[LL Cool Jim]

What’s the answer to this?

1. Which of the following should be disclosed in a summary of significant

accounting policies?

a. Basis of consolidation.

b. Concentration of credit risk of financial instruments.

c. Composition of plant assets.

d. Adequacy of pension plan assets in relation to vested benef

FAR Done
REG Done
BEC Done

[Determined CPA]

Is it a? That seems like the closest one to a policy.

A - 75
B - 78 God is good.
F - 77 Answered prayers.
R - 84! Done!!

Paperwork sent - waiting for license!!
Still on a cloud and in shock. Through God, all things will happen.

[LL Cool Jim]

I think so, that's what my answer is too but i don't have the answer key.

FAR Done
REG Done
BEC Done

[Determined CPA]

https://simplestudies.com/significant-accounting-policies-in-financial-statements.html

Its on this list so it is A.

what do you mean you dont have the answer key?! what are you studying from?

A - 75
B - 78 God is good.
F - 77 Answered prayers.
R - 84! Done!!

Paperwork sent - waiting for license!!
Still on a cloud and in shock. Through God, all things will happen.

[LL Cool Jim]

It's one if Jeff's demo question from 2015 release but he didn't put the answer on the demo, well, at least i didn't see it.

FAR Done
REG Done
BEC Done

[Determined CPA]

gothca

A - 75
B - 78 God is good.
F - 77 Answered prayers.
R - 84! Done!!

Paperwork sent - waiting for license!!
Still on a cloud and in shock. Through God, all things will happen.

[Anonymous]

The answers are bolded on the 2015 AICPA released questions.

[musicamor]

The answer is A.

Here's a postmortem on the question and the possible answer choices:

The question calls for disclosure of significant accounting policies – right off the bat, we should be directing our attention to answers that have to do with the way a company accounts for various items; what is their policy for how they treat different transactions in their business. If you direct your critical-thinking ability to this concept, you'll automatically rule out 2 of the 4 possible answers.

A. This seems the most logical because the basis for the way an entity consolidates its subsidiaries would be described in the form of a policy/procedure.

B. This would be one of the responses that you could automatically rule out. Concentration of credit risk deals with disclosure of balances/amounts and their risks to the organization – not a policy

C. This is disclosing (1) the composition of the balance of a portion of fixed assets or describing the nature of what is reported in this line of the financial statements – not a policy

D. This is disclosing whether or not a pension is properly funded – a financial statement disclosure – not a policy.

See how easy that was. The exam will test your ability to critically think through questions and your wherewithal to respond to examiner questions. Practice your question-answering technique.

Texas CPA - licensed in 2012!!!

[Author]

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