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. Which financial statement presents information about cash receipts and cash payments during a period?

    Answer: Statement of cash flows

    The statement of cash flows classifies and reports cash inflows and outflows from operating, investing, and financing activities.

  2. Under the equity method of accounting, how does the investor record dividends received from the investee?

    Answer: Decrease the investment account

    Under the equity method, dividends received reduce the carrying value of the investment because they represent a return of the investor's capital.

  3. A contingent liability should be accrued when the likelihood of loss is probable AND the amount can be:

    Answer: Reasonably estimated

    ASC 450 requires accrual when a loss is probable and the amount can be reasonably estimated, even if not precisely known.

  4. Which depreciation method allocates the highest depreciation expense in the early years of an asset's life?

    Answer: Double-declining balance

    Double-declining balance applies a fixed rate (2× straight-line rate) to the declining book value, generating the most depreciation in early years.

  5. When a company restates prior-period financial statements due to an error, the correction is reported as an adjustment to:

    Answer: Beginning retained earnings of the earliest period presented

    Prior-period error corrections are reported as adjustments to the opening retained earnings balance of the earliest period presented in comparative statements.

  6. Under ASC 606, variable consideration (e.g., rebates, discounts) should be included in the transaction price only to the extent it is:

    Answer: Probable that a significant reversal will not occur

    ASC 606 requires variable consideration to be constrained — included only when it is probable that a significant revenue reversal will not occur when the uncertainty resolves.

  7. The lower-of-cost-or-net-realizable-value (LCNRV) rule for inventory applies under which accounting standard?

    Answer: All inventory methods under US GAAP

    ASC 330 requires all companies (except those using LIFO or retail method) to write down inventory to NRV; LIFO/retail use lower-of-cost-or-market.