Assigned To: F-3, M-3

Question Title: AICPA Released July 2020
Include In: HW
Representative Task: FII-C1.1
Skill Level (Must be R&U or Application Only): Application
Page Reference: 21
Correct Answer Choice: D
ANSWER:
Choice "D" is correct. Ending inventory includes goods on hand, but may also include goods in transit,
depending upon the shipping terms. Ownership of the $118,000 in inventory transfers to Super Toy Store
at shipping point and is added to the year-end inventory on hand, even though the goods are not
physically present. The $75,000 of goods shipped to a customer F.O.B. destination are also added to the
year-end inventory on hand because the goods are in transit and ownership does not transfer to the
buyer until the goods are received by the buyer. The goods held on consignment by Super Toy Store are
not added to the year-end counts because Super Toy Store is the consignee and the goods are still the
valid inventory of the consignor.
Choice "A" is incorrect. The valuation of inventory at year-end will include inventory on hand, but must
also consider inventory in transit. The goods purchased from the vendor ($118,000) and the goods
shipped to the customer ($75,000) are included in the year-end inventory value because Super Toy Store
has the right of ownership during transit based upon the shipping terms.
Choice "B" is incorrect. The $393,000 properly includes inventory on hand ($350,000) and the goods
purchased from the vendor ($118,000), but the choice backs out the $75,000 of goods shipped to the
customer. These goods were not on hand at the end of the year and should not be backed out, but rather
added to the year-end inventory value.
Page 2 of 45

Choice "C" is incorrect. The $468,000 properly includes the inventory on hand ($350,000) and the
inventory purchased from the vendor that is in transit ($118,000). However, the inventory shipped to the
customer F.O.B. destination ($75,000) is still owned by Super Toy Store while in transit and therefore
should be included in the year-end inventory value.
Page 3 of 45

2. MCQ-12605
Marble Co. prepared its statement of cash flows using the following amounts:
Net decrease in fixed assets $(3,750)

Depreciation expense 13,000
Gain on sale of equipment, (net book value, $3,250) 1,250
Capital expenditures 12,500
Marble reported a net income of $20,000 at year-end. What amount should Marble report as net cash
provided by operating activities?
A. $19,500
B. $29,250
C. $31,750
D. $33,000

Include In: HW
Representative Task: FI-B5.2
Page Reference: 19
Correct Answer Choice: C
ANSWER:
Choice "C" is correct. The company adjusts the net income of $20,000 by adding back the depreciation
expense of $13,000. Depreciation expense is a noncash expense that reduces net income. The company
also adjusts net income by subtracting the gain of $1,250. Gains increase net income. Because this gain
is accounted for in the cash inflow from the sale of equipment (that is reported in cash flows from
investing activities), it is adjusted out of the operating activities section by subtracting it.
Choice "A" is incorrect. The $29,250 is calculated by subtracting depreciation expense of $13,000 and
adding the capital expenditures of $12,500. Depreciation expense is added back to net income to
calculate cash flows from operating activities, not subtracted, because it is a noncash expense that
reduces net income. Capital expenditures impact cash flows from investing activities, not cash flows from
operating activities.
Choice "B" is incorrect. The choice properly adds back the depreciation expense of $13,000, but it
subtracts the $3,750 decrease in fixed assets. Changes in fixed assets related to the purchase and/or
sale of fixed assets impact the investing activities section of the statement of cash flows.
Choice "D" is incorrect. The choice properly adds back the depreciation expense of $13,000, but does not
subtract the gain of $1,250 related to the sale of equipment. The gain is included in the $20,000 of net
income, but because it will be accounted for in the cash proceeds from the sale of equipment in the
investing activities section, it is adjusted out of the operating activities section.
Page 4 of 45

3. MCQ-12606
On January 1, Nick Co. purchased a delivery truck for $60,000. The truck's salvage value is $2,000, and
its estimated useful life is 10 years. The productive life of the truck is estimated to be 100,000 miles.
During the f irst year, the truck was driven 19,000 miles. Nick uses the double-declining balance method of
depreciation. What amount of depreciation expense should Nick record for the first year?
A. $5,800
B. $11,020
C. $11,600
D. $12,000

Include In: HW
Representative Task: FII-D1.1
Page Reference: 54
ANSWER:
Choice "D" is correct. The double-declining balance method of depreciation doubles the straight-line rate
and ignores salvage value in the expense calculation. The straight-line rate, based on a 10-year
depreciable life, is 10 percent (1/10) per year. Based on the double-declining approach, the company
records 20 percent depreciation expense of the remaining net book value per year. Because the company
has recorded no depreciation expense to date, depreciation expense for the first year totals $12,000
($60,000 × 20%).
Choice "A" is incorrect. Choice "A" calculates depreciation expense based on the straight-line method.
Nick Co. uses the double-declining balance method.
Choice "B" is incorrect. Choice "B" calculates depreciation expense based on the units of production
method. Nick Co. uses the double-declining balance method.
Choice "C" is incorrect. Choice "C" calculates the double-declining expense correctly, except it
incorporates the salvage value into the calculation. The salvage value is ignored when calculating
depreciation expense under an accelerated method like double-declining balance. The salvage value only
impacts the expense calculation in the year when the book value would drop below the salvage value as
a result of recording depreciation expense. In that year, depreciation expense is limited to the amount that
would reduce the book value to the salvage value of the asset.
Page 5 of 45

4. MCQ-12607
Lamb Corp. has taxable income of $240,000 and depreciation expense for tax purposes of $50,000
greater than f inancial reporting purposes. Lamb has a tax rate of 30 percent, and no other differences
exist. Which of the following entries should Lamb make for deferred taxes?
A. $87,000 def erred tax asset.
B. $72,000 def erred tax asset.
C. $57,000 def erred tax liability.
D. $15,000 def erred tax liability.

Include In: HW
Representative Task: FII-L1.3
Page Reference: 58
ANSWER:
Choice "D" is correct. Because Lamb is able to report a greater amount of depreciation expense for tax
purposes than book purposes, financial reporting income is greater than taxable income. The company is
saving money in taxes now, but it will end up paying this cash at a later date. This difference is a
temporary difference that results in a deferred tax liability. The difference of $50,000 is multiplied by the
tax rate of 30 percent to determine the amount of the DTL, which is $15,000.
Choice "A" is incorrect. Choice "A" takes the taxable income of $240,000 and adds the $50,000 tax
depreciation expense before multiplying the sum by 30 percent. Deferred tax assets and liabilities are
calculated by taking the amount of the temporary difference only, in this case $50,000, and multiplying by
the appropriate tax rate. In addition, because financial reporting income is greater than taxable income, a
DTL is recorded rather than a DTA.
Choice "B" is incorrect. Choice "B" represents the income tax expense that is reported in the income
statement, not the amount of the DTL. Because the depreciation expense is the only difference between
f inancial reporting income and taxable income, income tax expense on the income statement will total
$72,000 ($240,000 × 30%). Also, because financial reporting income is greater than taxable income, a
DTL is recorded rather than a DTA.
Choice "C" is incorrect. Choice "C" represents the income tax payable that is reflected on the balance
sheet. This is not the same as the DTL, but represents the amount of cash that Lamb will pay for this tax
year when tax returns are f iled in the subsequent year. The $57,000 is calculated as follows:
Taxable income $240,000
Deductible depreciation expense 50,000
Adjusted taxable income $190,000 × 30% = $57,000
Page 6 of 45

5. MCQ-12608
For the eight months ended August 31, Year 5, the carpet division of a flooring company, which is
considered a major line of business, had an operating loss of $115,000 from operations. On September 1,
Year 5, the board of directors voted to discontinue the division's operations. On December 31, Year 5, the
division was sold for a pretax loss of $135,000. The division's operating loss for Year 5 was $240,000.
The company's income tax rate is 30 percent. What amount of loss should the company report as
discontinued operations in the December 31, Year 5, income statement?
A. $262,500
B. $260,000
C. $182,000
D. $168,000

Include In: HW
Page Reference: 47
Correct Answer Choice: A
ANSWER:
Choice "A" is correct. When a company decides to sell a component or division of the business that
qualif ies for discontinued operations treatment, all impacts to net income are reported as discontinued
operations. This includes total revenues and expenses from operations for the year, as well as the gain or
loss resulting from the sale of the division. In this case, the company adds the Year 5 operating loss of
$240,000 and the loss from disposal of $135,000 for a pretax total loss of $375,000. Discontinued
operations are reported net of tax, resulting in a total net of tax loss of $262,500 [$375,000 × (1 ‒ 30%)].
Choice "B" is incorrect. The loss from operations reported by the division in Year 5 plus the loss on
disposal of the division at the end of Year 5 should be added together and presented net of tax as
discontinued operations. This choice does not properly include these two components.
Choice "C" is incorrect. Choice "C" includes only the operating loss from September 1 to December 1
($125,000) with the pretax loss from the sale of division ($135,000) in calculating the net of tax number.
The date that the board decides to sell the division does not affect the reporting of discontinued
operations' revenues and expenses. The company will report all income or loss from operations for Year
5 as discontinued operations in the income statement, not just the income or loss from the decision date
f orward.
Choice "D" is incorrect. Choice "D" only includes the loss from operations in calculating the overall loss
f rom discontinued operations. The company reports both income (loss) from operations and any gain
(loss) f rom disposal of the division, net of tax, as discontinued operations.
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6. MCQ-12609
Which of the following common characteristics of derivative financial instruments distinguishes them from
other types of financial instruments?
A. They impose a contractual obligation by one entity to deliver cash to a second entity to convey a
contractual right.
B. They are f inancial investments in stocks, bonds, or other securities that are marketable.
C. They have a notional amount or payment provision that is based on the changes in one or more
underlying variables.
D. Most financial instruments are valued on the balance sheet at fair value, but derivatives are valued
on the balance sheet at cost.

