CPA Refresher

Which of the following expenses should be included in general and administrative expenses?

• Interest and advertising expenses

• Interest expense

• Advertising expenses

• None of the above

Which of the following types of audit evidence is the most persuasive?

• Prenumbered client purchase order forms

• Client work sheets supporting cost allocations

• Bank statements obtained from the client

• client representation letter

An auditor who uses statistical sampling for attributes in testing internal controls should reduce the planned reliance on a prescribed control when the:

• Sample rate of deviation plus the allowance for sampling risk equals the tolerable rate

• Sample rate of deviation is less than the expected rate of deviation used in planning the sample

• Tolerable rate less than the allowance for sampling risk exceeds the sample rate of deviation

• Sample rate of deviation plus the allowance for sampling risk exceeds the tolerable rate

A NFP(not-for-profit) organization receives $150 from a donor. The donor receives two tickets to a theater show and an acknowledgement in the theater program. The tickets have a fair value of $100. What amount is recorded as contribution revenue?

• $0

• $50

• $100

• $150

In auditing long-term bonds payable, an auditor most likely would:

• Perform analytical procedures on the bond premium and discount accounts

• Examine documentation of assets purchased with bond proceeds for liens.

• Compare interest expense with the bond payable amount for reasonableness.

• Confirm the existence of individual bondholders at year-end.

Which of the following credits can result in a refund even if the individual had no income tax liability

• Credit for prior year minimum tax

• Elderly and permanently and totally disabled credit

• Earned income credit

• child and dependent care credit

Which one of the following would increase the working capital of a firm

• Cash collection of accounts receivable

• Refinancing of account payable with a two-year note payable

• Cash payment of accounts payable

• payment of a 30 year mortgage with cash.

Which of the following individuals would be most hurt by an unanticipated increase in inflation

• A retiree living on a fixed income

• A borrower whose debt has a fixed interest rate

• A union worker whose contract includes provisions for cost of living adjustments

• A saver who savings was placed in a variable rate savings account.

According to the ethical standards of the profession, which of the following acts by a CPA is generally prohibited?

• Purchase a product from a third-party and reselling it to the client

• Writing a financial management newsletter promoted and sold by a publishing company.

• Accepting a commission for recommending a product to an audit client

• accepting engagements obtained through the efforts of third parties

Ball and Baig are equal general partners in the firm of Games Associates. On January 1 of the current year, each partner's basis in their Games partnership interest was $50,000. During the year, Games borrowed $80,000, for which Ball and Baig are personally liable. Games sustained an ordinary business loss of $30,000 for the current year. The basis of each partner's interest in Games at the end of the current year is:

• $35,000

• $50,000

• $65,000

• $75,000