FREE Certified Public Accountant (CPA) Regulation Questions and Answers

Question 1

The Echo Company had the following income during the current year:
Operating profit = $110,000
$1,100 in dividends from a 20%-owned, taxed domestic business.
How much of the dividends received by the Echo Company should be included in its current year's taxable income?

Accepted Answer

$220

Answer

Cannot be determined

Answer

$350

Answer

$330

Question 2

Jack Snell designated his wife, Angelica, as the beneficiary of a life insurance policy with a face value of $150,000. This policy provided that, in the event of Jack's passing, the money would be given to Angelica with interest throughout her expected life. What amount should Angelica include in her annual gross income if the insurance company paid her $6,100 and determined her life expectancy to be thirty years?

Accepted Answer

$1,100

Answer

Cannot be determined

Answer

$1,400

Answer

$6,100

Answer

$1,500

Question 3

Suppose the 2015 alternative minimum taxable income of Alpha Corporation was $210,000. Which of the following correctly describes the exempt portion of the 2015 alternative minimum taxable income for Alpha Corporation?

Accepted Answer

$25,000

Answer

$26,000

Answer

$25,500

Answer

$24,500

Answer

$24,000

Question 4

Which of the following does not constitute a contract's fundamental component?

Accepted Answer

Statue of frauds

Answer

Consideration

Answer

Acceptance

Answer

Offer

Answer

Legality

Question 5

Which of the following must an auditor have an opinion on while auditing an issuer?
I. The audit committee's oversight on internal controls
II. The audit committee's oversight of financial reporting
III. The financial statements
IV. The effectiveness of internal controls

Accepted Answer

III and IV only

Answer

All scenarios

Answer

I and II only

Answer

II and III

Question 6

Together with his wife, Charlie Smith is submitting a joint tax return. Under a qualified plan, Charlie Smith's employer covers the entire cost of the employee's group term life insurance. Which of the following options best describes the maximum tax-free coverage that Mr Smith's employer may offer?

Accepted Answer

$50,000

Answer

$2,500

Answer

Cannot be determined

Answer

$25,000

Answer

$15,000

Question 7

True or False: Even if an auditor finds no false statements during an audit, a severe flaw or material weakness may still exist within a corporation.

Accepted Answer

TRUE

Answer

FALSE