Reading & Literacy Support Flashcards

A CPA candidate reads: 'An entity shall recognize a liability when a present obligation exists as a result of a past event and it is probable that an outflow of resources will be required.' The phrase 'as a result of' establishes what type of logical relationship?

Answer: Causal relationship

The phrase 'as a result of' explicitly links a cause (past event) to an effect (present obligation), establishing causality.

Which reading strategy is most appropriate when a candidate encounters a word they do not recognize while reading an exam question under time pressure?

Answer: Skip the word, read the rest of the sentence, and infer meaning from surrounding context

Under time pressure, using surrounding context to infer the meaning of an unknown word is the most efficient strategy.

In the sentence 'The entity consolidated the subsidiary because control, not ownership percentage, was the determining factor,' the subordinate clause beginning with 'because' functions to:

Answer: Provide the reason or rationale for the action in the main clause

A 'because' clause provides the causal explanation or justification for the event described in the main clause.

A passage excerpt reads: 'The audit committee, not management, is the external auditor's primary client.' This sentence is best characterized as:

Answer: A normative statement about the appropriate governance relationship under auditing standards

The statement expresses the normative (how it should be) relationship established by governance standards, particularly post-SOX.

Which of the following best exemplifies 'active reading' as applied to CPA exam preparation materials?

Answer: Generating questions about the content while reading and pausing to answer them

Active reading involves engaging critically with the material by formulating and answering questions as you read, deepening comprehension.

In a financial statement analysis passage, a writer uses an em-dash (—) in the following: 'Cash equivalents—instruments convertible to cash within 90 days—are included in the cash balance.' The em-dashes serve to:

Answer: Set off a parenthetical definition or clarifying phrase

Em-dashes are used to set off a parenthetical phrase that defines or elaborates on the noun immediately before the first dash.

A candidate reads an ethics passage and must distinguish between a 'rule' and a 'principle' in the AICPA Code of Professional Conduct. What textual clue would best signal that a statement is a broad principle rather than a specific rule?

Answer: The statement uses broad, values-based language such as 'integrity,' 'objectivity,' or 'public interest'

Principles in the AICPA Code are written in aspirational, values-based language, while rules are more specific and prescriptive.