Practice Test Geeks(CGA) Certified General Accountant Practice Test
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Financial Accounting & Reporting Flashcards

7 cards from real CGA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Financial Accounting & Reporting flashcards as text

  1. Under ASC 842, how should a lessee classify a lease where the present value of lease payments equals 92% of the asset's fair value?

    Answer: Finance lease

    Under ASC 842, a lease is classified as a finance lease if the PV of lease payments equals or exceeds substantially all of the asset's fair value (typically 90% threshold).

  2. Which method of inventory cost flow typically results in the highest net income during a period of rising prices?

    Answer: FIFO

    FIFO assigns the oldest (lowest) costs to COGS during rising prices, leaving higher-cost items in ending inventory and resulting in higher net income.

  3. A company issues bonds with a face value of $500,000 at 98. What is the initial carrying value of the bonds payable?

    Answer: $490,000

    Bonds issued at 98 means 98% of face value, so $500,000 × 0.98 = $490,000 initial carrying value.

  4. Under the percentage-of-completion method, if a project is 40% complete and total estimated costs are $1,000,000 with a contract price of $1,500,000, what revenue is recognized?

    Answer: $600,000

    Revenue recognized = 40% × $1,500,000 contract price = $600,000.

  5. Which of the following is NOT a component of Other Comprehensive Income (OCI)?

    Answer: Gains on sale of equipment

    Gains on sale of equipment are recognized in net income, not OCI; OCI captures items bypassing the income statement.

  6. A company declares a 15% stock dividend when 100,000 shares ($1 par) are outstanding and market price is $20. What is the debit to retained earnings?

    Answer: $300,000

    For stock dividends above 20-25%, use par value; below that, use market value: 15,000 shares × $20 = $300,000 debit to retained earnings.

  7. Under ASC 350, goodwill impairment testing requires comparing the reporting unit's fair value to its:

    Answer: Carrying amount including goodwill

    Under the simplified one-step goodwill impairment test, if the reporting unit's fair value is less than its carrying amount (including goodwill), an impairment loss is recognized.