Include In: HW
Representative Task: FIII-D1.1
Skill Level (Must be R&U or Application Only): R&U
Page Reference: 31
ANSWER:
Choice "C" is correct. A derivative is a f inancial instrument that derives its value from the value of some
other instrument and has three characteristics: (1) it has one or more underlyings, and one or more
notional amounts or payment provisions, or both; (2) it requires no initial net investment or one that is
smaller than would be required for other types of similar contracts; and (3) its terms require or permit a
net settlement, or it can readily be settled net outside the contract or by delivery of an asset that gives
substantially the same results.
Choice "A" is incorrect. This is the definition of a financial instrument, specifically, a f inancial liability.
Choice "B" is incorrect. These are all examples of financial instruments, including debt and equity
investments, but are not characteristics of derivative financial instruments.
Choice "D" is incorrect. All derivatives are valued on the balance sheet at fair value.
Page 8 of 45

7. MCQ-12610
Wright Co. is a small, privately held entity established at the beginning of Year 1. Wright decided to
prepare cash basis financial statements. At the end of Year 1, the company recorded receivables of
$2,000,000 and accrued expenses of $900,000, which were included in the total expenses incurred for
the year of $2,200,000, with $1,300,000 paid during the year. Cash sales of $1,200,000 were fully
recognized for the year. What is the company's cash-basis income/loss from operations at the end of
Year 1?
A. A loss of $1,900,000.
B. A loss of $1,000,000.
C. A loss of $100,000.
D. Income of $1,000,000.

Include In: HW
Representative Task: FI-F1.3
Page Reference: 37
ANSWER:
Choice "C" is correct. The cash basis of accounting considers cash inflows as revenues and cash
outf lows as expenses. In this case, the company received cash of $1,200,000 during the year. The
company fully recognized these cash collections as revenue, but even if they had not been fully
recognized, because the company collected the cash, they factor into cash basis income/loss. The
company paid $1,300,000 in cash for expenses. Cash basis loss for the year is the difference between
the two amounts, or $100,000. The T-accounts below illustrate how revenues and cash impact the
receivables account and how expenses and cash impact the accrued expenses account.
Choice "A" is incorrect. The loss of $1,900,000 considers the correct cash receipt amount of $1,200,000,
but uses the incorrect expense of $3,100,000 (the sum of the $2,200,000 expense incurred and the
ending accrued expense balance of $900,000). Neither of these expenses reflect the cash basis expense,
and only the $2,200,000 reflects the accrual basis expense because the ending balance of $900,000
already accounts for the difference between the $2,200,000 of expense incurred and the cash paid of
$1,300,000.
Choice "B" is incorrect. The loss of $1,000,000 considers the correct cash receipt amount of $1,200,000
but uses the $2,200,000 of accrual basis expenses in the calculation. The accrual basis expense number
does not affect the cash basis income/loss; rather, the cash payment of $1,300,000 should be netted with
the $1,200,000 to calculate cash basis net income/loss.
Choice "D" is incorrect. This choice provides the answer for accrual basis income/loss, not cash basis
income/loss. The company would report accrual basis income of $1,000,000, which is the difference
Page 9 of 45

between accrual basis revenue of $3,200,000 and accrual basis expense of $2,200,000. The $3,200,000
is not presented in the problem, but can be calculated using the receivables T-account presented above
and solving for the “?”.
Page 10 of 45

8. MCQ-12611
A company has a single, defined benefit pension plan for all employees. At year-end, the company's
projected benefit obligation is $1 million and the fair value of plan assets is $3 million, which is comprised
of $1.5 million of contributions made by the company and $1.5 million of recognized investment returns.
What should the company report related to the defined benefit pension plan in its statement of financial
position at the end of the current year?
A. A current liability of $2 million.
B. Both a current liability of $1 million and a current asset of $3 million.
C. A non-current asset of $2 million.
D. A non-current asset of $1.5 million.

Include In: HW
Representative Task: FII-K2.1
Page Reference: 15
ANSWER:
Choice "C" is correct. The f unded status of a pension plan is presented on the statement of financial
position. A positive funded status is presented as an asset (non-current only) and a negative funded
status is presented as a liability (split between current and non-current, depending upon the payable due
within the next year). In this case, the funded status is positive because the fair value of the plan assets of
$3,000,000 exceeds the PBO of $1,000,000. Overfunded pension plans are aggregated together and
reported as a non-current asset; therefore, the company presents the funded status of $2,000,000 as a
non-current asset.
Choice "A" is incorrect. Because the fair value of the plan assets exceeds the PBO, the company will
report a pension plan asset and not a pension plan liability in the statement of financial position.
Choice "B" is incorrect. The f air value of the plan assets and the PBO are netted together for reporting
purposes, not presented separately as this choice suggests. Because the fair value of the plan assets
exceeds the PBO, the net amount is reported as a pension plan asset.
Choice "D" is incorrect. The f unded status is presented as a non-current asset, but the funded status is
the dif ference between the fair value of the plan assets of $3,000,000 and the PBO of $1,000,000. The
split of the assets between contributions ($1.5 million) and investment returns ($1.5 million) does not
af f ect the reporting.
Page 11 of 45

9. MCQ-12612
An investment company's portfolio of private placement securities is recorded at fair value and valued
using a matrix pricing model. The matrix pricing model uses current pricing spreads on similar securities
to determine the fair value of the private placement securities. Which of the following valuation techniques
is being used?
A. The cost approach.
B. The market approach.
C. The exchange approach.
D. The income approach.

Include In: HW
Representative Task: FIII-K1.1
Page Reference: 17
Correct Answer Choice: B
ANSWER:
Choice "B" is correct. The market approach uses prices and other relevant information from market
transactions involving identical or comparable assets/liabilities to measure fair value. The company is
using comparable securities where pricing is available to estimate the fair value of the private placement
securities.
Choice "A" is incorrect. The cost approach uses current replacement cost to measure the fair value of
assets. This company is using comparable assets to determine the fair value of the private placement
securities.
Choice "C" is incorrect. The exchange approach is not a valuation technique that is used to determine the
f air value of assets and liabilities.
Choice "D" is incorrect. The income approach converts future amounts, including cash flows or earnings,
to a single discounted amount to measure fair value. This company is using comparable assets to
determine the fair value of the private placement securities.
Page 12 of 45

10. MCQ-12613
The vacation policy for a company is as follows:
Years of Service Annual Vacation (in Days)

1‒5 6
6‒10 12
11+ 18
Employee information for the company is as follows:
Employee Years of Service

A 1
B 6
C 12
The calendar-year company is closing its three-month period ended March 31. Each employee's gross
pay is $100 per day, and no employee has taken any vacation time as of March 31. What amount should
be accrued for vacation pay for the three-month period ended March 31?
A. $150
B. $300
C. $450
D. $900

Include In: HW
Representative Task: FII-K1.1
Page Reference: 8
ANSWER:
Choice "D" is correct. Based on the vacation policy and the employees who currently work for the
company, the company calculates the accrual for vacation pay as follows:
The company accrues vacation expense only for the months during the year where the vacation has
been earned, which is the three-month period ending March 31.
Choice "A" is incorrect. The $150 only accounts for Employee A's vacation pay accrual through the end
of March.
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Choice "B" is incorrect. The $300 only accounts for Employee B's vacation pay accrual through the end
of March.
Choice "C" is incorrect. The $450 only accounts for Employee C's vacation pay accrual through the end
of March.
Page 14 of 45

11. MCQ-12614
A corporation declared a 10 percent stock dividend on 15,000 shares outstanding of $5 par common
stock when the fair value was $10 per share. Which change in the corporation's stockholders' equity
accounts is correct?
A. Retained earnings is decreased by $15,000.
B. Additional paid-in-capital is increased by $15,000.
C. Common stock is decreased by $7,500.
D. Common stock is increased by $15,000.

Include In: HW
Representative Task: FII-I1.1
Page Reference: 54
ANSWER:
Choice "A" is correct. A 10 percent stock dividend qualifies as a small stock dividend because the
issuance is not expected to affect the market price of the stock. The stock dividend totals 1,500 shares
(15,000 shares × 10% dividend). The f air value of the stock on the date of declaration is transferred from
retained earnings to common stock and additional paid-in-capital as follows:
DR Retained earnings 15,000 (1,500 shares × $10/share fair value)
CR Common stock 7,500
CR Additional paid-in-capital 7,500
Choice "B" is incorrect. The increase to total capital stock is $15,000, but the increase to additional paid-
in-capital totals $7,500. The credit to common stock is $7,500 (1,500 shares × $5 par value) and the
remaining credit is to additional paid-in-capital for the excess of the fair value over the par value of the
stock issued.
Choice "C" is incorrect. Common stock increases because of a stock dividend. Retained earnings
decreases.
Choice "D" is incorrect. The increase to total capital stock is $15,000, but the increase to common stock is
only $7,500 because it is based upon the $5 par value of the stock (1,500 shares × $5 par value).
Page 15 of 45

12. MCQ-12615
Tiger Rags is evaluating its financial statement disclosures relating to gain contingencies. When should
Tiger Rags recognize the gain on the contingency?
A. When realized.
B. When clearly defined.
C. When reasonably possible and the amount can be estimated.
D. When probable and the amount can be estimated.

