Hock 2020 Part 1
Section A – External Financial Reporting Decisions
Questions only
Financial Statements - Other Than Statement of Cash Flows 22
Financial Statements - Statement of Cash Flows 45
Financial Statements - Integrated Reporting 9
Cash & Cash Equiv., Accounts Receivable, and Inventory 62
Investments, PP&E (Fixed Assets), and Intangible and Other Assets 57
Liabilities and Taxes 27
Profitability Ratios and Profitability Analysis 1
Owners' Equity 31
Revenue Recognition 7
276
Financial Statements - Other Than Statement of Cash Flows
1. Question ID: ICMA 19.P1.010 (Topic: Financial Statements - Other Than Statement of Cash
Flows)
A company is preparing its financial statements in accordance with U.S. GAAP. Listed below are
select financial data for the company.
Net income = $950,000
Depreciation = $40,000
Investment by owners = $60,000
Unrealized gain on available-for-sale securities = $90,000
Foreign currency translation loss = $20,000
What is the amount that would be reported as comprehensive income?
A. $1,120,000.
B. $1,020,000.
C. $1,060,000.
D. $970,000.
2. Question ID: ICMA 19.P1.002 (Topic: Financial Statements - Other Than Statement of Cash
Flows)
An income statement could be used by an external investor for all of the following
purposes except to
A. analyze the company’s performance compared to the budget.
B. assess the risk of the company achieving future profitability.
C. compare the company’s results to those of its competitors.
D. predict the company’s future revenues.
ﻛﻝ ﺍﻟﻛﺗﺏ ﻭﺍﻻﺳﺋﻠﻪ ﺍﻟﻠﻲ ﺗﺣﺗﺎﺟﻭﻫﺎ ﺣﺗﻼﻗﻭﻫﺎ ﻋﻠﻰ ﺍﻟﻘﻧﺎﺗﻳﻥ ﺩﻭﻝ
https://t.me/CMA_part1 https://t.me/CMA_part2
, Hock 2020 Part 1
Section A – External Financial Reporting Decisions
Questions only
3. Question ID: HOCK LR P2E 1 (Topic: Financial Statements - Other Than Statement of Cash
Flows)
The balance sheet (or statement of financial position) helps users to assess the liquidity, financial
flexibility, solvency and risk of a company. A company with financial flexibility has the ability to
A. decide whether to settle a liability or write it off.
B. respond to unexpected needs and opportunities.
C. choose the valuation methods it will use to report its assets.
D. meet its financial obligations as they come due.
4. Question ID: CIA 1192 P4 Q37 (Topic: Financial Statements - Other Than Statement of Cash
Flows)
Because of inexact estimates of the service life and the residual value of a plant asset, a fully
depreciated asset was sold in the current year at a material gain. This gain should be reported:
A. As part of sales revenue on the current year income statement.
B. In the income from continuing operations section of the current year income statement.
C. As an adjustment to prior periods' depreciation on the statement of retained earnings.
D. As an unusual or infrequent event in the unusual and infrequent events section of the current year
income statement.
5. Question ID: ICMA 10.P2.004 (Topic: Financial Statements - Other Than Statement of Cash
Flows)
The statement of changes in stockholders' equity shows a
A. listing of all stockholders' equity accounts and their corresponding dollar amounts.
B. computation of the number of shares outstanding used for earnings per share calculations.
C. reconciliation of the beginning and ending balances in the Retained Earnings account.
D. reconciliation of the beginning and ending balances in the individual stockholders' equity accounts.
6. Question ID: ICMA 1603.P1.053 (Topic: Financial Statements - Other Than Statement of
Cash Flows)
All of the following are limitations of the balance sheet except that
A. the balance sheet provides information on the liquidity and solvency of the company.
B. assets and liabilities are usually recorded at historical cost, which might differ significantly from
current fair value.
C. the balance sheet is prepared using management judgments and estimates.
D. the balance sheet omits many items that cannot be recorded objectively but which have financial
value to the company.
