10 exam-style questions with answers and explanations, straight from our 1,030-question bank. Tap an answer to check yourself. When you're ready, take the scored version in the free practice test.
The ABA exam has 200 questions and runs 6 hours.
These 10 free ABA questions are organized by exam domain, so you can see how each part of the Accredited Business Accountant/Advisor blueprint is tested. Reveal the answer and explanation under each question.
A distributor is closing its December 31 inventory records under U.S. GAAP. A supplier shipped goods to the distributor on December 29, FOB shipping point; they arrive January 3. The distributor also holds another supplier's goods on consignment, none of which have been sold. Which inventory treatment reflects ownership at December 31?
Correct answer: B - Include the goods in transit; exclude the consigned goods.
The income statement includes a $6,000 gain from selling equipment for $26,000 cash. The sale has been recorded correctly, and no tax effects are involved. In preparing the U.S. GAAP statement of cash flows by the indirect method, how should the accountant handle the gain and the proceeds?
Correct answer: A - Subtract the gain from net income; report all proceeds as an investing inflow.
During the year, a wholesaler charged $8,000 of receivable write-offs against its allowance for credit losses. After those entries, the allowance has a $4,000 debit balance. Its year-end estimate, incorporating current conditions and supportable forecasts, requires a $16,000 ending credit balance. What amount must the year-end adjustment debit to credit-loss expense and credit to the allowance?
Correct answer: C - $20,000.
A five-year warehouse lease has been correctly classified as an operating lease under ASC 842. The lessee's controller proposes leaving it off the balance sheet because ownership will not transfer. Fixed payments are level, and there are no incentives, initial direct costs, prepayments, or impairment. Which presentation is appropriate for the lessee?
Correct answer: D - Recognize a right-of-use asset and lease liability, with a single lease expense.
A manufacturer has capacity for a 1,000-unit special order at $28 per unit. The costing sheet shows: Variable manufacturing cost: $18 per unit. Allocated fixed overhead: $12 per unit; total existing fixed overhead will not change. Sales commission: $3 per regular unit; none on this order. One-time setup: $2,000. Regular sales, quality, and delivery commitments will be unaffected. What would accepting the order do to operating income?
Correct answer: C - Increase it by $8,000.
Minutes before an approved $48,000 supplier payment is due, accounts payable receives an email requesting a new bank account. It appears in the existing invoice conversation and contains the correct invoice number. The sender says the usual contact is unavailable and provides a new phone number for confirmation. The payment has not been released. Which response best protects the payment without unnecessarily disrupting other business?
Correct answer: A - Hold this payment and verify the change through a previously verified supplier contact.
For 2026, a divorced mother pays 75% of the cost of maintaining the home where her 9-year-old son lives for ten months. Neither parent has remarried. She signs a valid Form 8332 releasing the child-related claim to the father, who attaches it to his return. The parents together provide all of the child's support, and both otherwise meet the applicable child tax credit requirements. How are head-of-household status and the child tax credit affected?
Correct answer: D - The mother may still file as head of household; the father is eligible to claim the child tax credit.
At the start of 2026, an S corporation shareholder has $24,000 of stock basis and $6,000 of basis in a bona fide loan she made directly to the corporation. She receives a $7,000 nondividend cash distribution and a $35,000 ordinary business loss allocation. She also guarantees a $40,000 corporate bank loan but pays nothing under the guarantee. There are no other basis adjustments or prior suspended losses. Other loss limitations do not restrict the deduction. How much of the loss is deductible for 2026?
Correct answer: B - $23,000 deductible; $12,000 suspended.
A company tells its regular supplier that its purchasing manager may place routine inventory orders on the company's behalf. The company later imposes a private $5,000 approval limit but gives the supplier no notice. The manager places a routine $8,000 order within the authority previously communicated to the supplier, which reasonably relies on that communication. Under general agency principles, why can the order bind the company?
Correct answer: A - The company's representations support the manager's apparent authority.
While preparing a client's 2026 federal return, a practitioner subject to Treasury Circular 230 confirms that taxable receipts were omitted from the client's filed 2025 return. The client has not yet been told, and the practitioner has no authorization to amend that return. What is the practitioner's immediate obligation?
Correct answer: C - Promptly advise the client of the omission, explain its tax consequences, and discuss correcting the return.
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