Include In: HW
Representative Task: FIII-C1.1
Page Reference: 17
ANSWER:
Choice "A" is correct. Gain contingencies are not recognized in the financial statements because to do so
may cause recognition of revenue prior to its realization. Gain contingencies are recorded when the gain
is realized.
Choice "B" is incorrect. When a gain contingency is clearly defined, it may be appropriate to disclose the
contingency in the notes to the financial statements, but the gain contingency is not recorded until the
gain is realized.
Choice "C" is incorrect. When a gain contingency is reasonably possible and the amount can be
estimated, it may be appropriate to disclose the contingency in the notes to the financial statements.
However, the gain contingency is not recorded until the gain is realized. This is also true of a loss
contingency with these characteristics as note disclosure is appropriate, but no recording of the loss
occurs in the income statement when the loss is reasonably possible until the loss is incurred.
Choice "D" is incorrect. When a gain contingency is probable and the amount can be estimated, it may be
appropriate to disclose the contingency in the notes to the financial statements. However, the gain
contingency is not recorded until the gain is realized. A loss contingency with these characteristics would
be recorded in the income statement.
Page 16 of 45

13. MCQ-12616
Rus City purchased the local water and sewer utility and intends to operate the utility and charge user
f ees to the current customers for the services. In order to bring the utility up to current Environmental
Protection Agency (EPA) standards, Rus City issued bonds that would be backed solely by the fees
charged. In which fund should Rus City record the utility's activities?
A. Enterprise.
B. Debt service.
C. Internal service.
D. Special revenue.
Unit & Module to be Assigned To: F-10, M1

Include In: HW
Representative Task: FIV-A3.1
Page Reference: 7
ANSWER:
Choice "A" is correct. The activities of the Rus City water and sewer utility would be recorded in an
enterprise f und. Activities financed with debt that is secured solely by a pledge of the net revenue from
f ees and charges, or whose costs are recovered by fees and charges either under the authority of laws
and regulations or pricing policies, qualify for accounting and reporting in an enterprise fund. The Rus City
water and sewer utility is capitalized by debt backed by fees.
Choice "B" is incorrect. The activities of the Rus City water and sewer utility would be recorded in an
enterprise f und, not a debt service fund. A debt services fund is used to accumulate resources and pay
currently due interest and principal on long-term general obligation debt. The Rus City water and sewer
utility is a proprietary operation that will provide comprehensive water and sewer service, not simply
service debt. In addition, the debt relates to the enterprise fund and is not general long-term debt.
Choice "C" is incorrect. The activities of the Rus City water and sewer utility would be recorded in an
enterprise f und, not an internal service fund. Although all proprietary funds (internal service and
enterprise f unds) share the characteristic of fee-supported activities, enterprise funds serve external
customers, and internal service funds serve the government itself either exclusively or almost exclusively.
The water and sewer utility purchased by Rus City serves external customers.
Choice "D" is incorrect. The activities of the Rus City water and sewer utility would be recorded in an
enterprise f und, not a special revenue fund. Special revenue funds account for revenues and
expenditures that are legally restricted for specific purposes. Special revenue funds relate to
governmental rather than fee-supported proprietary activities like those of the Rus City water and
sewer utility.
Page 17 of 45

14. MCQ-12617
Changes to existing authoritative GAAP for nonissuer, nongovernmental entities are communicated by
the Financial Accounting Standards Board through the issuance of:
A. Exposure Drafts.
B. Concept Statements.
C. Accounting Standards Updates.
D. Statements of Financial Accounting Standards.

Include In: HW
Representative Task: FI-A2.1
Page Reference: 4
ANSWER:
Choice "C" is correct. When the FASB announces a change to existing authoritative GAAP, it is done
through an Accounting Standards Update, which details the specific changes/updates made to the
Accounting Standards Codification.
Choice "A" is incorrect. Exposure Drafts are preliminary drafts of a proposed standard that the FASB uses
during the due process system of standard setting. The exposure draft allows for feedback from
interested user groups and is used in the creation of the Accounting Standards Update, but it is not the
document that contains the final changes to authoritative GAAP.
Choice "B" is incorrect. Concept Statements are issued by the FASB; however, Concept Statements are
not GAAP and do not change existing authoritative GAAP. Instead, these statements provide the
f ramework and basis upon which accounting standards are written.
Choice "D" is incorrect. Prior to the creation of the Accounting Standards Codification, new accounting
standards were issued as Statements of Financial Accounting Standards. However, this is old
terminology because any update to the Codification is now made with an Accounting Standards Update.
Page 18 of 45

15. MCQ-12618
On January 1, Year 1, the general fund of a state government made a capital acquisition of $50,000. The
asset's useful life is 10 years, and the government uses the straight-line basis of depreciation. What is the
complete journal entry that should be recorded on December 31, Year 1, when reconciling the fund
f inancial statements to the government-wide financial statements?
A. Debit capital asset $45,000; credit capital acquisition $45,000.
B. Debit capital asset $50,000; credit expenditures $45,000; credit accumulated depreciation $5,000.
C. Debit capital asset $50,000; credit capital acquisition $45,000; credit accumulated depreciation
$5,000.
D. Debit capital asset $50,000; credit expenditures $50,000; debit depreciation expense $5,000; credit
accumulated depreciation $5,000.
Unit & Module to be Assigned To: F10, M6

Include In: HW
Representative Task: FIV-C1.1
Page Reference: 73
ANSWER:
Choice "D" is correct. The workpaper entry required to recognize non-current capital assets purchased by
a governmental fund along with related depreciation expense in the governmental activities column of the
government-wide financial statements would be as follows:
DR Capital asset 50,000
CR Capital outlay expenditure 50,000
To capitalize asset acquired for governmental activities in accordance with the economic resources
measurement focus.
DR Depreciation expense 5,000

CR Accumulated depreciation 5,000
To record depreciation expense on capital assets in accordance with the accrual basis of accounting
computed as follows ($50,000 ÷ 10-year useful life = 5,000).
Choice "A" is incorrect. Capital assets are not recorded net of accumulated depreciation. In addition,
capital asset recognition includes elimination of capital outlay expenditures, not creation of a capital
acquisition account.
Choice "B" is incorrect. Capital assets are recorded in their gross amount as proposed by the answer
choice, however, capital expenditures are eliminated in their entirety, no net of depreciation expense and
depreciation expense are recognized in total.
Choice "C" is incorrect. Capital assets are recorded in their gross amount as proposed by the answer
choice, however, capital expenditures are eliminated in their entirety, no capital acquisition account is
created, and depreciation expense is recognized in total.
Page 19 of 45

16. MCQ-12619
Under which of the following circumstances does substantial doubt exist about an entity's ability to
continue as a going concern?
A. The entity is not in compliance with statutory capital requirements.
B. The entity's CFO has retired, and there is no definitive succession plan in place.
C. The entity projects that it will have negative cash flows from operating activities over the next 12
months.
D. It is probable that the entity will be unable to meet its obligations coming due within 12 months of
f inancial statement issuance.

Include In: HW
Page Reference: 7
ANSWER:
Choice "D" is correct. Substantial doubt exists when relevant conditions and events, when considered in
the aggregate, indicate it is probable that the entity will not be able to meet its obligations as they become
due within one year from the financial statement issuance date.
Choice "A" is incorrect. The entity's noncompliance with statutory capital requirements should be
considered in the evaluation of quantitative and qualitative factors in determining whether substantial
doubt exists, but this factor alone does not provide substantial doubt about the entity's ability to continue
as a going concern.
Choice "B" is incorrect. Not having a definite plan to replace the retired CFO does not provide substantial
doubt about the entity's ability to continue as a going concern. This scenario could happen to financially
strong companies.
Choice "C" is incorrect. The entity's projection that it expects negative cash flows from operating activities
in the upcoming year should be considered in the evaluation of quantitative and qualitative factors in
determining whether substantial doubt exists. However, this factor alone does not provide substantial
doubt about the entity's ability to continue as a going concern. Many companies, especially companies in
their early years, will generate negative cash flows from operating activities, yet continue to remain a
going concern.
Page 20 of 45

17. MCQ-12620
At the end of Year 1, a defined benefit pension plan reported net assets available for benefits of
$650,000. During Year 2, the following items were recorded:
Investment income $ 300,000

Contributions 1,350,000
Administrative expenses 150,000
Benef its paid directly to participants 900,000
What amount should the plan report as year-end net assets available for benefits in the Year 2 statement
of changes in net assets available for benefits?
A. $600,000
B. $1,250,000
C. $1,650,000
D. $2,300,000

Include In: HW
Representative Task: FI-E1.2
Page Reference: 35
ANSWER:
Choice "B" is correct. Net assets available for benefits at the end of the year represent the difference
between a def ined benefit pension plan's assets and liabilities, excluding the participant's accumulated
plan benefits. Theref ore, the beginning balance, plus any changes reported in the plan's statement of
changes in net assets available for benefits, will affect the ending balance.
Beginning balance $650,000
Investment income + 300,000
Employer contributions + 1,350 000
Administrative expenses - 150,000
Benef its paid directly to participants - 900,000
Ending balance $1,250,000
Choice "A" is incorrect. This choice appropriately includes the investment income, employer contributions,
administrative expenses, and benefits paid to participants. In essence, this is the net change in net assets
available for benefits. However, it does not include the net assets beginning balance.
Choice "C" is incorrect. This choice only includes the investment income and employer contribution
amounts. The ending balance will also include the net assets beginning balance, as well as the impact of
administrative expenses and benefits paid to participants.
Page 21 of 45

Choice "D" is incorrect. This choice only includes the net assets beginning balance, investment income,
and employer contribution amounts. The ending balance will also include the impact of administrative
expenses and benefits paid to participants.
Page 22 of 45

18. MCQ-12621
A company is performing an impairment test of one of its long-lived assets. IFRS, but not U.S. GAAP,
requires the company to compare the carrying amount of the asset with its:
A. Fair value.
B. Purchase price.
C. Recoverable amount.
D. Undiscounted future cash flows.

