Step 1 – Calculate expected counts:
Total invoices = 1,200 × Benford %
Digit 1 expected = 1,200 × 0.301 = 361.2 (actual = 450 → excess +88.8)
Step 2 – Compute % deviation:
For digit 1: (450 – 361.2) / 361.2 = +24.6%
Digit 2: (180 – 211.2) = -31.2 → -14.8%
Digit 9: (60 – 55.2) = +4.8 → +8.7%
Step 3 – Interpretation:
Digit 1 has the largest positive deviation. This suggests possible fictitious vendors, inflated invoices, or threshold avoidance (e.g., invoices just under $2,000 but above $1,000). New exam expects: “Investigate invoices starting with ‘1’ for duplicates or authorization.”
New exam insight: Modern exit exams include basic data analytics. Solution is not a journal entry but a risk assessment.
Under ASC 842, all leases over 12 months are capitalized. The renewal option (reasonably certain) must be included.
Step 1: Determine lease term.
Step 2: Calculate present value of lease payments.
PV Factor for annuity due (n=8, i=5%): 1 + [1 - (1.05)^-7] / 0.05 = 6.7866
Present Value = $20,000 * 6.7866 = $135,732
Step 3: Record entries on Jan 1, 2025.
Note: Under old standards (ASC 840), this would be an operating lease off-balance-sheet. The new exam expects the ROU asset on the balance sheet immediately. accounting exit exam question and solutions wit new
Solution Summary: | Account | Debit | Credit | | :--- | :--- | :--- | | Right-of-Use Asset | $135,732 | | | Lease Liability | | $135,732 |
Scenario:
You are the senior accountant. The CFO asks you to reduce the allowance for doubtful accounts by $500,000 to meet earnings target. Your calculation (based on aging) supports the current allowance. The CFO says: “We’ll reverse it next quarter – just temporary.”
Question:
According to the IESBA Code (or AICPA), what should you do?
A software company sells a 12-month subscription for $12,000 on January 1, 2025. The customer pays $3,000 upfront and agrees to pay the remaining $9,000 on June 30, 2025. The company delivers access to the software immediately. How much revenue should be recognized for the quarter ended March 31, 2025?
A) $12,000
B) $3,000
C) $4,000
D) $3,000 plus interest on the receivable Step 1 – Calculate expected counts: Total invoices
Solution:
Under IFRS 15 / ASC 606, revenue is recognized over time as the service is provided.
Under Old GAAP (default): Crypto is indefinite-lived intangible asset.
Under ASU 2023-08 (FASB new, effective 2025): Crypto is measured at fair value with changes in net income.
Exam Expectation: For 2025 exams, most boards will test both methods. If the question says "current GAAP without crypto election," use intangible model. If it says "under the new fair value option," use the second.