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AICPA CPA-Business Exam Questions
- Topic 1: Auditing and Attestation
- Topic 2: Business Environment and Concepts
- Topic 3: Financial Accounting and Reporting.
Free AICPA CPA-Business Exam Actual Questions
Note: Premium Questions for CPA-Business were last updated On Aug. 29, 2026 (see below)
Which of the following statements is correct with respect to a limited partnership?
Choice 'c' is correct. In a limited partnership, a general partner may be a secured creditor of the limited partnership.
Choice 'a' is incorrect. In a limited partnership, a limited partner may be an unsecured creditor of the limited partnership.
Choice 'b' is incorrect. In a limited partnership, a general partner may also be a limited partner at the same time.
Choice 'd' is incorrect. In a limited partnership, only the limited partners will have limited liability. A limited partnership must have at least one general partner and general partners have unlimited liability.
(The word 'all' makes this option wrong.)
All of the following capital budgeting analysis techniques use cash flows as the primary basis for the calculation, except for the:
Choice 'd' is correct. The accounting rate of return does not use cash flows as the primary basis for the calculation. It measures the accrual accounting return instead of cash flows:
Choice 'a' is incorrect. Net present value method discounts cash flows for an investment over its life to time period zero using a desired or minimum rate of return.
Choice 'b' is incorrect. Internal rate of return (IRR) determines the compound interest rate of an investment where the present value of the cash inflows equals the present value of the cash outflows. The IRR is the discount rate that results in a net present value of zero.
Choice 'c' is incorrect. The discounted payback period is the time period required for discounted cash inflows to equal the initial investment. The time value of money is considered.
Gartshore Inc. is a mail-order book company. The Company recently changed its credit policy in an attempt to increase sales. Gartshore's variable cost ratio is 70 percent and its required rate of return is 12 percent. The company projects that annual sales will increase from the current level of $360,000 to $432,000, but the average collection period on receivables will go from 30 days to 40 days. Ignoring any tax implications, what is the cost of carrying the additional investment in accounts receivable, using a 360-day year?
Choice 'a' is correct. The cost of carrying accounts receivable now is the variable cost of creating the account receivable times the cost of that capital during the collection period. The cost of the investment in accounts receivable is now:
Choice 'c' is incorrect. This considers the entire account receivable as a cost.
Choices 'b' and 'd' are incorrect, per the above calculation.
Generally, a merger of two corporations requires:
Choice 'a' is correct. The merger of two corporations requires that a special meeting be held and that notice and copy of the merger plan be given to all stockholders of both companies. A merger generally requires the approval of both the directors and stockholders.
Choice 'b' is incorrect. While the stockholders' approval is required, in most states a majority vote is required; no state requires a unanimous vote.
Choice 'c' is incorrect. While the board's approval is required, a majority vote and not a unanimous vote is required.
Choice 'd' is incorrect. There is no requirement that all liabilities owed by the absorbed corporation be paid before the merger because the merged corporation becomes obligated to pay such liabilities upon the merger.
Initially the nominal interest rate is 8 percent and the inflation rate is 6 percent. One year later, the nominal interest rate rises to 12 percent while the inflation rate rises to 10 percent. It follows that the real rate of interest:
Choice 'a' is correct. The real interest rate equals the nominal interest rate minus the inflation rate. Thus, the real interest rate in the first year is: real interest rate = 8 6 = 2 and the real interest rate in the next year is: real interest rate = 12 10 = 2.
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