CPA Exam Questions & Answers 2026 (21–30)

Question 1

All of the following benefits are covered by workers' compensation regulations, apart from

TheoryPractice · Accepted Answer

Full pay during disability.. Workers are usually compensated earnings under workers' compensation, however only a portion of their salaries are paid.

Question 2

A corporation’s penalty for underpaying federal estimated taxes is

TheoryPractice · Accepted Answer

Not deductible. Even though a corporation’s penalty for underpay-ing federal estimated taxes is in the nature of interest, it is treated as an addition to tax, and as such, the penalty is not deductible.

Question 3

According to the Federal Insecticide, Fungicide, and Rodenticide Act, which of the following is (are) true?

I. Herbicides and pesticides must be certified and can only be used for permitted applications.

II. Before companies can sell herbicides and pesticides, they must be registered under the Act.

III. Pesticides can only be applied in certain quantities on food crops, as set out in the Act.

TheoryPractice · Accepted Answer

I, II, and III.. All three clauses are included in the Federal Insecticide, Fungicide, and Rodenticide Act. Before herbicides and insecticides can be sold, products must be registered. Furthermore, they must only be used for the purposes that have been allowed. In addition, the quantity that can be utilized on food crops is limited.

Question 4

Losses and credits from passive activities applies to all of the following except:

TheoryPractice · Accepted Answer

S corporations. Losses and credits from passive activities applies to individuals, estates, trusts, closely held C corporations, and personal service corporations.  A closely held C corporation is one with five or fewer shareholders owning more than 50% of stock.  Personal service corporation is an incorporated service business with more than 10% of its stock owned by shareholder-employees.

Question 5

According to the COSO ERM framework, which of the following would involve the determination of the likelihood and impact of events on the achievement of objectives?

TheoryPractice · Accepted Answer

Risk assessment. According to the COSO ERM framework, risk assessment would involve the determination of the likelihood and impact of events on the achievement of objectives. Control activities are the methods used to implement the response to risk. Sometimes the control activity is also, effectively, the risk response is wrong. Inherent risk is the risk to an entity in the absence of any actions management might take to alter either the risk's likelihood or impact. Risk responses are developed to deal with inherent risk. Residual risk is the risk that still remains after management responds to the risk and the control activities are in place.

Question 6

According to the International Standards for the Professional Practice of Internal Auditing, which of the following statements is true?

TheoryPractice · Accepted Answer

The internal auditors must establish and maintain a system to monitor the disposition of audit results. This statement is true according to the International Standards for the Professional Practice of Internal Auditing.  The other answers are incorrect because they do not present the two major types of services.

Question 7

A major function of transaction processing is________.

TheoryPractice · Accepted Answer

data storage. Data storage is a major function of transaction processing along with data input, data processing, and information output.  Analysis of data is not a major function of transaction processing.  Analysis is typically performed after transaction processing.

Question 8

Which of the below benefits of leasing as a long-term financing option is false?

TheoryPractice · Accepted Answer

The dollar cost.. This is true since the long-term dollar cost of leasing an asset is typically higher than the cost of buying and financing it in another way.

Question 9

Corporate governance is designed to compensate for the agency problem resulting from the fact that corporations are managed by professional management that may do which of the following?

TheoryPractice · Accepted Answer

not operate them in the best interest of the shareholders. Corporate governance is designed to compensate for the agency problem resulting from the fact that corporations are managed by professional management that may not operate them in the best interest of the shareholders. Corporate governance includes internal control and enterprise risk management.

Question 10

Choose the accurate answer for the assumption of Breakeven analysis that over the relevant range,

TheoryPractice · Accepted Answer

Unit variable costs are unchanged.. Breakeven analysis is predicated on a number of generalizations. One presumption is that the variable costs per unit remain constant over the relevant range. It is assumed that the selling price per unit stays constant over the relevant range. Unit revenues are therefore linear. As production rises, total costs rise as well because total variable costs rise as well. Total fixed costs are always linear over the relevant range since they remain constant.

CPA Exam Questions & Answers 2026 (21–30)

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