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AICPA Exam CPA-Financial Topic 1 Question 83 Discussion

Actual exam question for AICPA's CPA-Financial exam
Question #: 83
Topic #: 1
[All CPA-Financial Questions]

For interim financial reporting, the computation of a company's second quarter provision for income taxes uses an effective tax rate expected to be applicable for the full fiscal year. The effective tax rate should reflect anticipated:

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Suggested Answer: B

Choice 'b' is correct. Deficits accumulated during the development stage of a company should be reported as a part of stockholders' equity.

Rule: Development stage enterprises should present FS in accordance with GAAP and make additional disclosures such as: cumulative net losses, cumulative deficit (as part of equity), cumulative sales & expenses (part of I/S), cumulative statement of cash flows and supplementary 'shareholders equity.'

Choices 'a', 'c', and 'd' are incorrect, per the rule above.


by James at Mar 21, 2024, 06:01 PM

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Berry
25 days ago
Option F: Hire an army of accountants to find every loophole in the tax code. The effective tax rate will be whatever you can get away with.
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Ilene
27 days ago
Option A? Really? That's about as accurate as a broken compass. This exam is testing our knowledge, not our crystal ball skills.
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Stephen
2 days ago
I think the answer is actually Option C.
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Lemuel
1 months ago
Hmm, this is a tricky one. I'm leaning towards Option B, but I'd better double-check the textbook just to be sure.
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Sheridan
18 days ago
User 1: I think the answer is Option B.
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Ashton
2 months ago
I believe using the full-year tax rate for interim reporting helps in avoiding significant fluctuations in tax expense quarter to quarter.
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Lashawnda
2 months ago
I think it makes sense to use the expected full-year tax rate for interim reporting to provide a more accurate picture of the company's financial performance.
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Maira
2 months ago
The effective tax rate should reflect anticipated changes in tax laws and rates.
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Janessa
2 months ago
I'm not entirely sure, but I think Option D might be the right answer. The effective tax rate should account for any anticipated changes in the company's overall profitability for the full fiscal year.
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Mitsue
28 days ago
I think Option C could also be a possibility, as it might factor in other variables affecting the effective tax rate.
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Nickolas
2 months ago
Option C seems to be the correct answer here. The effective tax rate should reflect anticipated changes in the mix of income earned in different jurisdictions, as well as changes in tax laws and regulations.
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Marshall
15 days ago
I think it's crucial for companies to stay updated on tax regulations to ensure compliance.
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Bernardine
27 days ago
That makes sense. It's important to anticipate these changes for accurate financial reporting.
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Mari
29 days ago
I agree, Option C is the correct answer. The effective tax rate should consider changes in income mix and tax laws.
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