AICPA CPA-Financial Exam - Topic 2 Question 73 Discussion

Actual exam question for AICPA's CPA-Financial exam

Question #: 73
Topic #: 2

The following items were among those that were reported on Lee Co.'s income statement for the year ended December 31, 1989:

The office space is used equally by Lee's sales and accounting departments. What amount of the abovelisted items should be classified as general and administrative expenses in Lee's multiple-step income statement?

A$290,000

B$325,000

C$410,000

D$500,000

Show Suggested Answer

Suggested Answer: D

Choice 'd' is correct. The concept of reliability in financial reporting includes; neutrality, representational faithfulness and verifiability.

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

by Marge at Aug 07, 2023, 04:05 PM

Limited Time Offer

25%

Off

Get Premium CPA-Financial Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Sueann

5 months ago

$290,000? That feels way too low for general expenses!

upvoted 0 times

...

Bea

5 months ago

I thought it was $410,000, but I could be wrong.

upvoted 0 times

...

Novella

5 months ago

Wait, are we sure about that? Seems high to me.

upvoted 0 times

...

Mollie

5 months ago

Totally agree, $325,000 makes sense!

upvoted 0 times

...

Noel

6 months ago

I think it should be $325,000 based on the office space allocation.

upvoted 0 times

...

Edward

6 months ago

I feel like the total should be higher than $290,000, but I can't remember if we included all the items listed in the question.

upvoted 0 times

...

Chaya

6 months ago

I think the office space costs should be split evenly, but I’m confused about what else counts as general and administrative expenses.

upvoted 0 times

...

Marshall

6 months ago

This question feels similar to one we practiced where we had to split costs between sales and admin. I think it might be around $325,000, but I can't recall the exact breakdown.

upvoted 0 times

...

Meghan

6 months ago

I remember we discussed how to allocate expenses between departments, but I'm not sure how to apply that here.

upvoted 0 times

...

Paz

6 months ago

Okay, let's see. IPSec and ECC are both encryption technologies, but I don't think they meet the requirement of not needing any configuration on the IoT endpoints. I'm leaning towards TLS as the best answer here.

upvoted 0 times

...

Ma

6 months ago

I'm pretty sure a broadcast storm is most likely to occur in an Ethernet network with redundant paths not running STP. That's the option that stands out to me.

upvoted 0 times

...

Vilma

11 months ago

Ugh, I wish they would just give us a calculator and let us do the math. These word problems are the worst!

upvoted 0 times

Ocie

10 months ago

I agree, it can be tough to figure out without a calculator.

upvoted 0 times

...

Carlton

10 months ago

I think the amount classified as general and administrative expenses is $325,000.

upvoted 0 times

...

Teri

10 months ago

I know, these word problems can be so frustrating sometimes.

upvoted 0 times

...

Willow

11 months ago

This is a piece of cake! I've got this one in the bag. Time to show off my accounting skills.

upvoted 0 times

...

Christa

11 months ago

Hold on, is this a multiple-choice question or a fill-in-the-blank? I can never remember which one is which...

upvoted 0 times

Malinda

10 months ago

I think the correct answer is C) $410,000.

upvoted 0 times

...

Salome

10 months ago

The answer options are A) $290,000, B) $325,000, C) $410,000, and D) $500,000.

upvoted 0 times

...

Josphine

11 months ago

It's a multiple-choice question.

upvoted 0 times

...

Fairy

11 months ago

Wait, is this a trick question? I bet the answer is C, because it's the most expensive option. That's usually how they get you on these exams!

upvoted 0 times

Kenneth

10 months ago

I agree with you, I think the answer is C) $410,000. It does seem like the most expensive option, but it also makes sense for general and administrative expenses.

upvoted 0 times

...