FAR Cost Accounting Standards (CAS) 2

Question 1

Under CAS 403, home office expenses must be allocated to operating segments on the basis of:

Accepted Answer

Beneficial or causal relationship between the expense and segments

Answer

CAS 403 requires home office expenses to be allocated using a base that best reflects the beneficial or causal relationship between those expenses and the segments receiving benefit.

Question 2

What does CAS 404 govern?

Accepted Answer

Capitalization of tangible capital assets

Answer

CAS 404 establishes criteria for capitalizing tangible assets and requires contractors to apply capitalization thresholds consistently.

Question 3

Under CAS 405, what is the required treatment of costs specifically identified as unallowable?

Accepted Answer

They must be identified and excluded from billings, claims, and proposals

Answer

CAS 405 requires costs specifically identified as unallowable, and their directly associated costs, to be identified and excluded from any government billing, claim, or proposal.

Question 4

CAS 406 establishes requirements for which accounting concept?

Accepted Answer

Cost accounting periods used to accumulate and report costs

Answer

CAS 406 requires consistency in the cost accounting periods used to accumulate costs and allocate costs to cost objectives, preventing arbitrary period shifts.

Question 5

Under CAS 409, which depreciation method is NOT permitted for government cost accounting purposes?

Accepted Answer

Accelerated cost recovery system (ACRS/MACRS) tax method

Answer

CAS 409 does not permit tax-based depreciation methods like ACRS/MACRS; contractors must use methods that reflect the actual service life and productive use of the asset.

FAR - Certified Cost or Pricing Data Specialist Practice Test

FAR - Certified Cost or Pricing Data Specialist Practice Test

FAR Cost Accounting Standards (CAS) 2