CLFP Financial and Tax Accounting for Leases Practice Exam

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• Which financial statements provide the greatest level of assurance?
• Which inventory method reflects most recent prices in inventory values?
• Under cash basis accounting, which item may be understated on the balance sheet?
• Net Sales to Inventory ratio is calculated by dividing net sales by which item?
• Net income is defined as
• Reviewing financial statements over a longer period helps underwriters to better assess:
• Operating Expenses are defined as:
• What is Sale-Leaseback Accounting?
• According to the 1984 Congressional Record, tax rules are generally not written in IRS code and instead evolve through which of the following?
• What is Inventory?
• How is unearned income accounted for on the Lessor Income Statement?
• How should a lessor disclose Future minimum lease payments for direct finance leases?
• What is the major purpose of the Statement of Cash Flows?
• How should a lessor account for a direct finance lease?
• Net Sales to Inventory (Sales to stock) yields a figure different from Inventory Turnover because which is true?
• What is a Lease?
• Marketable securities are listed at what value?
• Beyond ASC 840 criteria, what additional conditions must be met to classify as a capital lease?
• Inception of the Lease is defined as
• Which statement correctly defines the Implicit Interest Rate?
• What information is included in the PPT assessment notice?
• Which asset category includes cash and liquid assets that can be converted to cash within a year?
• Payables Turnover measures the number of days a business will take to pay for purchases; which data are used in its calculation according to the provided material?
• What are Prepaid Expenses?
• Capital stock is defined as:
• Which statement about IRS Section 179 is true?
• What is depreciation?
• How should a manufacturer account for a sale-type lease?
• Notes section typically includes which of the following?
• What do compiled financial statements present?
• Retained Earnings are defined as:
• What is the purpose of the balance sheet?
• Quick Ratio is defined as
• What is the purpose of the Notes section?
• Accrued payroll is a current liability consisting of salaries and wages currently owed.
• Which statement correctly defines negative cash flow?
• What is Unguaranteed Residual Value?
• Receivable Turnover is calculated as net sales divided by what?
• Under the same inventory data, two units sold. LIFO COGS and ending valuation?
• Which financial statement reports cash flow information?
• Which leases are exempt from on-balance-sheet recognition under the proposed changes?
• Executory costs may be paid by which party?
• What is cash flow?
• What is MACRS?
• What are Financial Relationships (Ratios)?
• Which is NOT a component of a full-disclosure financial statement?
• What is Economical Useful Life of Leased Property?
• Initial Direct Cost (IDC) includes which description?
• What does the Sales to Working Capital ratio measure?
• Which item is not typically included in Cost of Sales?
• Debt to Equity ratio is calculated as
• Under anticipated changes, the lessee would record which asset on the balance sheet?
• Describe a key element to understanding a balance sheet.
• What is Initial Indirect Cost (IDC) in leasing?
• From the following inventory amounts, two units are sold. Under the FIFO method, what are the COGS and ending inventory valuation?
• What are the three levels of assurance provided by financial statements?
• Which statement about proposed changes to lessee accounting is false?
• What is a Bargain Purchase Option?
• Which item is included as a component to provide additional information in a full-disclosure financial statement?
• What best describes the ‘Investment in Leased Property’ balance in operating lease accounting from the lessor’s perspective?
• Equity on the balance sheet is best described as:
• Fixed assets are typically capitalized and depreciated over their useful life.
• If a lease fails the burden-of-proof test, how is the lessor's tax treatment generally characterized?
• The statement 'Total Liabilities and Equity equals Assets' is:
• Return on Equity is calculated as
• What characteristic describes long term investments?
• Which option best describes required disclosures for a capital lease on the lessee's financial statements?
• Which statement best describes the purpose of unearned income in a direct finance lease?
• How would you define contingent rentals more broadly?
• What balance sheet disclosure is required for operating leases?
• Revenues are defined as:
• Which level of assurance offers reasonable assurance that there are no material modifications to conform with GAAP?
• Which statement about Bargain Renewal Option is true?
• Under true lease tax treatment, who depreciates the asset for tax purposes?
• Why is sales tax complicated?
• IRS Section 179 cap and phase-out thresholds: which statement is true?
• What are Assets?
• Which items are typically included in lessee disclosures for a capital lease?
• What is Renewal or Extension of a Lease?
• Reviewing financial statements over different periods helps management to:
• MACRS is the predominant method for tax basis depreciation for assets placed in service after which year?
• What are Accounts Receivable?
• How is depreciation calculated?
• Gross Profit is defined as:
• What is cash basis accounting?
• Which item is NOT included in Maximum Lease Payments?
• Gross Margin is defined as:
• Under operating leases, who bears depreciation on the leased asset on the lessor’s books?
• Total Operating Income is defined as:
• Which balance sheet category includes intangible assets such as patents and trademarks?
• Using the given inventory data, what are the COGS and ending inventory under the average cost method?
• Why is appreciation generally not used in financial statement values, according to the provided material?
• How should residual values be accounted by a lessor?
• During each lease term, minimum payments are allocated between which components?
• Which metric measures the profitability of ownership's investment, stated as a percentage?
• The current portion of long-term debt is the portion payable within the next 12 months.
• In PPT process, there is a protest period after the assessment notice.
• Lease Term includes renewal periods that precede a bargain purchase option.
• Implicit Interest Rate is defined as
• Short-Term Notes are a current liability representing the balance due to pay off short term debt for borrowed funds.
• What is tax basis accounting?
• How is IDC accounted for on Lessor financial statements?
