Explore BrainMass
Share

# Certified Financial Planner practice exam questions

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

These are sample Certified Financial Planner exam test questions from my textbook:

If a client's primary goal in making lifetime gifts to his children is to lower his estate taxes he should make gifts of property that
A. Are expected to depreciate significantly in the future
B. Are expected to appreciate significantly in the future

Someone received a bequest of 100 shares of stock from a relative who died on March 1 of this year. The relative bought the stock at a total cost of \$5,500. The value of the 100 shares of stock was \$5,750 on March 1. Its value rose to \$6,250 on July 1 of this year, on which day the individual sold it for \$6,250, incurring expenses for the sale of \$250. The taxable gain on the sale would be a
A. \$250 long-term capital gain
B. \$250 short-term capital gain
C. \$500 long-term capital gain
D. \$500 short-term capital gain

A corporation's current dividend is \$3.85. If future dividends are expected to grow at 4% forever, which of the following amounts should the corporation's stock sell for it the required rate of return on the stock is 14%?
A. \$28.57
B. \$38.50
C. \$40.04
D. \$41.60
Please provide the formula for this. I had it written down, but I've lost it.

Your client, a wealthy physician in the top marginal tax bracket, is interested in purchasing, with some of his friends, a franchise in a fast-growing company. After carefully reviewing the proposal, you have determined that apart from a large up-front investment, the business will not need to retain income and the income in future years will be paid out to the owners. Your client wants to be assured that the business would not be disrupted if one of his partners lost interest or encountered personal financial reversals. What form of business makes the most sense for him?

A. Limited partnership
B. General partnership
C. C-corportaion
D. Professional corporation
E. S-corporation.

#### Solution Preview

Ques.If a client's primary goal in making lifetime gifts to his children is to lower his estate taxes he should make gifts of property that
A. Are expected to depreciate significantly in the future
B. Are expected to appreciate significantly in the future
Answer: Option B is correct.The asset whose value is expected to appreciate significantly will Increase the estate tax liability of client. The property whose value has already been increased Will be taxable in the hands of client irrespective of making gift to his children. Depreciation in value of asset do not have any increasing effect on tax liability of client.

Ques.Someone received a bequest of 100 shares of stock from a relative who died on March 1 of this year. The relative bought the stock at a total cost of \$5,500. The value of the 100 shares of stock was \$5,750 on March 1. Its value rose to \$6,250 on July 1 of this year, on which day the individual sold it for \$6,250, incurring ...

#### Solution Summary

Tutorial is 385 words, including computations to show you how and why each response is selected. No references.

\$2.19

## 20 Auditing Multiple Choice Questions

1. The definition of auditing states that the auditor
A. objectively obtains evidence
B. is independent
C. must evaluate internal control
D. none of the above

2. Financial statements are the representations of
A. the auditor
B. the board of directors
C. the AICPA
D. management

3. Proper supervision is
A. a general standard
B. a standard of fieldwork
C. a standard of reporting
D. both A & C

4. The audit report should be dated
A. the same date the engagement letter is dated
B. the date the report is prepared
C. the date the fieldwork is completed
D. none of the above

5. If an auditor is not independent, he should issue a
A. disclaimer
B. unqualified report with explanatory paragraph
C. qualified report
D. representation letter

6. The concept of materiality is recognized in the auditor's report
A. in the introductory paragraph
B. in an explanatory paragraph
C. in the scope paragraph
D. materiality is not recognized in the auditor's report

7. The auditor considers materiality from
A. an AICPA perspective
B. a state board perspective
C. independence perspective
D. reasonable user perspective

8. The risk that the auditor will not detect a material misstatement is
A. control risk
B. inherent risk
C. expected misstatement
D. none of the above

9. Evidence is considered competent when it
A. is relevant to the audit objective being tested
B. contains no material misstatement
C. signals the true state of an assertion
D. both A & C

10. Audit documentation is the property of
A. the client
B. the auditor
C. both the client and the auditor
D. the audit committee

11. The objective of the audit plan is
A. to conduct the audit in accordance with GAAS
B. reduce the risk of material misstatements to an acceptably low level
C. prepare an unqualified report
D. Both A & B

12. Substantive tests consist of
A. analytical procedures
B. tests of the design of the internal control system
C. tests of the implementation of the internal control system
D. all of the above

13. A more detailed understanding of internal control is required when using a
A. substantive strategy
B. reliance strategy
C. sampling strategy
D. test-basis strategy

14. The concept of _________ recognizes that the cost of an entity's internal control system should not exceed the benefits that are expected to be derived
A. materiality
B. substantive testing
C. reasonable assurance
D. control risk

15. Which is not true concerning information technology?
A. audit objectives change when using information technology
B. duties may be difficult to segregate
C. internal control usually becomes more reliable as the complexity of the system increases
D. hard copies of source documents may not exist

16. Personal computers may be used for
A. trial balance preparation
B. audit documentation
C. analytical procedures
D. all of the above

17. The correct sequence of steps in planning an attribute sampling application is
A. randomly select sample items, perform audit procedures, perform error analysis
B. determine the tolerable deviation rate, consider the effect of population size, randomly select the sample items
C. determine the test objective, define the control deviation conditions, define the population
D. define the sampling unit, define the period covered by the test, randomly select the sample items

18. Which of the following represents a deviation
A. unused or inapplicable documents
B. inability to examine a sample item
C. voided documents
D. Both A & B

19. The amount of the preliminary judgment about materiality that is allocated to a financial statement account is referred to as
A. sampling risk
B. risk of incorrect rejection
C. upper limit on misstatement
D. tolerable misstatement

20. Sampling may be used for substantive testing to
A. develop an estimate of some amount
B. consider the variation within the population
C. apply judgment
D. determine an acceptable level of risk

View Full Posting Details