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Free CPA-Financial Exam Braindumps (page: 14)

Page 14 of 41
PDF with 163 Questions

According to the FASB conceptual framework, comprehensive income includes which of the following?

  1. Option A
  2. Option B
  3. Option C
  4. Option D

Answer(s): B

Explanation:

Choice "b" is correct. Comprehensive income is the change in equity of a business during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity except those resulting from investments by owners and distributions to owners.
SFAC 6 para 70.



Which of the following describes how comprehensive income should be reported?

  1. Must be reported in a separate statement, as part of a complete set of financial statements.
  2. Should not be reported in the financial statements but should only be disclosed in the footnotes.
  3. May be reported in a separate statement, in a combined statement of income and comprehensive income, or within a statement of stockholders' equity.
  4. May be reported in a combined statement of income and comprehensive income or disclosed within a statement of stockholders' equity; separate statements of comprehensive income are not permitted.

Answer(s): C

Explanation:

Choice "c" is correct.
Comprehensive income must be presented in one of three formats:
1. In a combined statement of income and comprehensive income;
2. In a separate statement of comprehensive income that begins with net income; or
3. In a statement of changes in equity.
Choices "a", "b", and "d" are incorrect, per the above.
Balance Sheet and Disclosures Overview



What is the purpose of information presented in notes to the financial statements?

  1. To provide disclosures required by generally accepted accounting principles.
  2. To correct improper presentation in the financial statements.
  3. To provide recognition of amounts not included in the totals of the financial statements.
  4. To present management's responses to auditor comments.

Answer(s): A

Explanation:

Choice "a" is correct. Information presented in notes to the financial statements have the purpose of providing disclosures required by generally accepted accounting principles. SFAC 5 para. 7



Which of the following should be disclosed in a summary of significant accounting policies?

  1. Basis of profit recognition on long-term construction contracts.
  2. Future minimum lease payments in the aggregate and for each of the five succeeding fiscal years.
  3. Depreciation expense.
  4. Composition of sales by segment.

Answer(s): A

Explanation:

Choice "a" is correct. The summary of significant accounting policies should disclose policies. The only policy in this question is the "basis" of profit recognition on long-term construction contracts. The other disclosures are accounting details and would be disclosed in other footnotes, but not in the summary of significant accounting policies.
Choice "b" is incorrect. The future minimum lease payments should be disclosed, but not in the summary of significant accounting policies.
Choice "c" is incorrect. Depreciation expense should certainly be disclosed, but not in the summary of significant accounting policies.
Choice "d" is incorrect. The composition of sales by segment should be disclosed, but not in the summary of significant accounting policies.



Page 14 of 41



Post your Comments and Discuss AICPA CPA-Financial exam with other Community members:

Venkatesh Aiyar commented on September 23, 2024
I will be taking this exam in early December. If anyone has taken or passed this exam recently, please let me know what I should focus on other than the usual suspects such as consolidation, cash flow etc.
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