Free CPA Practice Questions & Sample Tests
30 original CPA questions. Five per section, with answers and explanations. No account required.
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FAR · 5 free questions
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FAR - Revenue RecognitionA retailer transfers control of a product to a customer on December 28. It sends the invoice on January 2 and receives cash on January 15. The product is the only performance obligation. Under Topic 606, when should the retailer recognize revenue?
CPA sample questions and answers by section
Explore one example from each CPA Exam section below. The session above has five questions per section, 30 in total. You can finish any section here without signing up.
Audit Evidence
Which statement correctly distinguishes the sufficiency and appropriateness of audit evidence?
- A.Sufficiency measures quantity; appropriateness measures relevance and reliability
- B.Sufficiency measures reliability; appropriateness measures quantity
- C.Both terms measure only the quantity of evidence
- D.Both terms measure only whether evidence came from an external source
Show answer and explanation
Correct answer: A. Sufficiency measures quantity; appropriateness measures relevance and reliability
PCAOB AS 1105 defines sufficiency as the quantity of audit evidence and appropriateness as its quality, meaning its relevance and reliability.
Why each choice is right or wrong
- A. This matches the definitions in PCAOB AS 1105.
- B. The definitions are reversed. Reliability is part of appropriateness, not sufficiency.
- C. Only sufficiency measures quantity. Appropriateness measures quality.
- D. External sourcing can affect reliability, but it does not define both concepts.
Source reviewed 2026-08-12: PCAOB AS 1105, Audit Evidence
Revenue Recognition
A retailer transfers control of a product to a customer on December 28. It sends the invoice on January 2 and receives cash on January 15. The product is the only performance obligation. Under Topic 606, when should the retailer recognize revenue?
- A.December 28
- B.January 2
- C.January 15
- D.The date the sales contract was signed
Show answer and explanation
Correct answer: A. December 28
Topic 606 recognizes revenue when the performance obligation is satisfied by transferring the promised good or service. Here, control transfers on December 28.
Why each choice is right or wrong
- A. Control transferred and the performance obligation was satisfied on December 28.
- B. Sending an invoice does not control the recognition date when control transferred earlier.
- C. Cash collection affects the receivable, not the date the performance obligation was satisfied.
- D. Contract signing identifies the arrangement, but it does not by itself mean the product was transferred.
Source reviewed 2026-08-12: FASB Revenue Recognition, Topic 606
Individual Taxation
An unmarried taxpayer paid more than half the cost of maintaining a home where a qualifying child lived for more than half the year. Assuming all other requirements are met, which filing status best fits these facts?
- A.Single
- B.Married filing jointly
- C.Married filing separately
- D.Head of household
Show answer and explanation
Correct answer: D. Head of household
An unmarried taxpayer who pays more than half the cost of maintaining a home for a qualifying dependent may qualify for head of household status.
Why each choice is right or wrong
- A. Single may describe the taxpayer's marital status, but the facts support the more specific head of household status.
- B. Married filing jointly requires the taxpayer to be married or treated as married under the applicable rules.
- C. Married filing separately also requires the taxpayer to be married or treated as married.
- D. The unmarried status, household-cost test, and qualifying child facts support head of household status.
Source reviewed 2026-08-12: IRS Filing Status guidance
Financial Statement Analysis
A company has current assets of $240,000 and current liabilities of $120,000. Using the AICPA formula, what is the company's current ratio?
- A.0.5
- B.1.0
- C.2.0
- D.3.0
Show answer and explanation
Correct answer: C. 2.0
The current ratio is current assets divided by current liabilities: $240,000 divided by $120,000 equals 2.0.
Why each choice is right or wrong
- A. This reverses the numerator and denominator: $120,000 divided by $240,000.
- B. A ratio of 1.0 would require current assets and current liabilities to be equal.
- C. $240,000 divided by $120,000 equals 2.0.
- D. A ratio of 3.0 would require current assets to be three times current liabilities.
Source reviewed 2026-08-12: AICPA CPA Exam Analytics Definitions and Valuation Metrics
SOC Engagements
A payroll processor has controls that may affect a customer's internal control over financial reporting. Which SOC examination focuses on those controls?
- A.SOC 1
- B.SOC 2
- C.SOC 3
- D.A compilation engagement
Show answer and explanation
Correct answer: A. SOC 1
A SOC 1 examination addresses controls at a service organization that are likely to be relevant to user entities' internal control over financial reporting.
Why each choice is right or wrong
- A. SOC 1 is designed for controls relevant to user entities' internal control over financial reporting.
- B. SOC 2 addresses controls relevant to the trust services criteria, not specifically financial reporting controls.
- C. SOC 3 is a general-use report related to the trust services criteria.
- D. A compilation does not examine a service organization's controls.
Source reviewed 2026-08-12: AICPA SOC 1 guidance
Partnership Basis
A taxpayer contributes property with an adjusted basis of $30,000 and a fair market value of $50,000 to a partnership for an interest. There are no liabilities, and no gain is recognized. What is the taxpayer's initial basis in the partnership interest?
- A.$0
- B.$20,000
- C.$30,000
- D.$50,000
Show answer and explanation
Correct answer: C. $30,000
The initial basis of a partnership interest includes the adjusted basis of property contributed. With no liabilities and no recognized gain, the initial basis is $30,000.
Why each choice is right or wrong
- A. A nonrecognition contribution does not make the contributed property's adjusted basis disappear.
- B. The built-in appreciation of $20,000 is not the partner's initial basis.
- C. The property's $30,000 adjusted basis carries into the initial partnership-interest basis in these facts.
- D. Fair market value does not replace adjusted basis for this initial-basis calculation.
Source reviewed 2026-08-12: IRS Publication 541, Basis of Partner's Interest