Include In: HW
Representative Task: FIII-L1.1
Page Reference: 83
ANSWER:
Choice "C" is correct. IFRS uses a one-step model for fixed asset impairment testing in which the carrying
value of the fixed asset is compared with the fixed asset's recoverable amount.
Choice "A" is incorrect. Under U.S. GAAP, impairment of a f ixed asset is determined by comparing the
carrying value of the fixed asset to the undiscounted future net cash flows expected from the asset. If
impairment exists, the carrying value is then compared to the fair value of the asset to determine the
impairment amount. However, this question asks for treatment under IFRS.
Choice "B" is incorrect. Under U.S. GAAP, impairment of a f ixed asset is determined by comparing the
carrying value of the fixed asset to the undiscounted future net cash flows expected from the asset.
Another term for undiscounted future cash flows is the recoverable amount. However, this question asks
f or treatment under IFRS.
Choice "D" is incorrect. Under U.S. GAAP, impairment of a fixed asset is determined by comparing the
carrying value of the fixed asset to the undiscounted future net cash flows expected from the asset.
However, this question asks for treatment under IFRS.
Page 23 of 45

19. MCQ-12640
On January 1, Year 1, a company purchased for $10,000 an at-the-money call option on 1,200 barrels of
crude oil, which the company intends to purchase in five years. The company elected to exclude the time
value of the option from the assessment of effectiveness, classified the option as a cash flow hedge, and
applied a straight-line amortization to the initial option premium. On December 31, Year 1, the time value
of the option decreased by $1,200, and the change in intrinsic value increased by $1,800. The journal
entry that the company should make on December 31, Year 1, to record the change in value of the
derivative should include which of the following as a credit?
A. Derivative asset, $600.
B. Derivative asset, $1,400.
C. Other comprehensive income, $600.
D. Other comprehensive income, $1,400.

Include In: HW
Representative Task: FIII-D1.4
Page Reference: 35
ANSWER:
Choice "C" is correct. Because the company excluded the time value of the option from the assessment
of effectiveness, the entire hedge is assumed to be effective. Amortization of the initial option premium is
recognized in earnings using the straight-line method as selected by the company. The change in fair
value related to the effective portion of a cash flow hedge is included in other comprehensive income until
the hedged transaction impacts earnings. The intrinsic value is the difference between the market price
and the preset strike price at any point in time. Time value refers to the option's value over and above its
intrinsic value. The increase in intrinsic value of $1,800 results in an increase to the derivative asset and
an unrealized gain on the call option that will affect other comprehensive income. The decrease in time
value of $1,200 results in a decrease to the derivative asset and an unrealized loss on the call option that
will af f ect other comprehensive income. When netted together, the overall impact is a debit to the
derivative asset and a credit to other comprehensive income of $600, increasing the values of both
elements.
Choice "A" is incorrect. The value of the derivative asset will change by a net amount of $600, but the
asset will increase, not decrease as this choice suggests, because the increase in intrinsic value exceeds
the decrease in time value.
Choice "B" is incorrect. The value of the derivative asset will change, but it will increase, not decrease. In
addition, this choice incorrectly includes the straight-line amortization of the option premium of $2,000
($10,000 / 5 years) as af fecting other comprehensive income ($600 net increase to OCI less $2,000
amortization expense as decreasing OCI). Amortization of the option premium affects earnings.
Choice "D" is incorrect. Other comprehensive income will increase, but only by the change in fair value
related to the effective portion of the cash flow hedge. The amortization of the initial premium will affect
earnings. In addition, it will reduce income, not increase it, as this choice suggests.
Page 24 of 45

2020 AICPA Financial Newly Released MCQs—Difficult (Hard) Rating
20. MCQ-12641
Light Co. had the following bank reconciliation at March 31:
Balance per bank statement, March $23,250

31
Add: Deposit in transit 5,150
28,400
Less: Outstanding checks 6,300
Balance per books, March 31 $22,100
Additional information from Light's bank statement for the month of April is as follows:
Deposits $29,200
Disbursements 24,800
All reconciling items at March 31 cleared through the bank in April. Outstanding checks at April 30 totaled
$3,200. What is the amount of cash disbursements per books in April?
A. $21,700
B. $24,800
C. $27,900
D. $28,000

Include In: HW
Representative Task: FII-A1.2
Page Reference: 7
ANSWER:
Choice "A" is correct. According to the bank statement, disbursements in April totaled $24,800. However,
the question says that all outstanding checks from the March reconciliation cleared the bank in April. This
means that $6,300 of the $24,800 disbursement amount was recorded in the company's books during the
month of March. As a result, $18,500 ($24,800 – $6,300) of the April disbursements per the bank were
recorded in the company's books during April and cleared the bank during April. The last component to
consider are the outstanding checks in the April reconciliation. These are checks written and recorded in
the books that did not clear the bank. Because they are not included in the adjusted disbursement
amount of $18,500, the $3,200 of outstanding checks are added to determine total April disbursements
per the books of $21,700.
Choice "B" is incorrect. The $24,800 considers only the disbursements recorded by the bank during the
month of April. This choice does not account for disbursements recorded in the company's books that did
not clear the bank ($3,200), nor does it exclude the disbursements that cleared the bank in April that were
recorded in the company's books in March ($6,300).
Page 25 of 45

Choice "C" is incorrect. The $27,900 accounts for the disbursements recorded in the company's books
that did not clear the bank ($3,200), and accounts for disbursements that cleared the bank in April that
were recorded in the company's books in March ($6,300). The error in the calculation is that the
adjustments are the opposite of what they should be. The $6,300 is added to the bank disbursement total
and the $3,200 is subtracted, resulting in an erroneous answer.
Choice "D" is incorrect. The $28,000 includes the $24,800 disbursement total from the bank and adds in
the $3,200 of outstanding checks in the April reconciliation. However, the choice does not reduce the
bank disbursement total for the checks that were already recorded in the books during March ($6,300)
and cleared the bank in April.
Page 26 of 45

21. MCQ-12642
How should a local government's internal service fund report depreciation expense in its fund financial
statements?
A. Not reported.
B. Operating expense.
C. Nonoperating expense.
D. Separate f rom revenues and expense.

Include In: HW
Representative Task: FIV-B.3.1
Page Reference: 58
ANSWER:
Choice "B" is correct. Depreciation is recognized as a component of operating expenses in proprietary
f unds such as internal services funds.
Choice "A" is incorrect. Depreciation is recorded and reported in proprietary funds such as the internal
service f unds. Proprietary funds use accrual accounting largely consistent with commercial standards that
require the recognition of depreciation on capital assets.
Choice "C" is incorrect. Depreciation is recognized as a component of operating expenses in proprietary
f unds, not nonoperating expense.
Choice "D" is incorrect. Depreciation is recognized as a component of operating expenses in proprietary
f unds, not a separate line item apart from revenue and expense.
Page 27 of 45

22. MCQ-12643
Main Co. began its manufacturing business last year. Main uses the dollar-value LIFO method to
determine the value of its inventory. Main's inventory was valued at $100,000 at the end of last year, and,
using current costs, $132,000 at the end of the current year. The prices for Main's inventory during the
current year were 20 percent higher than last year's prices. What amount should Main report as inventory
on its balance sheet at the end of the current year?
A. $110,000
B. $112,000
C. $122,000
D. $132,000

Include In: HW
Representative Task: FII-C1.1
Page Reference: 34
ANSWER:
Choice "B" is correct. Dollar-value LIFO uses the prices of inventory, rather than units, to determine
increases and decreases in inventory quantity. The value of inventory at the end of the current year totals
$132,000 in current prices, but when the 20 percent price increase is excluded from the year-end value,
the value of the inventory is $110,000 ($132,000 / 1.2). The $110,000 represents the value of inventory at
the end of the current year if it had been purchased at the end of last year, or the value of inventory in
base year dollars. The increase in inventory in terms of base year dollars is $10,000 ($110,000 current
year base year dollars ‒ $100,000 prior year base year dollars). But because the increase in inventory
occurred during the current year, the increase is marked up to current year prices, resulting in the value of
the current year layer according to dollar-value LIFO of $12,000 ($10,000 × 1.2). Under LIFO, cost of
goods sold in the current year reflect the most recent prices, but there is an increase in inventory in the
current year, so the excess of goods purchased must be valued at current year prices. The dollar-value
LIFO inventory totals $112,000, which is the prior year ending inventory value of $100,000, plus the value
of the layer added to inventory in the current year of $12,000.
Choice "A" is incorrect. The $110,000 represents the value of inventory at the end of the current year, if it
had been purchased at the end of last year, or the value of inventory in base year dollars. This value is
used in calculating dollar-value LIFO inventory, but is not reflective of the increase in prices that occurred
in the current year.
Choice "C" is incorrect. The $122,000 takes the value of inventory at the end of the current year
according to base year prices and adds to it the value of the current year layer of $12,000. The $12,000 is
added to the prior year inventory value, not the current year inventory value at base year dollars.
Choice "D" is incorrect. The $132,000 represents the value of inventory according to current year prices,
or FIFO.
Page 28 of 45

23. MCQ-12644
Glass Co. had net income of $70,000 during the year. Depreciation expense was $10,000. The f ollowing
inf ormation is available:
Accounts receivable increase $20,000

Equipment gain on sale (sale price $100,000) 10,000 increase
Nontrade notes payable increase 50,000
Equipment purchases 40,000 increase
Accounts payable increase 30,000
What amount should Glass report as net cash provided by investing activities in its statement of cash
f lows for the year?
A. $(40,000)
B. $10,000
C. $50,000
D. $60,000

