Accounting for Decision Makers Certification Exam Guide + Practice Questions Updated 2026

Explanation:
The correct answer is D. Publicly traded companies in the United States. Sarbanes-Oxley was enacted to strengthen corporate accountability, internal controls, and audit oversight for companies that access the public securities markets. Standard summaries of SOX explain that it applies to publicly traded companies doing business in the United States, along with the audit firms that audit those public companies.
Option B is incorrect because SOX does not generally apply in full to private, nonpublic companies in the same way it applies to public issuers.
Option C is also incorrect for the same reason.
Option A may describe a narrower scenario that can involve public-company reporting structures, but for an exam question asking broadly “Who does Sarbanes-Oxley apply to?”, the clearest and best answer is publicly traded companies in the United States. SOX is fundamentally a public-company law designed to protect investors by improving the reliability of corporate disclosures and the independence of external audits. Therefore, among the listed choices, Option D is the most accurate and standard answer.

Explanation:
The correct answers are A and
C. A financial statement error is an unintentional misstatement in the amount, classification, presentation, or disclosure of financial statement information. PCAOB standards explain that misstatements can arise from either error or fraud, and errors are unintentional. A miscalculated payroll tax liability is a classic accounting error because it produces an incorrect liability amount without intent to deceive. Likewise, unintentionally recording unearned customer prepayments as revenue is an error in revenue recognition and financial statement classification.
Option B is not an error; it is fraud or misappropriation of assets because it involves deliberate overpayment and a kickback. PCAOB fraud guidance distinguishes intentional misconduct from accidental mistakes.
Option D is not necessarily an error merely because an auditor disagrees with management’s estimate. Allowance for uncollectible accounts is an area of judgment, and disagreement alone does not prove a financial statement error exists. Therefore, the two choices that best represent unintentional financial statement errors are A and C.

Explanation:
The correct answers are C. Interest income and D. Gain on sale of assets. Net income increases when revenues and gains increase, while it decreases when expenses and losses increase. Interest income is a type of revenue or other income that adds to earnings. Gain on sale of assets also increases net income because it represents the amount by which proceeds from the sale exceed the asset’s carrying value. OpenStax notes that the income statement includes revenues, expenses, gains, and losses in measuring financial performance.
Option A. Income tax expense decreases net income because it is an expense.
Option B. Cost of sales also decreases net income because it is a major operating expense deducted in arriving at gross profit and ultimately net income. Gains and interest income improve profitability, whereas expenses reduce it. This distinction is fundamental in preparing and interpreting the income statement. Therefore, the two items that increase net income are Interest income and Gain on sale of assets, making C and D the correct answers.

Explanation:
The correct answer is B. Whether a company’s financial statements fairly reflect its financial position. The purpose of an external audit is for the independent auditor to express an opinion on whether the financial statements present fairly, in all material respects, the company’s financial position, results of operations, and cash flows in conformity with the applicable financial reporting framework. PCAOB auditing standards state this explicitly in the required auditor’s report language.
Option A is incorrect because anyone reading the income statement can see whether the company reported a profit or loss; that alone is not the purpose of the audit.
Option C is incorrect because tax liability is not what the audit opinion is primarily determining.
Option D is also incorrect because an audit does not certify that the statements were prepared by a particular kind of employee such as a trained bookkeeper. Instead, the audit evaluates whether the statements are fairly presented and free of material misstatement. Therefore, the best answer is that an external audit helps determine whether the company’s financial statements fairly reflect its financial position.

Explanation:
The correct answer is C. $130,000. A contribution margin income statement separates variable costs from fixed costs, which makes it useful for forecasting profit at different sales levels. OpenStax explains that contribution margin analysis shows how much sales revenue remains after variable costs to cover fixed costs and profit.
First calculate the per-unit amounts based on 10,000 shoes:
Sales per unit = $600,000 / 10,000 = $60
Variable cost per unit = $400,000 / 10,000 = $40
Contribution margin per unit = $20
For 14,000 shoes, total contribution margin would be:
14,000 × $20 = $280,000
Now subtract fixed costs, which stay the same at $150,000:
Forecasted net income = $280,000 - $150,000 = $130,000
So the company would expect to earn $130,000 if it sells 14,000 shoes. This is exactly why CVP and contribution margin statements are useful for planning: they allow managers to estimate the profit impact of volume changes quickly, as long as selling price, variable cost per unit, and fixed costs remain stable.
Therefore, Option C is correct.