O. Ray Whittington - Wiley CPA Exam Review 2013, Business Environment and Concepts

Contents

The following items, copyright by the American Institute of Certified Public Accountants, Inc., are reprinted (or adapted) with permission.

1. Material from Uniform CPA Examination Questions and Answers , 1978 through 2000.

2. Information for Uniform CPA Examination Candidates , Board of Examiners, 2000.

3. Material from the Certified Internal Auditor Examination, Copyright 1994 through 1997 by the Institute of Internal Auditors, Inc. are reprinted and/or adapted by permission.

4. Material from the Certified Management Accountant Examination, Copyright 1993 through 1997 by the Institute of Certified Management Accountants are reprinted and/or adapted by permission.

Reproduction and adaption of pronouncements, copyright Financial Accounting Standards Board, Norwalk, Connecticut 06856-5116, with permission.

Continuum adapted from Charles T. Hongren and George Foster, Cost Accounting: A Managerial Emphasis, 7th Edition, Prentice Hall.

Copyright 2013 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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PREFACE

Passing the CPA exam upon your first attempt is possible! The Wiley CPA Examination Review preparation materials provide you with the necessary materials (visit our website at www.wiley.com/cpa for more information). Its up to you to add the hard work and commitment. Together we can beat the pass rate on each section of about 45%. All Wiley CPA products are continuously updated to provide you with the most comprehensive and complete knowledge base. Choose your products from the Wiley preparation materials and you can proceed confidently. You can select support materials that are exam-based and user-friendly. You can select products that will help you pass!

Remaining current is one of the keys to examination success. Here is a list of whats new in this edition of the Wiley CPA Examination Review Business Environment and Concepts text.

• The new AICPA Content Specification Outlines on Business Environment and Concepts for the Computerized CPA Examination beginning in 2012
• New task-based simulations involving communication
• AICPA questions released in 2012

The objective of this work is to provide you with the knowledge to pass the Business Environment and Concepts portion of the Uniform Certified Public Accounting (CPA) Exam. The text is divided up into eight areas of study called modules. Each module contains written text with discussion, examples, and demonstrations of the key exam concepts. Following each text area, actual American Institute of Certified Public Accountants (AICPA) unofficial questions and answers are presented to test your knowledge. We are indebted to the AICPA for permission to reproduce and adapt examination materials from past examinations. Author constructed questions are provided for new areas or areas that require updating. All author constructed questions are modeled after AICPA question formats. The multiple-choice questions are grouped into topical areas, giving candidates a chance to assess their areas of strength and weakness. Selection and inclusion of topical content is based upon current AICPA Content Specification Outlines. Only testable topics are presented. If the CPA exam does not test it, this text does not present it.

The CPA exam is one of the toughest exams you will ever take. It will not be easy. But if you follow our guidelines and focus on your goal, you will be thrilled with what you can accomplish.

Ray Whittington

November 2012

ABOUT THE AUTHORS

Ray Whittington , PhD, CPA, CMA, CIA, is the dean of the Driehaus College of Business at DePaul University. Prior to joining the faculty at DePaul, Professor Whittington was the Director of Accountancy at San Diego State University. From 1989 through 1991, he was the Director of Auditing Research for the American Institute of Certified Public Accountants (AICPA), and he previously was on the audit staff of KPMG. He previously served as a member of the Auditing Standards Board of the AICPA and as a member of the Accounting and Review Services Committee and the Board of Regents of the Institute of Internal Auditors. Professor Whittington has published numerous textbooks, articles, monographs, and continuing education courses.

Patrick R. Delaney , deceased, was the dedicated author and editor of the Wiley CPA Exam Review books for twenty years. He was the Arthur Andersen LLP Alumni Professor of Accountancy and Department Chair at Northern Illinois University. He received his PhD in Accountancy from the University of Illinois. He had public accounting experience with Arthur Andersen LLP and was coauthor of GAAP: Interpretation and Application , also published by John Wiley & Sons, Inc. He served as Vice President and a member of the Illinois CPA Societys Board of Directors, and was Chairman of its Accounting Principles Committee; was a past president of the Rockford Chapter, Institute of Management Accountants; and had served on numerous other professional committees. He was a member of the American Accounting Association, American Institute of Certified Public Accountants, and Institute of Management Accountants. Professor Delaney was published in The Accounting Review and was a recipient of the Illinois CPA Societys Outstanding Educator Award, NIUs Excellence in Teaching Award, and Lewis Universitys Distinguished Alumnus Award. He was involved in NIUs CPA Review Course as director and instructor.