Include In: HW
Page Reference: 20
ANSWER:
Choice "D" is correct. Investing activities consider the cash effects of transactions affecting long-term
assets. Based on the information presented, the sale of equipment and the purchase of equipment are
the only transactions affecting long-term assets. The cash inflow from the sale of equipment of $100,000
is netted against the cash outflow related to the purchase of equipment of $40,000 to determine net cash
provided by investing activities of $60,000. The inf ormation related to accounts receivable and accounts
payable impacts operating activities. The information related to notes payable impacts financing activities.
Choice "A" is incorrect. The outflow of $40,000 only considers the purchase of equipment that occurred
during the year and does not account for the $100,000 inflow of cash related to the sale of equipment.
Choice "B" is incorrect. The $10,000 only considers the gain on sale of equipment that occurred during
the year. The gain is the result of the $100,000 cash inflow from the sale exceeding the book value of the
equipment sold. The gain is captured in the $100,000 cash inflow, but does not reflect the full value of
cash inf lows. In addition, this gain is recorded as a negative adjustment to net income under the indirect
method to ensure that it is excluded from cash flows provided by operating activities.
Page 29 of 45

Choice "C" is incorrect. The $50,000 calculates cash flows from investing activities of $60,000 correctly
($100,000 cash in f rom the sale of equipment less $40,000 cash out from purchase of equipment);
however, it incorrectly adjusts the $10,000 gain out of the $60,000 net cash flows. The $10,000
adjustment related to the gain from the sale of equipment is made in the operating activities section of the
statement of cash flows under the indirect method. The $70,000 in net income includes this gain, but
because it is the result of an investing activity and is already accounted for in the $100,000 cash inflow, it
must be included as an adjustment to net income in the operating activities section of the statement of
cash f lows.
Page 30 of 45

24. MCQ-12645
A city's water division generated $1.5 million in revenue. It reported expenses of $1 million, which
included $200,000 paid to an internal service fund. The water division also transferred $50,000 to the
general f und. What amount is the water division's change in net position on the statement of revenues,
expenses, and changes in fund net position?
A. $250,000
B. $300,000
C. $450,000
D. $500,000

Include In: HW
Representative Task: FIV-B3.2
Page Reference: 58
ANSWER:
Choice "C" is correct. The change in f und net position for a proprietary fund would include all nominal
activity recorded on the statement of revenues, expenses, and changes in f und net position. The water
division would compute the change in net position as follows:
Revenue $1,500,000
Expenses ( 1,000,000)
Income (loss) before
contributions and transfers 500,000
Transf ers (50,000)
Change in net position $ 450,000
Choice "A" is incorrect. The change in net position for the water division is not the sum of the internal
service f und charges and transfers as proposed by this choice.
Choice "B" is incorrect. The change in net position of the water division is not the income (loss) before
contributions and transfers net of the amounts charged by the internal service fund. Internal service fund
charges are appropriately included in the expenses of the water division and need not be considered
twice. In addition, transfers must be deducted from income (loss) before contributions and transfers to
compute the change in net position.
Choice "D" is incorrect. The change in net position of the water division is not the income (loss) before
contributions and transfers. Transfers must be deducted from income (loss) before contributions and
transf ers to compute the change in net position.
Page 31 of 45

25. MCQ-12646
A customer is considering buying a television set with a retail price of $2,000. The customer asks the
store manager if the store will consider paying the sales tax so that the total cash payment is $2,000. The
sales tax is 8 percent. The store manager agrees to accept $2,000 cash. What should the accountant
credit in this transaction?
Sales Sales Tax Payable
A. $2,000 $0
B. $1,840 $160
C. $2,000 $148
D. $1,852 $148

Include In: HW
Representative Task: FII-G1.1
Page Reference: 6
ANSWER:
Choice "D" is correct. The seller receives sales tax paid by a customer and records a credit for the
amount to sales tax payable until the company remits the amount to the taxing authority. In this case, if
the seller agreed to an amount of $2,000, which covered the sale of the product plus tax, the company
calculates sales revenue of $1,852 by excluding the sales tax amount from the $2,000 (2,000 / 1.08). The
company credits the difference of $148 to sales tax payable.
DR Cash 2,000
CR Sales revenue 1,852
CR Sales tax payable 148
Choice "A" is incorrect. A seller is obligated to collect sales tax payable in a sales transaction. The
amount collected is recorded in a sales tax payable account until remitted to the taxing authority. Sales
tax payable is recorded in the initial entry, because this is simply a pass-through amount, from the
customer to the taxing authority. Sales tax is not an expense of the company. If the seller agreed to a
total amount of $2,000, the amount recorded to sales revenue will be less than $2,000.
Choice "B" is incorrect. The seller agreed to a total amount of $2,000, which is split into sales revenue
and sales tax payable. However, the split between sales revenue and sales tax payable in this choice is
incorrect in that the sales tax amount is based on 8 percent of $2,000. Because the sales tax amount is
included in the $2,000, it is calculated by excluding the sales tax amount from the $2,000 (2,000 / 1.08),
which provides sales revenue of $1,852. The tax amount is the difference between the $2,000 and
$1,852, or $148. This amount can also be confirmed by taking 8 percent of $1,852, which is $148.
Choice "C" is incorrect. The total amount collected from the customer is $2,000. This includes the
revenue f rom the sale of the television set plus the sales tax amount. The entry in this choice sums to a
cash amount of $2,148, which is incorrect.
Page 32 of 45

26. MCQ 12647

On June 10, a company issued two thousand $1,000 5 percent bonds, payable in 10 years. Each bond
contained a detachable warrant that provided a right to purchase five shares of $1 par common stock for
$30. The value of the warrants at issuance was $50 each. On June 30, the market rate of interest was 9
percent. At the time of issuance, what amount was the increase in shareholders' equity?
A. $60,000
B. $100,000
C. $200,000
D. $300,000

Include In: HW
Representative Task: FII-H1.5
Page Reference: 37
ANSWER:
Choice "B" is correct. The issuance of bonds with a detachable warrant is an example of a convertible
bond, but the bond is not surrendered upon conversion. Instead, in addition to the bond, the bondholder is
purchasing the right to buy stock in the future at a certain price within a stated period. The original
transaction results in a bond liability but also results in an increase in equity as two separable instruments
are involved in the transaction. The two methods to allocate the journal entry are the proportional method
and the incremental method. The scenario presented does not provide a value for the issuance of the
bonds, nor does it provide the fair value of the bonds without the stock warrants. As a result, the
incremental method is used to determine the credit to shareholders' equity. Because the fair value of the
warrants is provided, this is the amount used to determine the credit to equity. Each bond is issued with
one detachable warrant, so 2,000 warrants are issued. The f air value of the warrants is $50 resulting in a
total credit to shareholders' equity of $100,000 (2,000 warrants × $50/warrant).
Choice "A" is incorrect. The credit to shareholders' equity under the incremental method is based on the
f air value of the warrants at the time of issuance. The exercise price of $30 per share does not affect the
initial credit to shareholders' equity, though this amount will impact journal entries if and when the
detachable warrants are exercised.
Choice "C" is incorrect. The credit to shareholders' equity under the incremental method is based on the
f air value of the warrants at the time of issuance. The difference between the fair value of the warrants at
time of issuance ($50) and the exercise price of the stock ($30) does not affect the original journal entry
to record the detachable warrants.
Choice "D" is incorrect. The credit to shareholders' equity under the incremental method is based on the
f air value of the warrants at the time of issuance. The bondholders may ultimately exercise the right to
purchase 10,000 shares of stock (2,000 warrants × 5 shares/warrant), but the $300,000 represents the
amount of cash that the company would receive upon exercise of the detachable warrants (10,000 shares
× $30 exercise price), not the original credit to shareholders' equity.
Page 33 of 45

27. MCQ-12648
McClave Enterprises used quoted prices for similar assets as the basis for determining the fair value of its
investments. McClave's inputs for determining the fair values of the investments would be classified as
which level in the f air value hierarchy?
A. Level 1.
B. Level 2.
C. Level 3.
D. Level 4.

Include In: HW
Page Reference: 18
ANSWER:
Choice "B" is correct. Level 2 inputs are inputs other than quoted market prices that are directly or
indirectly observable for the asset or liability. Level 2 inputs include quoted prices for similar assets or
liabilities in active markets.
Choice "A" is incorrect. Level 1 inputs are quoted prices in active markets for identical assets or liabilities
that the reporting entity has access to on the measurement date. McClave is using quoted prices for
similar assets as the basis for determining fair value.
Choice "C" is incorrect. Level 3 inputs are unobservable inputs for the asset or liability. McClave is using
quoted prices for similar assets as the basis for determining fair value. As these are observable inputs,
they do not qualify as Level 3 inputs.
Choice "D" is incorrect. The f air value hierarchy includes three levels of inputs, not four.
Page 34 of 45

28. MCQ-12649
A company holds a financial asset that is actively traded in two different markets. The company transacts
in both markets equally. The price of the asset in market A is $50. If the company sells the asset in
market A, it incurs a transaction cost of $4. The price of the asset in market B is $48. If the company sells
the asset in market B, it incurs a transaction cost of $1. What is the fair value of the financial asset?
A. $46
B. $47
C. $48
D. $50

