Prospective Financial Statements: Performance and Usage Course #6845/QAS6845 Exam Packet
PROSPECTIVE FINANCIAL STATEMENTS: PERFORMANCE AND USAGE (COURSE #6845/QAS6845) COURSE DESCRIPTION This course discusses how to perform and the proper uses of financial forecasts and projections. It uses the materials entitled Prospective Financial Statements: Performance and Usage. PLEASE NOTE: This course material is a component of #5430/QAS5430, Special Engagement Opportunities, and therefore we recommend that you should not take both courses in the same CPE reporting period. No prerequisites. Course level: Basic. Course #6845/QAS6845-3 CPE hours. LEARNING ASSIGNMENTS and OBJECTIVES As a result of studying each assignment, you should be able to meet the objectives listed below each individual assignment. ASSIGNMENT SUBJECT 1 Prospective Financial Statements: Performance and Usage Study the course materials Complete the review questions at the end of the material Answer the final exam questions 1 to 15 Objectives: To be able to use appropriate authority for prospective financial statements To define the terms budget, financial forecast, and financial projection To determine when to use a financial forecast and when to use a financial projection To correctly categorize prospective financial statements for general use, limited use, or internal use To include in prospective financial statements the minimum elements To identify the basis of accounting and accounting principles used for prospective financial statements To name the standards, steps, and requirements to follow in conducting a compilation or examination engagement for prospective financial statements To list the instances when the standard compilation or examination report in connection with prospective financial statements would be modified To follow procedures for an agreed-upon procedures engagement of prospective financial information Exam Page -1
ASSIGNMENT 2 Complete the Answer Sheet and Course Evaluation and Submit to PES NOTICE This course and test have been adapted from materials and information contained in the materials entitled Prospective Financial Statements: Performance and Usage. This course is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional advice and assumes no liability whatsoever in connection with its use. Since tax accounting and auditing standards are constantly changing, and are subject to differing interpretations, we urge you to do additional research and consult appropriate experts before relying on the information contained in this course to render professional advice. Professional Education Services, LP 2013 Program publication date 5/1/13 Exam Page -2
PROSPECTIVE FINANCIAL STATEMENTS: PERFORMANCE AND USAGE (COURSE #6845/QAS6845) EXAM OUTLINE COURSE EXPIRATION DATE: Per AICPA and NASBA standards, this course must be completed within one year from the date of purchase. TEST FORMAT: The following final exam, consisting of 15 multiple choice questions, is based specifically on the material included in this course. The answer sheet must be completed and returned to PES for CPE certification. You will find the answer sheet at the back of this exam packet so that you may easily remove it and use it while taking your test. LICENSE RENEWAL INFORMATION: The Prospective Financial Statements: Performance and Usage course (#6845/QAS6845) qualifies for 3 CPE hours. PROCESSING: Your exam will be graded promptly. You must score 70% or better to pass. When you pass, your certificate of completion will be mailed. If you do not pass, we will give you a courtesy call to inform you of this and then another answer sheet will be sent to you free of charge. GRADING OPTIONS: Please choose only one of the following. There is no additional charge for any of these grading options. Make sure to fill out your answer sheet completely prior to submitting it. ONLINE GRADING Visit our website at http://www.mypescpe.com. Login to your account (if you are a first-time user you must set up a new user account). Go to the MY CPE tab and click the My CPE Exams in Progress folder. If your exam is not already located in this folder, click Add Exam Previously Purchased and follow the instructions. MAIL Your exam will be graded and your certificate of completion mailed to you the same day we receive it. Your certificate will be dated according to the postmark date; therefore, you do not need to overnight your exam. Please mail your answer sheet to: Professional Education Services, LP 4208 Douglas Blvd., Ste 50 Granite Bay, CA 95746 FAX Your exam will be graded and you will be contacted either via phone or fax with your results within 4 business hours of receipt. A copy of your graded exam and certificate of completion will be mailed to you the same day we receive it. Your certificate will be dated according to the fax date. If you choose to fax your exam, please do not mail it. Your fax will serve as the original. Please refer to the attached answer sheet for further instructions on fax grading. Fax number (916) 791-4099. Thank you for using Professional Education Services. We appreciate your business!! Exam Page -3
PROSPECTIVE FINANCIAL STATEMENTS: PERFORMANCE AND USAGE (COURSE #6845/QAS6845) FINAL EXAM The following questions are multiple choice. Please indicate your choice on the enclosed Answer Sheet. 1. The types of reports that are available for prospective financial statements include all of the following except: a) compilation b) review c) examination d) agreed-upon procedures 2. Which of the following is true about a financial forecast: a) it reflects the conditions the responsible party expects will exist and the course of action it expects to take b) it is based on one or more hypothetical assumptions c) it reflects a range of possibilities based on one or more hypothetical assumptions d) it may include expired historical information 3. Facts: Company X wants to acquire a new company and needs to put together prospective financial statements in order to obtain financing for the acquisition. The bank has asked X to prepare a budget based on a hypothetical assumption that it will get financing and will acquire the new company. Which kind of financial statements would X use: a) financial forecast b) financial projection c) pro forma d) historical 4. Prospective financial statements exclude which of the following: a) financial statements for periods that have completely expired b) forecasts c) projections d) information for an unexpired period 5. The Minimum Elements for Prospective Financial Statements include all of the following except: a) sales or gross revenues b) gross profit or cost of sales c) provision for income taxes d) depreciation expense 6. Which of the following are required in prospective financial statements: a) a full set of footnotes b) a summary of significant assumptions c) a summary of significant accounting policies d) both b and c above 7. The most common type of engagement on prospective financial statements is a(n): a) audit b) review c) compilation d) agreed-upon procedure 8. What standard applies to a compilation of prospective financial statements and to the compilation report: a) adequate knowledge of subject matter b) independence c) internal control d) planning and supervision 9. Under SSAE No. 10, the engagement letter is: a) preferred b) required c) not permitted d) useless Exam Page -4