ﻛﻝ ﺍﻟﻛﺗﺏ ﻭﺍﻻﺳﺋﻠﻪ ﺍﻟﻠﻲ ﺗﺣﺗﺎﺟﻭﻫﺎ ﺣﺗﻼﻗﻭﻫﺎ ﻋﻠﻰ ﺍﻟﻘﻧﺎﺗﻳﻥ ﺩﻭﻝ
https://t.me/CMA_part1 https://t.me/CMA_part2
, Hock 2020 Part 1
Section A – External Financial Reporting Decisions
Questions only
7. Question ID: HOCK MP2 AF16 (Topic: Financial Statements - Other Than Statement of Cash
Flows)
In times of rising prices, what effect does the use of the historical cost concept have on a company's
asset values and profit?
A. Asset values will be overstated and profit understated in the financial statements.
B. Asset values and profit will both be understated in the financial statements.
C. Asset values will be understated and profit overstated in the financial statements.
D. Asset values and profit will both be overstated in the financial statements.
8. Question ID: ICMA 10.P2.002 (Topic: Financial Statements - Other Than Statement of Cash
Flows)
The financial statements included in the annual report to the shareholders are least useful to which
one of the following?
A. Managers in charge of operating activities.
B. Competing businesses.
C. Stockbrokers.
D. Bankers preparing to lend money.
9. Question ID: ICMA 1603.P1.006 (Topic: Financial Statements - Other Than Statement of
Cash Flows)
A company’s net income totaled $12,000,000. The company had an unusual loss of $250,000, an
unrealized after-tax gain of $25,000 on available-for-sale debt securities, and a $900,000 distribution
of cash dividends. The company’s comprehensive income was
A. $10,875,000.
B. $11,775,000.
C. $11,750,000.
D. $12,025,000.
10. Question ID: ICMA 10.P2.016 (Topic: Financial Statements - Other Than Statement of Cash
Flows)
All of the following are limitations to the information provided on the statement of financial
position except the
A. quality of the earnings reported for the enterprise.
B. judgments and estimates used regarding the collectibility, salability, and longevity of assets.
C. omission of items that are of financial value to the business such as the worth of the employees.
D. lack of current valuation for most assets and liabilities.
ﻛﻝ ﺍﻟﻛﺗﺏ ﻭﺍﻻﺳﺋﻠﻪ ﺍﻟﻠﻲ ﺗﺣﺗﺎﺟﻭﻫﺎ ﺣﺗﻼﻗﻭﻫﺎ ﻋﻠﻰ ﺍﻟﻘﻧﺎﺗﻳﻥ ﺩﻭﻝ
https://t.me/CMA_part1 https://t.me/CMA_part2
, Hock 2020 Part 1
Section A – External Financial Reporting Decisions
Questions only
11. Question ID: HOCK MP2 AF15 (Topic: Financial Statements - Other Than Statement of
Cash Flows)
The accounting concept or convention which, in times of rising prices, tends to understate asset
values and overstate profits, is the
A. going concern concept.
B. historical cost convention.
C. conservatism concept.
D. prudence concept.
12. Question ID: HOCK MP2 AF1 (Topic: Financial Statements - Other Than Statement of Cash
Flows)
According to the FASB conceptual framework, the objectives of financial reporting for business
enterprises are based on
A. generally accepted accounting principles.
B. the needs of investors and creditors in making decisions about providing resources to the entity.
C. reporting on management's stewardship.
D. the need for conservatism.
13. Question ID: ICMA 1603.P1.046 (Topic: Financial Statements - Other Than Statement of
Cash Flows)
Blue Fox Industries had the following account balances at year end.
Sales $452,000
Cash 23,400
Accounts payable 14,300
Rent expense 3,700
Accounts receivable 9,400
Cost of goods sold 214,000
Land 104,000
Contract liability 6,800
Gain on sale 17,500
Equipment 28,800
Inventories 2,200
Notes payable 67,000
What is the amount of total current assets reported on the balance sheet?