Include In: HW
Page Reference: 16
ANSWER:
Choice "C" is correct. The f air value of a financial asset is the price that would be received to sell an
asset in an orderly transaction between market participants in the principal or most advantageous
market at the measurement date under current market conditions. The most advantageous market is
determined by considering the selling price of the asset after factoring in the transaction costs. Once
the most advantageous market is determined, the selling price of the asset is the appropriate fair
value measurement. In this case, the stock price and transactions costs net to $46 ($50 ‒ $4) and
$47 ($48 ‒ $1) f or market A and B, respectively. As a result, market B is the most advantageous
market. However, the appropriate fair value is $48 because this is the selling price in market B and
transaction costs are ignored.
Choice "A" is incorrect. The price used to determine the most advantageous market is $46 for
market A and $47 f or market B. Market B is the most advantageous market; therefore, $46 is the
incorrect fair value for the financial asset because it considers the wrong market, and it incorrectly
f actors in the transaction cost in determining fair value.
Choice "B" is incorrect. The price used to determine the most advantageous market is $46 for
market A and $47 f or market B. Market B is the most advantageous market; however, the fair value
of the financial asset considers only the selling price and ignores the transaction cost of $1. This
answer incorrectly factors in the transaction cost in determining fair value.
Choice "D" is incorrect. The price used to determine the most advantageous market is $46 f or
market A and $47 f or market B. As a result, market B is the most advantageous market. Although
$50 represents the correct amount to use for f air valuing a financial asset, market A is not the most
advantageous market.
Page 35 of 45

29. MCQ-12650
A publicly traded corporation reported a $10,000 deduction in its current year tax return for an item it
expects to be disallowed. The tax rate is 40 percent. How should the corporation report this tax position in
the f inancial statements?
A. As a temporary difference disclosed in the notes to the financial statements that is not recognized.
B. As a $10,000 def erred tax asset.
C. As a $4,000 income tax expense and a $4,000 liability for an unrecognized tax benefit.
D. As a $4,000 def erred tax asset and a $4,000 income tax benefit.

Include In: HW
Representative Task: FII-L1.3
Page Reference: 65
ANSWER:
Choice "C" is correct. An uncertain tax position exists when a company has a level of uncertainty about
the sustainability of a particular tax position. U.S. GAAP requires a more-likely-than-not level of
conf idence before the impact is recorded in the financial statements. In this case, the company expects
the $10,000 deduction will be disallowed. This seems to indicate a more-likely-than-not scenario. If the
deduction is disallowed, reported taxable income will be higher and the tax liability will be greater. As a
result, considering the tax rate of 40 percent, a $4,000 ($10,000 × 40% tax rate) tax liability for an
unrecognized tax benefit is recorded because it represents the entity's potential future obligation to the
tax authority for a tax position that was not recognized. This also causes an increase in income tax
expense.
Choice "A" is incorrect. Because the company expects the deduction to be disallowed, this indicates a
more-likely-than-not scenario, which requires recognition in the financial statements.
Choice "B" is incorrect. Disallowing the tax deduction results in higher taxable income and a tax liability in
the f orm of an unrecognized tax benefit. The liability for an unrecognized tax benefit represents the
entity's potential future obligation to the tax authority for a tax position that was not recognized. On the
contrary, a deferred tax asset, as suggested by this choice, represents future tax savings, which is not the
case in this scenario. In addition, the tax rate has not been considered in the answer choice.
Choice "D" is incorrect. Although the $4,000 amount is calculated correctly, disallowing the tax deduction
results in higher taxable income. This creates a tax liability in the form of an unrecognized tax benefit and
an increase in income tax expense. It does not create a deferred tax asset and income tax benefit.
Page 36 of 45

30. MCQ-12651
A U.S. public company with a worldwide public float of $800 million at the end of the second quarter of the
f iscal year is required to file its annual report with the U.S. SEC on:
A. Form 10-Q within 40 days after the end of the reporting period.
B. Form 10-Q within 45 days after the end of the reporting period.
C. Form 10-K within 60 days after the end of the reporting period.
D. Form 10-K within 75 days after the end of the reporting period.

Include In: HW
Representative Task: FI-D1.1
Page Reference: 27
ANSWER:
Choice "C" is correct. A large accelerated filer is defined by the SEC as an issuer with a worldwide market
value of outstanding common equity held by nonaffiliates of $700 million or more as of the last business
day of the issuer's most recently completed second fiscal quarter. Accelerated filers are required to file
Form 10-K (annual report) within 60 days after the end of the fiscal year.
Choice "A" is incorrect. The 10-Q is the quarterly report, whereas the questions asks for the annual report.
Choice "B" is incorrect. The 10-Q is the quarterly report, whereas the questions asks for the annual report.
Choice "D" is incorrect. The f iling deadline for accelerated filers is 75 days after the end of the fiscal year.
Based on the public float value of the company exceeding $700 million, the company qualifies as a large
accelerated filer and, therefore, must file the annual report within 60 days of the end of the fiscal year.
Page 37 of 45

31. MCQ-12652
A company operates a defined-contribution plan for its employees. At the end of the year, the plan had
investments with a cost of $5 million and a fair value of $10.25 million. Loans made to employees had a
balance of $1 million. After year-end, one of the stocks in its portfolio, a pharmaceutical stock valued at
$150,000 at year-end, lost half its value after a new drug was denied regulatory approval. What amount
should the defined-contribution plan financial statements report as investments as of year-end?
A. $5,000,000
B. $10,175,000
C. $10,250,000
D. $11,250,000

Include In: HW
Representative Task: FI-E1.3
Page Reference: 23
ANSWER:
Choice "C" is correct. The significant decline in the fair value of the defined-contribution plan assets after
year-end is an example of a subsequent event. However, changes in the fair value of assets that occur
af ter the balance sheet date, but before the date the financial statements are issued, are considered
nonrecognized subsequent events. The defined-contribution plan assets are reported at their year-end
f air value of $10,250,000. If the company feels that disclosure is necessary to keep the financial
statements misleading, the company may disclose the decline in fair value that occurred after year-end in
the f ootnotes.
Choice "A" is incorrect. Investments related to plan assets of a defined-contribution plan are reported at
f air value, not cost.
Choice "B" is incorrect. This choice incorrectly reduces the fair value of the plan assets by the decline in
f air value that occurred after year-end. The decline in fair value of the plan assets will not affect the fair
value of the plan assets reported at year-end. The decline is a nonrecognized subsequent event, but may
be disclosed if the company feels providing the information will keep the financial statements from being
misleading.
Choice "D" is incorrect. The $10,250,000 fair value of the plan assets at year-end is the appropriate value
to report on the balance sheet. The $1 million balance related to employee loans does not increase the
f air value of the plan assets as this choice suggests; rather, the $1 million is reported as a receivable on
the balance sheet.
Page 38 of 45

32. MCQ-12653
Azim Services, a nongovernmental, not-for-profit organization, received dues of $100 f rom its members.
Azim provided its members with a newsletter that had a $25 value. All other services were valued at $10
per member. What is the amount of contribution made to Azim by each member?
A. $10
B. $25
C. $65
D. $100

Include In: HW
Representative Task: FIII-G1.1
Page Reference: 55
ANSWER:
Choice "C" is correct. The difference between the contributions made by a donor and the fair value of any
premium transferred is classified as contribution revenue. Contribution revenue is computed as follows:
Dues $100
Less: Newsletter f air value (25)
Other services (10)
Net contribution $ 65
Choice "A" is incorrect. The difference between the contributions made by a donor and the fair value of
any premium transferred is classified as contribution revenue. The proposed solution suggests that
contributions are equal to the value of the services provided by Azim Services.
Choice "B" is incorrect. The difference between the contributions made by a donor and the fair value of
contributions are equal to the value of the newsletter provided by Azim Services.
Choice "D" is incorrect. The difference between the contributions made by a donor and the fair value of
contributions are equal to the total amount paid to Azim Services.
Page 39 of 45

33. MCQ-12654
A company acquired an item of property, plant and equipment that consists of individual components with
costs that are both significant and insignificant in relation to the total cost of the item. Which of the
f ollowing statements represents the methodology that should be used to measure and record
depreciation expense under IFRS?
A. The individual components may be combined and depreciated using a weighted-average useful life
computed for the asset as a whole.
B. The individual components may be combined and depreciated over the useful life of the asset
based on the company's established policy for that asset category.
C. Each component with a cost that is significant in relation to the total cost of the item should be
depreciated separately; approximation techniques may be used to depreciate the cost of the
remaining items that are individually insignificant.
D. Each component with a cost that is significant in relation to the total cost of the item should be
depreciated separately, and the company may elect to immediately expense the cost of the
remaining items that are individually insignificant.

Include In: HW
Representative Task: FIII-L1.1
Page Reference: 50
ANSWER:
Choice "C" is correct. IFRSs require component depreciation. Separate significant components of a fixed
asset with different lives should be recorded and depreciated separately. The remaining cost of the
assets is depreciated over the average useful life of the asset as a whole.
Choice "A" is incorrect. IFRSs requires component depreciation. U.S. GAAP allows composite or group
depreciation, which is the type of depreciation methodology indicated in this choice.
Choice "B" is incorrect. IFRSs requires component depreciation. U.S. GAAP allows composite or group
depreciation, which is the type of depreciation methodology indicated in this choice.
Choice "D" is incorrect. IFRSs require component depreciation, which this choice suggests. Separate
significant components of a fixed asset with different lives should be recorded and depreciated
separately. The remaining cost of the asset is depreciated over the average useful life of the asset as a
whole. The remaining cost is not expensed immediately as this choice suggests.
Page 40 of 45

34. MCQ-12655
Which of the following statements would most likely be included among a set of financial statements
prepared in conformity with a special purpose framework?
A. The statement of comprehensive income.
B. The statement of operations.
C. The statement of cash receipts and disbursements.
D. The statement of financial position.