• What is Residual Value of Leased Property?
• What are the three basis of accounting on which financial statements are created?
• In lessor accounting, if the lessor provides cash financing, the lease is typically classified as
• Which element of the income statement represents income and expenses that are not generated by the usual course of business and are not considered extraordinary?
• Under LIFO, ending inventory consists of which prices?
• What was FASB 13?
• Unguaranteed Residual Value is defined as
• When a lease passes burden of proof, how is the lessor's tax treatment characterized?
• Which item is NOT listed as part of the burden of proof for a true lease?
• Which item is typically capitalized and depreciated as a fixed asset?
• Taxes payable are amounts estimated by an accountant to have been incurred during the accounting period.
• Which accounting basis provides insight into liquidity and leverage for debt capacity?
• What are Long Term Investments?
• Which statement best describes compiled financial statements?
• What is a Heading?
• What is LIFO Inventory Value?
• For operating leases, how is rent income recognized when payments are not level?
• Value of Leased Property for a lessor that is not a manufacturer or dealer is equal to which?
• Under a capital lease, which accounting element reflects the cost of the leased asset over time?
• Lease Term includes which of the following renewal periods?
• Incremental Borrowing Rate is defined as
• What basis of accounting is required by GAAP?
• How should the lessee record a capital lease on its balance sheet?
• Which of the following is a required disclosure for direct finance leases?
• What now governs lease accounting?
• What does the term 'Liquidate' mean in a business context?
• Which fixed asset is not depreciated?
• After PPT assessment is billed, who may invoice the lessee to collect?
• Where is Personal Property Tax Assessed?
• What are Contingent Rentals?
• What is Gross Investment?
• A very high receivable turnover generally indicates which of the following?
• Which statement best describes the role of the 80% of useful life guideline in the burden of proof for true leases?
• Aging the Receivables is a method used to determine what?
• Which statement best defines renewal or extension of a lease?
• Which of the following are components of equity?
• What is an example of a prepaid expense?
• Cost of Sales is defined as:
• Inventory Turnover is calculated as which formula?
• Interest payable includes accrued fees due for use of both short term and long term borrowings.
• Which type of financial statement would include test audits?
• Which metric measures the portion of a company financed by debt versus equity?
• How did APB fail?
• PreTax income is best described as
• Which element is typically included in an audited financial statement but not in a compiled one?
• Bonus Depreciation is true statement?
• Under anticipated changes, which statement correctly describes sale-type vs direct finance lease?
• A non-cancelable lease can only be canceled under which condition?
• How should the lessee record a capital lease on the income statement?
• In a capital lease, the lease obligation should be recorded at the lower of which values?
• In PPT filing, where is the first rendition filed?
• Which statement best describes Sale-Leaseback Accounting?
• Under anticipated IFRS and FASB changes, which statement about lessee accounting is true?
• What is Unearned Income?
• What is a qualified audited financial statement?
• Which of the following statements is true about the Economical Useful Life?
• In a direct finance lease, how is the debt accounted for by the lessor?
• How is depreciation reflected on financial statements?
• Which costs are excluded when calculating the present value for a capital lease obligation?
• In straight-line depreciation, which components are included in the calculation?
• How should a Lessor account for an Operating Lease on its income statement?
• What costs are considered executory costs in a lease arrangement?
• Which ratio is commonly known as the Acid Test Ratio?
• What is accrual based accounting?
• Which statement about Bargain Purchase Option is true?
• A higher Current Ratio generally indicates greater liquidity; the benchmark is
• What is a primary goal of the accounting profession?
• What is the advantage of FIFO Inventory Valuation?
• How should a Lessor account for an Operating Lease on its balance sheet?
• How may ASC 840 differ between lessor and lessee in applying the 90% of fair value test?
• For an operating lease, how are rental payments recognized in the income statement?
• What is the advantage of LIFO Inventory Valuation?
• Which statement is a capital lease criterion under ASC 840?
• What is FIFO Inventory Valuation?
• In what year was the Accounting Standards Codification approved by the FASB?
• What is a Bargain Renewal Option?
• Using the same inventory data, two units sold. Average Cost COGS and ending valuation?
• What are current assets?
• Which of the following is a current liability?
• Which item is a fixed asset?
• Are net leases treated differently from a tax perspective?
• What does the Operating Expense Ratio primarily indicate?
• Excess Paid In Capital is defined as:
• Current liabilities are defined as all debt and obligations payable within 12 months.
• Appreciation refers to which concept in financial statements?
• Mortgage payable falls under which liability category?
• Value of Leased Property is defined as the price at which the property could be sold at an arm's length transaction by unrelated parties.
• Under FIFO, which items are sold first?
• Initial Direct Cost (IDC) includes which costs?
• What are Marketable Securities?
• Which of the following factors makes a residual value unguaranteed?
• Which statement describes what happens when a capital lease criterion is met?
• Aging the receivables helps determine what?
• What is Accounting Standards Codification?
• Which statement is true about changes to Section 179 deductions over time?
• What is Straight-Line Depreciation?
• Amortization is best described as which of the following?
• Current Ratio is defined as
• Long-Term Liabilities are liabilities due over a period exceeding 12 months.
• Net Profit Margin is defined as net income divided by which figure?
• What is Average Cost Inventory Valuation?
• Patents and trademarks are examples of which balance sheet category?
• What is the purpose of the income statement?
• Accounts payable is a current liability representing amounts owed to whom?
• Retained Earnings are defined as:
• Which statement about the 90% fair value test under ASC 840 is true?