A. $59,300.
ﻛﻝ ﺍﻟﻛﺗﺏ ﻭﺍﻻﺳﺋﻠﻪ ﺍﻟﻠﻲ ﺗﺣﺗﺎﺟﻭﻫﺎ ﺣﺗﻼﻗﻭﻫﺎ ﻋﻠﻰ ﺍﻟﻘﻧﺎﺗﻳﻥ ﺩﻭﻝ
https://t.me/CMA_part1 https://t.me/CMA_part2
Section A – External Financial Reporting Decisions
Questions only
Financial Statements - Other Than Statement of Cash Flows 22
Financial Statements - Statement of Cash Flows 45
Financial Statements - Integrated Reporting 9
Cash & Cash Equiv., Accounts Receivable, and Inventory 62
Investments, PP&E (Fixed Assets), and Intangible and Other Assets 57
Liabilities and Taxes 27
Profitability Ratios and Profitability Analysis 1
Owners' Equity 31
Revenue Recognition 7
276
Financial Statements - Other Than Statement of Cash Flows
1. Question ID: ICMA 19.P1.010 (Topic: Financial Statements - Other Than Statement of Cash
Flows)
A company is preparing its financial statements in accordance with U.S. GAAP. Listed below are
select financial data for the company.
Net income = $950,000
Depreciation = $40,000
Investment by owners = $60,000
Unrealized gain on available-for-sale securities = $90,000
Foreign currency translation loss = $20,000
What is the amount that would be reported as comprehensive income?
A. $1,120,000.
B. $1,020,000.
C. $1,060,000.
D. $970,000.
2. Question ID: ICMA 19.P1.002 (Topic: Financial Statements - Other Than Statement of Cash
Flows)
An income statement could be used by an external investor for all of the following
purposes except to
A. analyze the company’s performance compared to the budget.
B. assess the risk of the company achieving future profitability.
C. compare the company’s results to those of its competitors.
D. predict the company’s future revenues.
ﻛﻝ ﺍﻟﻛﺗﺏ ﻭﺍﻻﺳﺋﻠﻪ ﺍﻟﻠﻲ ﺗﺣﺗﺎﺟﻭﻫﺎ ﺣﺗﻼﻗﻭﻫﺎ ﻋﻠﻰ ﺍﻟﻘﻧﺎﺗﻳﻥ ﺩﻭﻝ
https://t.me/CMA_part1 https://t.me/CMA_part2
, Hock 2020 Part 1
Section A – External Financial Reporting Decisions
Questions only
3. Question ID: HOCK LR P2E 1 (Topic: Financial Statements - Other Than Statement of Cash
Flows)
The balance sheet (or statement of financial position) helps users to assess the liquidity, financial
flexibility, solvency and risk of a company. A company with financial flexibility has the ability to
A. decide whether to settle a liability or write it off.
B. respond to unexpected needs and opportunities.
C. choose the valuation methods it will use to report its assets.
D. meet its financial obligations as they come due.
4. Question ID: CIA 1192 P4 Q37 (Topic: Financial Statements - Other Than Statement of Cash
Flows)
Because of inexact estimates of the service life and the residual value of a plant asset, a fully
depreciated asset was sold in the current year at a material gain. This gain should be reported:
A. As part of sales revenue on the current year income statement.
B. In the income from continuing operations section of the current year income statement.
C. As an adjustment to prior periods' depreciation on the statement of retained earnings.
D. As an unusual or infrequent event in the unusual and infrequent events section of the current year
income statement.
5. Question ID: ICMA 10.P2.004 (Topic: Financial Statements - Other Than Statement of Cash
Flows)
The statement of changes in stockholders' equity shows a
A. listing of all stockholders' equity accounts and their corresponding dollar amounts.
B. computation of the number of shares outstanding used for earnings per share calculations.
C. reconciliation of the beginning and ending balances in the Retained Earnings account.
D. reconciliation of the beginning and ending balances in the individual stockholders' equity accounts.
6. Question ID: ICMA 1603.P1.053 (Topic: Financial Statements - Other Than Statement of
Cash Flows)
All of the following are limitations of the balance sheet except that
A. the balance sheet provides information on the liquidity and solvency of the company.
B. assets and liabilities are usually recorded at historical cost, which might differ significantly from
current fair value.
C. the balance sheet is prepared using management judgments and estimates.
D. the balance sheet omits many items that cannot be recorded objectively but which have financial
value to the company.