Include In: HW
Representative Task: FI-F1.1
Page Reference: 33
ANSWER:
Choice "C" is correct. Special purpose frameworks are non-GAAP presentations that include other bases
of accounting, such as the cash basis and modified cash basis. The statement of cash receipts and
disbursements is an example of a cash basis income statement.
Choice "A" is incorrect. The statement of comprehensive income is a required statement under U.S.
GAAP f or companies that have other comprehensive income and is not an example of a non-GAAP
presentation.
Choice "B" is incorrect. The statement of operations refers to the operating section of the income
statement, which is a required statement under U.S. GAAP.
Choice "D" is incorrect. The statement of financial position is another term for balance sheet, which is a
required statement under U.S. GAAP.
Page 41 of 45

35. MCQ-12656
On January 1, Year 1, a company appropriately capitalized $40,000 of software development costs for
computer software to be sold. The company estimated an economic life of two years for the software and
believes that it will generate $500,000 in total software sales. It had software sales of $300,000 in Year 1.
What amount of software amortization expense, if any, should the company report in its financial
statements for the year ended December 31, Year 1?
A. $0
B. $20,000
C. $24,000
D. $40,000

Include In: HW
Representative Task: FIII-I1.2
Page Reference: 76
ANSWER:
Choice "C" is correct. Capitalized costs related to software projects are amortized with the resulting
expense recorded in the income statement. The annual amortization amount is the greater of the
amortization resulting from the percentage of revenue approach or the straight-line approach. Under the
percentage of revenue approach, amortization expense totals $24,000.
Under the straight-line approach, the amortization expense totals $20,000 ($40,000 / 2 years).
The percentage of revenue approach yields the greater of the two amounts and is therefore the approach
used to record the expense in Year 1.
Choice "A" is incorrect. The company must amortize software development costs as they were
appropriately capitalized on January 1, Year 1. The amortization expense is based on the percentage of
revenue approach or the straight-line approach.
Choice "B" is incorrect. $20,000 is the appropriate amortization expense under the straight-line approach,
but based on the calculations presented above, the percentage of revenue approach yields a greater
expense number. The company will use the percentage of revenue approach, not the straight-line
approach, to record amortization expense.
Choice "D" is incorrect. The f ull amount of the capitalized software costs is amortized using the
percentage of revenue approach or the straight-line approach. The only way that $40,000 would be the
amortization expense in Year 1 is if software sales in Year 1 exceeded expected software sales or the
economic life of the software was only one year. Otherwise, the amortization expense in Year 1 is less
than the total capitalized value.
Page 42 of 45

36. MCQ-12657
A holder of a variable interest that is not the primary beneficiary acquired additional variable interests in
the variable interest entity (VIE). What action, if any, should follow?
A. The holder of the variable interest should reconsider whether it is now the primary beneficiary.
B. The holder of the variable interest should use the voting-interest model to determine whether the
VIE should be consolidated.
C. The primary beneficiary should discontinue consolidation of the VIE because the election to
consolidate is no longer allowed.
D. No action is necessary because the primary beneficiary of a VIE does not change subsequent to
the initial assessment.

Include In: HW
Page Reference: 36
ANSWER:
Choice "A" is correct. The holder is the primary beneficiary if it has the power to direct the activities of a
variable interest entity that most significantly impacts the entity's economic performance, and the
company absorbs the expected VIE losses or receives the expected VIE residual returns. If the additional
interest acquired in the VIE changes the terms, such that the holder now has the power to direct activities
of the VIE, this should be considered in determining what party consolidates the VIE.
Choice "B" is incorrect. If an entity is identified as a variable interest entity, the ownership percentage
does not necessarily indicate the primary beneficiary in the agreement. First, entities are subject to the
variable interest entity model. Because this entity is already a VIE, the voting-interest model is insufficient
to determine the party that should consolidate the VIE.
Choice "C" is incorrect. Acquiring additional ownership in a VIE does not necessarily change who the
primary beneficiary of the VIE is. The VIE model is applied to determine if the primary beneficiary has
changed as a result of the additional ownership.
Choice "D" is incorrect. Acquiring additional ownership in a VIE could change who the primary beneficiary
of the VIE is. The VIE model is applied to determine if the primary beneficiary has changed as a result of
the additional ownership.
Page 43 of 45

37. MCQ-12658
On a nongovernmental, not-for-profit entity's statements of activities, which of the following amounts
should not be netted together under any circumstances?
A. Revenues and expenditures from the sale of used equipment.
B. Revenues and expenditures from an annual fundraising campaign.
C. Investment income, custodial fees, and other advisory expenditures.
D. Gains and losses from exchange rates or other foreign currency translations.

Include In: HW
Representative Task: FI-C2.1
Page Reference: 55
ANSWER:
Choice "B" is correct. Special events that represent ongoing and major activities of the not-for-profit
organization, such as an annual fundraising campaign, should fully display gross fundraising revenues
and f undraising expenses. While peripheral or incidental events may be presented on a net basis, major
f undraising campaigns will present revenues and expenses separately.
Choice "A" is incorrect. Not-for-profit organizations account for disposal of equipment by netting proceeds
("revenues") against carrying value (expired cost or "expenditures") to report a gain or loss on disposal in
a manner consistent with commercial enterprises.
Choice "C" is incorrect. Investment returns are reported net of any related investment expense.
Choice "D" is incorrect. Gains and losses associated with changes in foreign currency exchange rates are
presented net consistent with commercial accounting standards.
Page 44 of 45

38. MCQ-12659
Af ter speaking to the company's sales manager, a customer placed a large order. The customer has no
immediate need for the products, so the customer asked the company to wait 60 days before delivering
the products. In this case, the company should recognize revenue for the sale when the order is:
A. Placed by the customer.
B. Delivered to the customer.
C. Packed and ready for shipment.
D. Verif ied as in-stock by the company.

Include In: HW
Representative Task: FII-J1.1
Page Reference: 25
ANSWER:
Choice "B" is correct. Delivery to the customer ensures that control of the inventory is transferred to the
customer, and as a result, the company has satisfied the performance obligation and can record revenue.
Choice "A" is incorrect. Placing the order by the customer does not meet the requirements of revenue
recognition. The company has not satisfied the performance obligation, because it has not transferred
control to the buyer.
Choice "C" is incorrect. Packing the items for shipment does not meet the requirements of revenue
recognition. The company has not satisfied the performance obligation, as it has not transferred control to
the buyer.
Choice "D" is incorrect. Verifying the items included in the order as in stock does not meet the
requirements of revenue recognition. The company has not satisfied the performance obligation, because
it has not transferred control to the buyer.
Page 45 of 45

2020 AICPA Newly Released Simulations—Financial
FINANCIAL
July 2020
AICPA Newly
Released Sims
Page 1 of 15

FAR 2020 Simulation 500374 (TBS-002150)
Unit & Module Assignment F-3, M-5

Task Position Number Task 6
Sim Task Name: PP&E Schedule (AICPA R-2020)
Type: HW
Skill Level: Analysis
Representative Task: FII-D1.7
Note: there are several errors in this solution table. See the solution explanation below for the full,
complete table.
Page 2 of 15

Page 3 of 15

Page 4 of 15

Page 5 of 15

Page 6 of 15

FAR 2020 Simulation 500374 (TBS-002150) Solution
April 1, Year 1:
Printing Co. records the following journal entry related to the purchase of machinery on April 1, Year 1:
DR Property, plant, and equipment $38,000
CR Accounts payable $38,000
Printing Co. capitalizes the cost of the machine as its cost exceeds $500. All costs related to the acquisition of the
machinery are included in this journal entry. This includes the full invoice price ($36,000) as well as tax ($1,800) and
shipping ($200).
December 31, Year 1:

According to Printing Co.'s fixed asset capitalization and depreciation policy, the company will depreciate the binding
machine over a five-year useful life, with a half-year convention. Technically, depreciation begins when the company
places the machine in service, but the in-service date is irrelevant because the company uses the half-year convention.
Using the half-year convention, Printing Co. records one-half year's depreciation expense in Year 1 and one-half year's
depreciation expense in the year of disposal. Annual depreciation expense totals $7,600 ($38,000 / 5 years). Note that
there is no salvage value to consider in the calculation.
The following journal entry records depreciation expense:

DR Depreciation expense $3,800
CR Accumulated depreciation $3,800

The company records a full year's depreciation expense for Year 2 with the following journal entry:
March 30, Year 3:

On March 30, Year 3, Printing Co. hired technicians for basic maintenance on the binding machine.
Page 7 of 15

Because these are ordinary expenses, Printing Co. records these costs as repairs and maintenance expense with the
following journal entry:
DR Repairs and maintenance expense $4,000

The company records a full year's depreciation expense for Year 3 with the following journal entry:
June 30, Year 4:

Printing Co. disposes of the binding machine on June 30, Year 4.
Prior to disposal, the company records depreciation expense under the half-year convention as follows:
At the time of disposal, accumulated depreciation totals $22,800 ($3,800 + $7,600 + $7,600 + $3,600). The company
removes both the historical cost of the machine and the accumulated depreciation in the journal entry.
Because the company replaces the machinery instead of selling it, the company records a loss for the book value of the
machinery removed:
DR Accumulated depreciation $22,800
DR Loss on transaction $15,200
CR Property, plant, and equipment $38,000
The numbers provided in the solution chart net together the above journal entries such that the total effect on
accumulated depreciation is a debit of $19,000.
July 1, Year 4:
Printing Co. records the following journal entry related to the purchase of machinery on July 1, Year 4:
DR Property, plant, and equipment $36,000
Printing Co. capitalizes the cost of the machine as its cost exceeds $500. All costs related to the acquisition of the
machinery are included in this journal entry. This includes the full invoice price ($34,000) as well as tax ($1,700) and
shipping ($300).

