AICPA Reading & Literacy Support 2 ā Questions and Answers
Question 1: When reading a complex financial statement footnote, which strategy best helps a CPA candidate identify the main point of a dense paragraph?
- Read only the first and last sentence of the paragraph
- Identify subject-verb pairs in each sentence and discard modifying clauses first (Correct answer)
- Highlight every number mentioned in the paragraph
- Rewrite the paragraph in their own words before continuing
Correct answer: Identify subject-verb pairs in each sentence and discard modifying clauses first
Isolating subject-verb pairs strips away complexity and reveals the core claim of a dense sentence.
Question 2: A passage states: 'While revenue recognition under ASC 606 differs markedly from prior GAAP, the core principleārecognizing revenue to depict the transfer of goods or servicesāremains anchored in economics.' The word 'anchored' most nearly means:
- Limited
- Grounded (Correct answer)
- Complicated
- Eliminated
Correct answer: Grounded
'Anchored' here means firmly grounded or rooted, indicating the principle is stable.
Question 3: Which of the following best describes an 'inference' in the context of reading a CPA exam passage?
- A conclusion drawn directly from a stated fact
- A conclusion that goes beyond what is explicitly stated but is supported by evidence in the text (Correct answer)
- A personal opinion about the content of the passage
- A summary of the passage's main argument
Correct answer: A conclusion that goes beyond what is explicitly stated but is supported by evidence in the text
An inference requires using textual evidence to reach a conclusion the author implies but does not explicitly state.
Question 4: A CPA exam question asks you to identify the 'primary purpose' of a regulatory excerpt. Which approach is most effective?
- Focus on the most technical vocabulary used in the passage
- Identify what problem or need the regulation is designed to address (Correct answer)
- Count how many times key terms are repeated
- Summarize only the final paragraph of the excerpt
Correct answer: Identify what problem or need the regulation is designed to address
Regulatory text is written to solve a problem or establish a standard, so identifying that purpose reveals the primary intent.
Question 5: In reading a PCAOB auditing standard, the phrase 'the auditor should consider' versus 'the auditor must' signals what type of distinction?
- A difference in the subject matter being audited
- A difference between a required procedure and a professional judgment decision (Correct answer)
- A difference between large and small engagements
- A difference between public and private company standards
Correct answer: A difference between a required procedure and a professional judgment decision
'Must' denotes a mandatory requirement while 'should consider' grants professional judgment about whether a procedure is necessary.
Question 6: Which text structure is most commonly used in FASB Accounting Standards Codification topic introductions?
- Chronological narrative describing historical events
- Problem-solution structure outlining the accounting issue and the codification's resolution (Correct answer)
- Compare-contrast structure listing IFRS vs. US GAAP differences
- Descriptive structure cataloguing all possible transactions
Correct answer: Problem-solution structure outlining the accounting issue and the codification's resolution
ASC topic introductions typically identify an accounting problem and then present the standard as the authoritative solution.
Question 7: A reading passage contains the sentence: 'Notwithstanding the preceding guidance, entities operating under a going-concern uncertainty may apply an alternative measurement basis.' The word 'notwithstanding' functions as:
- A causal connector meaning 'because of'
- A concessive connector meaning 'despite' or 'regardless of' (Correct answer)
- A temporal connector meaning 'after'
- An additive connector meaning 'in addition to'
Correct answer: A concessive connector meaning 'despite' or 'regardless of'
'Notwithstanding' is a formal concessive term indicating that the exception applies regardless of the preceding rule.
AICPA Reading & Literacy Support 2
When reading a complex financial statement footnote, which strategy best helps a CPA candidate identify the main point of a dense paragraph?