ﻛﻝ ﺍﻟﻛﺗﺏ ﻭﺍﻻﺳﺋﻠﻪ ﺍﻟﻠﻲ ﺗﺣﺗﺎﺟﻭﻫﺎ ﺣﺗﻼﻗﻭﻫﺎ ﻋﻠﻰ ﺍﻟﻘﻧﺎﺗﻳﻥ ﺩﻭﻝ
https://t.me/CMA_part1 https://t.me/CMA_part2
, Hock 2020 Part 1
Section A – External Financial Reporting Decisions
Questions only
7. Question ID: HOCK MP2 AF16 (Topic: Financial Statements - Other Than Statement of Cash
Flows)
In times of rising prices, what effect does the use of the historical cost concept have on a company's
asset values and profit?
A. Asset values will be overstated and profit understated in the financial statements.
B. Asset values and profit will both be understated in the financial statements.
C. Asset values will be understated and profit overstated in the financial statements.
D. Asset values and profit will both be overstated in the financial statements.
8. Question ID: ICMA 10.P2.002 (Topic: Financial Statements - Other Than Statement of Cash
Flows)
The financial statements included in the annual report to the shareholders are least useful to which
one of the following?
A. Managers in charge of operating activities.
B. Competing businesses.
C. Stockbrokers.
D. Bankers preparing to lend money.
9. Question ID: ICMA 1603.P1.006 (Topic: Financial Statements - Other Than Statement of
Cash Flows)
A company’s net income totaled $12,000,000. The company had an unusual loss of $250,000, an
unrealized after-tax gain of $25,000 on available-for-sale debt securities, and a $900,000 distribution
of cash dividends. The company’s comprehensive income was
A. $10,875,000.
B. $11,775,000.
C. $11,750,000.
D. $12,025,000.
10. Question ID: ICMA 10.P2.016 (Topic: Financial Statements - Other Than Statement of Cash
Flows)
All of the following are limitations to the information provided on the statement of financial
position except the
A. quality of the earnings reported for the enterprise.
B. judgments and estimates used regarding the collectibility, salability, and longevity of assets.
C. omission of items that are of financial value to the business such as the worth of the employees.
D. lack of current valuation for most assets and liabilities.
ﻛﻝ ﺍﻟﻛﺗﺏ ﻭﺍﻻﺳﺋﻠﻪ ﺍﻟﻠﻲ ﺗﺣﺗﺎﺟﻭﻫﺎ ﺣﺗﻼﻗﻭﻫﺎ ﻋﻠﻰ ﺍﻟﻘﻧﺎﺗﻳﻥ ﺩﻭﻝ
https://t.me/CMA_part1 https://t.me/CMA_part2
, Hock 2020 Part 1
Section A – External Financial Reporting Decisions
Questions only
11. Question ID: HOCK MP2 AF15 (Topic: Financial Statements - Other Than Statement of
Cash Flows)
The accounting concept or convention which, in times of rising prices, tends to understate asset
values and overstate profits, is the
A. going concern concept.
B. historical cost convention.
C. conservatism concept.
D. prudence concept.
12. Question ID: HOCK MP2 AF1 (Topic: Financial Statements - Other Than Statement of Cash
Flows)
According to the FASB conceptual framework, the objectives of financial reporting for business
enterprises are based on
A. generally accepted accounting principles.
B. the needs of investors and creditors in making decisions about providing resources to the entity.
C. reporting on management's stewardship.
D. the need for conservatism.
13. Question ID: ICMA 1603.P1.046 (Topic: Financial Statements - Other Than Statement of
Cash Flows)
Blue Fox Industries had the following account balances at year end.
Sales $452,000
Cash 23,400
Accounts payable 14,300
Rent expense 3,700
Accounts receivable 9,400
Cost of goods sold 214,000
Land 104,000
Contract liability 6,800
Gain on sale 17,500
Equipment 28,800
Inventories 2,200
Notes payable 67,000
What is the amount of total current assets reported on the balance sheet?
A. $59,300.
ﻛﻝ ﺍﻟﻛﺗﺏ ﻭﺍﻻﺳﺋﻠﻪ ﺍﻟﻠﻲ ﺗﺣﺗﺎﺟﻭﻫﺎ ﺣﺗﻼﻗﻭﻫﺎ ﻋﻠﻰ ﺍﻟﻘﻧﺎﺗﻳﻥ ﺩﻭﻝ
https://t.me/CMA_part1 https://t.me/CMA_part2