According to Printing Co.'s fixed asset capitalization and depreciation policy, the company will depreciate the binding
machine over a five-year useful life, with a half-year convention. Using the half-year convention, Printing Co. records one-
half year's depreciation expense in this year of purchase and one-half year's depreciation expense in the year of disposal.
Annual depreciation expense totals $7,200 ($36,000 / 5 years). Note that there is no salvage value to consider in the
calculation.
The following journal entry records depreciation expense:
Page 8 of 15


Sim Task Name: PP&E Accounting Changes & Errors (AICPA R-2020)
Type: HW
Skill Level: Application
Representative Task: FIII-A1.1, FII-D1.1
Page 9 of 15

Page 10 of 15

Page 11 of 15

Journal Entry No. 1:
Based on the $120,000 initial purchase price of the equipment on January 1, Year 1, and an estimated useful life of 12
years, Cougar’s annual depreciation expense entry totals $10,000 ($120,000 / 12). By the end of Year 2, Cougar has
recorded $20,000 of accumulated depreciation, resulting in the book value of the equipment of $100,000.
On January 1, Year 3, the addition of the engine extends the useful life of the equipment; therefore, the company
capitalizes the engine cost of $65,000. As a result, the equipment now has a book value of $165,000 ($100,000 book
value at January 1, Year 3 + $65,000 engine value). Cougar will depreciate the $165,000 over the remaining useful life.
On January 1, Year 3, prior to the addition of the engine, the equipment had a remaining useful life of 10 years (12-year
original useful life less two years of usage). Because the addition of the engine adds another five years to the useful life of
the asset, the new useful life is 15 years. The company records depreciation expense based on the adjusted cost of the
equipment and the revised useful life.
The December 31, Year 3 depreciation entry totals $11,000 ($165,000 / 15 years) and is as follows:

The addition of the engine increased the book value of the equipment. It also extended the useful life of the equipment.
When changes in estimates related to depreciation occur, whether the change is related to the salvage value, useful life
estimate, or depreciation method utilized by the company, these changes are accounted for as a change in estimate and
do not require a restatement of financial statement numbers. Rather, the new information is accounted for in the year of
change and prospectively. This is why the company calculated the book value at the time of change (January 1, Year 3)
and recorded the Year 3 depreciation expense based on the new information.
The $48,000 journal entry in Year 3 overstated depreciation expense and accumulated depreciation related to the
purchase of the tractor. When a company purchases property, plant, and equipment during the year, it prorates the annual
depreciation expense to consider the dates that the company used the equipment. Because Cougar records depreciation
expense monthly, the entry should reflect the number of months Cougar used the tractor. In this case, Cougar should
have recorded a depreciation expense of $40,000, calculated as follows:
Initial cost: $240,000

Estimated useful life: 5 years
Annual depreciation expense: $48,000
Months used (March-December) x 10/12

Prorated depreciation expense $40,000
As a result, depreciation expense in Year 3 is $8,000 too high and accordingly, accumulated depreciation is too high.
When the company discovers the error in Year 4, Cougar records the following correcting journal entry:
DR Accumulated depreciation $8,000
CR Retained earnings $8,000
Page 12 of 15

An error requires retrospective adjustment, not prospective adjustment. How the company corrects the error depends
upon when the company discovers the error. Cougar debits accumulated depreciation since the account is overstated due
to the Year 3 error. Cougar credits retained earnings for $8,000, recognizing that the overstated expense in Year 3
resulted in an understated net income, and as a result, understated retained earnings. Adjusting retained earnings in
ef f ect restates the previously reported net income for Year 3. It is inappropriate for Cougar to credit depreciation expense
in Year 4 because the error relates to Year 3. The Year 3 expense account was closed out to net income and then
retained earnings at the end of Year 3. Once the Year 3 ledger is closed, any adjustments to Year 3 revenues, expenses,
gains, or losses are recorded to retained earnings. The journal entry ignores the effect of income taxes, because the
simulation did not provide a tax rate.
In Year 4, Cougar discovers an error, in that it omitted the Year 3 depreciation expense journal entry for the snowmobile.
An error requires retrospective adjustment, not prospective adjustment. How the company corrects the error depends
upon when the company discovers the error. In this case, Cougar did not discover the Year 3 error until Year 4. In
correcting the error, Cougar will record any adjustment to net income directly to retained earnings. In addition, Cougar
discovers there is an error in Year 4. Because the company is still in Year 4, Cougar can record any adjustments to net
income to the appropriate income statement account.
The depreciation expense calculation related to the snowmobile is as follows:
Cost – Salvage value $19,000 - $1,000

Usef ul life / 3 years
Annual depreciation expense $6,000
Cougar f ailed to record depreciation for three months in Year 3:

Months used in Year 3 (Oct‒Dec) x 3/12
Prorated depreciation expense $1,500 Unrecorded Year 3 expense
Cougar also failed to record depreciation expense for the first six months of Year 4:

Months used in Year 3 (Jan‒Jun) x 6/12
Prorated depreciation expense $3,000 Unrecorded Year 4 expense
Cougar has already closed the books for Year 3, meaning that the effect of the error is included in retained earnings.
Excluding the expense resulted in overstating net income and ultimately retained earnings. Cougar records the correction
of the error related to Year 3 as an adjustment to retained earnings. Since the books are still open for Year 4, Cougar
records the correction of the Year 4 error directly to depreciation expense.
Cougar records the following journal entry on June 30, Year 4:
DR Retained earnings $1,500

Page 13 of 15


Sim Task Name: Research (AICPA R-2020)
Type: HW
Skill Level: Application
Representative Task: FII-G1.1
Page 14 of 15

FASB ASC 944-40-30-15
Keywords: assumptions, liability, future benefits
Search:
Select FASB Codification
Click on Advanced Search
Search keywords above in “all of these words”
To locate the authoritative literature related to calculating the liability for future benefits associated with new insurance
policies, one place to start is the industry-specific guidance. Click “Industry.” Insurance is not a specific industry provided,
but is a type of financial service. Click “Financial Services-Insurance,” which is Topic 944. Subtopic 40 relates to “Claim
Costs and Liabilities for Future Policy Benefits.” Based on the information presented, guidance is sought on the expense
assumptions used to estimate future liabilities. This concept deals with initial measurement, which is covered in Section
30. Specifically, Paragraph 15 includes the guidance for how to estimate expense assumptions.
Page 15 of 15

AICPA Newly Released MCQs July&#39;20

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2020 AICPA Newly Released Questions—Financial

Registered to Daljeet Singh (#1411612)

2020 AICPA Financial Newly Released MCQs—Medium (Moderate) Rating

Inventory on hand, December 31 $350,000

What was Super Toy Store's ending inventory at December 31?

Unit & Module to be Assigned To: F-3, M-3

Registered to Daljeet Singh (#1411612)

Registered to Daljeet Singh (#1411612)

Net decrease in fixed assets $(3,750)

Unit & Module to be Assigned To: F-8, M-2

Registered to Daljeet Singh (#1411612)

Unit & Module to be Assigned To: F-3, M-5

Registered to Daljeet Singh (#1411612)

Unit & Module to be Assigned To: F-6, M-5

Registered to Daljeet Singh (#1411612)

Unit & Module to be Assigned To: F-1, M-5

Registered to Daljeet Singh (#1411612)

Unit & Module to be Assigned To: F-6, M-3

Registered to Daljeet Singh (#1411612)

Unit & Module to be Assigned To: F-2, M-7

Registered to Daljeet Singh (#1411612)

Registered to Daljeet Singh (#1411612)

Unit & Module to be Assigned To: F-7, M-2

Registered to Daljeet Singh (#1411612)

Unit & Module to be Assigned To: F-2, M-4

Registered to Daljeet Singh (#1411612)

Years of Service Annual Vacation (in Days)

Employee Years of Service

Unit & Module to be Assigned To: F-5, M-1

Registered to Daljeet Singh (#1411612)

Registered to Daljeet Singh (#1411612)

Unit & Module to be Assigned To: F-7, M-6

Registered to Daljeet Singh (#1411612)

Unit & Module to be Assigned To: F-5, M-2

Registered to Daljeet Singh (#1411612)

Unit & Module to be Assigned To: F-10, M1

Registered to Daljeet Singh (#1411612)

Unit & Module to be Assigned To: F-1, M-1

Registered to Daljeet Singh (#1411612)

Unit & Module to be Assigned To: F10, M6

DR Depreciation expense 5,000

Registered to Daljeet Singh (#1411612)

Unit & Module to be Assigned To: F-2, M-2

Registered to Daljeet Singh (#1411612)

Investment income $ 300,000

Unit & Module to be Assigned To: F-7, M-4

Registered to Daljeet Singh (#1411612)

Registered to Daljeet Singh (#1411612)

Unit & Module to be Assigned To: F-3, M-8

Registered to Daljeet Singh (#1411612)

Unit & Module to be Assigned To: F-6, M-3

Registered to Daljeet Singh (#1411612)

2020 AICPA Financial Newly Released MCQs—Difficult (Hard) Rating

Balance per bank statement, March $23,250

Unit & Module to be Assigned To: F-3, M-1

Registered to Daljeet Singh (#1411612)

Registered to Daljeet Singh (#1411612)

Unit & Module to be Assigned To: F-10, M5

Registered to Daljeet Singh (#1411612)

Unit & Module to be Assigned To: F-3, M-3

Registered to Daljeet Singh (#1411612)

Accounts receivable increase $20,000

Unit & Module to be Assigned To: F-8, M-2

Registered to Daljeet Singh (#1411612)

AICPA Newly Released MCQs July'20

AICPA Newly Released MCQs July'20