Cisco
CompTIA
ISC
EC-Council
EXIN
Fortinet
ITIL
Juniper
Microsoft
VMware
Avaya
SAP
Google
NVIDIA
Salesforce
Amazon
Palo Alto Networks
ISC2
Splunk
ServiceNow
All Vendors
  2. Home
  3. Exams
  4. CFA
  5. CFA I

CFA CFA I Exam
CFA Level I Chartered Financial Analyst (Page 107 )

Updated On: 26-Jan-2026
Page 107 of 793
PDF with 3960 Questions

A firm has to pay 1,000 to its suppliers in one year. The interest rate on this liability is 9%. The current liability recorded by the firm is ________.

  1. 1,090
  2. 90
  3. 1,000
  4. 917

Answer(s): C

Explanation:

Current liabilities, in general, are recorded at the principal portion of the payment. Hence, even though the firm in this case will have to pay 1,090 in 1 year, the current liability equals the principal portion = 1,000.



If the estimated life of a long-term asset is increased, which of the following is true?

  1. The depreciation expense increases
    II. Taxes decrease
    III. Income increases
    IV. Cashflow decreases
  2. I & II
  3. III & IV
  4. I & III
  5. I, III & IV

Answer(s): B

Explanation:

The increase in the asset's life estimate decreases the depreciation expense. Hence, income increases, taxes increase and cashflow decreases (due to higher taxes).



When merchandise inventory is purchased under a perpetual system, which account is debited?

  1. Cash
  2. Merchandise Inventory
  3. Accounts Payable
  4. Purchases

Answer(s): B

Explanation:

The perpetual inventory system records purchases of merchandise inventory directly into a balance sheet account called Merchandise Inventory.



The weighted average method is based on the assumption that the cost of merchandise sold should be calculated using the:

  1. average price of beginning inventory plus purchases during the period
  2. average price per unit of ending inventory
  3. average price per unit of beginning inventory
  4. average price of ending inventory plus purchases during the period

Answer(s): A

Explanation:

Under the weighted average method, inventory is priced at the average cost of the goods available for sale (Beginning inventory plus purchases during the period).



A transaction that is unusual in nature and infrequent in occurrence should be reported separately as a component of income

  1. after cumulative effect of accounting changes and after discontinued operations of a segment of a business.
  2. before cumulative effect of accounting changes and before discontinued operations of a segment of a business.
  3. after cumulative effect of accounting changes and before discontinued operations of a segment of a business.
  4. before income from continuing operations.
  5. before cumulative effect of accounting changes and after discontinued operations of a segment of a business.

Answer(s): E

Explanation:

A transaction that is unusual and infrequent is classified as an extraordinary item. The following is the order of items to be reported separately in the income statement: income from continuing operations, discontinued operations, extraordinary items, cumulative effect of changes in accounting principle, and net income.



Viewing page 107 of 793
Viewing questions 531 - 535 out of 3960 questions



Post your Comments and Discuss CFA CFA I exam prep with other Community members:

Join the CFA I Discussion