AICPA Exam CPA-Financial Topic 1 Question 83 Discussion

Actual exam question for AICPA's CPA-Financial exam

Question #: 83
Topic #: 1

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:

AOption A

BOption B

COption C

DOption D

Show Suggested Answer

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

2 months 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

2 months 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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Pearlene

1 months ago

Let's go with Option C then.

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Whitley

1 months ago

I agree, Option A doesn't seem right for this question.

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Stephen

2 months ago

I think the answer is actually Option C.

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Lemuel

3 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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Craig

1 months ago

User 3: I'm not sure, I need to review the textbook before making a decision.

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Louisa

1 months ago

User 2: I agree, Option B seems like the correct choice.

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Sheridan

2 months ago

User 1: I think the answer is Option B.

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Ashton

3 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

3 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

3 months ago

The effective tax rate should reflect anticipated changes in tax laws and rates.

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Janessa

3 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

2 months 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

3 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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Lawanda

1 months ago

Definitely, staying informed and adjusting the effective tax rate accordingly is key for accurate financial reporting.

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Marshall

2 months ago

I think it's crucial for companies to stay updated on tax regulations to ensure compliance.

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Bernardine

2 months ago

That makes sense. It's important to anticipate these changes for accurate financial reporting.

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Mari

3 months 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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