10. Which of the following is true in connection with a compilation engagement on prospective financial statements: a) an accountant must obtain a representation letter b) a representation letter is recommended, but not required c) a representation letter is only required for an examination d) an accountant should follow the guidance of SSARS No, 19 with respect to a representation letter 11. There are four instances in which an accountant would modify the standard compilation report in connection with prospective financial statements, which include all of the following except: a) if the accountant is not independent b) emphasis of a matter c) the summary of significant accounting policies is omitted d) the accountant prepares a projection instead of a forecast 12. Facts: Harry Callahan, CPA is not independent with respect to XYZ Company. Harry is asked to perform a compilation engagement on forecasted financial statements for XYZ. Which of the following is true in connection with Harry s compilation report: a) Harry should state the lack of independence and is permitted, but not required, to disclose the reason for the lack of independence b) Harry should state the lack of independence but is not permitted to disclose the reason for the lack of independence c) Harry should not state the lack of independence and is not permitted to disclose the reason for the lack of independence d) Harry should not state the lack of independence but is permitted to disclose the reason for the lack of independence in the notes to financial statements 13. Under SSAE No. 10, the report date for a financial forecast or a projection should be the: a) date the report is signed b) date of completion of the examination procedures c) last date of the engagement period d) date the forecast or projection is presented to the client 14. The report date on an examination report on prospective financial information is: a) the date the report is delivered to the client b) the date the report is delivered to a third party c) the date of completion of the examination procedures d) the date the report is prepared and delivered to the client 15. Facts: Jimmy Dean, CPA is hired by XYZ Corporation to compile historical financial statements for the six-month period ending June 30, 20XX and present comparatively budgeted financial statements for the year ended December 31, 20XX. The only information shown comparatively is the statement of income and schedule of operating expenses. How should Jimmy report on this scenario: a) issue a compilation report on the budget and present the historical information as supplementary information b) report on the historical statements as a compilation under SSARS No. 19 and disclaim on the prospective budgeted financial information c) issue two separate compilation reports; one on the historical financial statements and one on the budgeted financial information d) the accountant is not permitted to present historical and prospective financial information on the same financial statement Congratulations you ve completed the exam! Exam Page -5
PROSPECTIVE FINANCIAL STATEMENTS: PERFORMANCE AND USAGE #6845/QAS6845 (3 CPE hours) ANSWER SHEET (5/13) Important Note: For certification, this answer sheet must be completed and submitted to PES for grading within one year from the date of purchase. Please use black ink and print for quicker processing thank you. Name (as it appears on your license) Address City State Zip Home Work Daytime Phone ( ) E-mail address License Number State Expiration Date CPA, CFP, EA (circle one) If course was ordered by another party, please indicate name here: GRADING OPTIONS Please choose only ONE of the following: ONLINE GRADING Visit our website at http://www.mypescpe.com. o Login to your account (if you are a first-time user, you must set up a new user account). o Go to the MY CPE tab and click the My CPE Exams in Progress folder. o If your exam is not already located in this folder, click Add Exam Previously Purchased and follow the instructions. Mail Mail your exam to: PES, 4208 Douglas Blvd., Ste 50, Granite Bay, CA 95746 Fax Fax your exam to (916) 791-4099 and choose one of the following options: Please: o mail my results only or o fax o phone my results to: ( ) PLEASE INDICATE YOUR ANSWER BY FILLING IN THE APPROPRIATE CIRCLE A B C D A B C D 1. O O O O 11. O O O O 2. O O O O 12. O O O O 3. O O O O 13. O O O O 4. O O O O 14. O O O O 5. O O O O 15. O O O O 6. O O O O 7. O O O O 8. O O O O 9. O O O O 10. O O O O Please complete the attached course evaluation your opinion is extremely valuable. Exam Page -6
Prospective Financial Statements: Performance and Usage #6845/QAS6845 - Course Evaluation Rate on a scale of 1-10 with 1 being poor and 10 being excellent. 1. The course met the course objectives described in the promotional material. 2. The course was up to date, held my interest, was timely, and effective. 3. The course materials were understandable, valuable, and suitable for a correspondence course. 4. The amount of advance knowledge and stated prerequisites were appropriate. 5. The completion time was appropriate for the number of credits allowed. 6. The course met my professional education needs. Please answer the following questions mark/rate any and all that may apply 1. How would you rate PES s order desk customer service 2. What can PES do to keep you as a valued customer? 3. Any other comments regarding this course or our company would be appreciated. 4. What other courses/subjects would you like to see PES offer in the future?, Mail to: Professional Education Services, LP 4208 Douglas Blvd., Ste 50, Granite Bay, CA 95746 Exam Page -7