PROFESSIONAL EXAMINATION.
The problems asked in the first half of the May, 1943 C.P.A. examination in accounting practice prepared by the Board of Examiners of the American Institute of Accountants. The examinee was given four and one-hall hours to solve all problems. The problems were weighted as follows, problem 1, 10 points; problem 2, 20 points; and problem 3, 20 points. The solution to the problem 1 interprets, it is obvious that the reported earned surplus arose as a result of charging the opening inventory to cost of sales at the reduced price or by a write-up of the inventory to the contract price. While the original investment in inventory, 100,000.00 dollar, did represent the cost of those goods this special price was given because of other considerations, and good reporting would require disclosure of the special conditions surrounding this transaction. The solution of the problem 2 explains, the balance sheet should carry a footnote keyed to the capital surplus item reciting the fact that the company is contractually obligated to buy its raw material from one source at a fixed price and that the inventory must be maintained at an amount not less than 200,000.00 dollar. Further this note should explain that the capital surplus arose as a result of this contract by which the Black Corporation acquired its original inventory at a special price.
- DOI
- 10.2308/tar-7042156
- Volume
- 18 (3)
- Pages
- 274-280
- Language
- en
- Export
- BibTeX
- Sources
- openalex crossref