FAR CPA Exam Questions and answers. Latest updates, VERIFIED.
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Course
CPA
Institution
CPA
FAR CPA Exam Questions and answers. Latest updates, VERIFIED.
Revenue T-Account - -Dr. Beg Balance
Dr. Revenue
Dr. End Balance
Cr. Cash
Unearned Revenue T-Account - -Dr. Revenue
Cr. Beg Balance
Cr. Cash
Cr. End Balance
Prepaid Expense T-Account - -Dr. Beg Balance
Dr. Cash
Dr. End...
disclosure principle = all information is not recognized in financial statements
,What instruments can the fair value option be applied to? - ✔✔-recognized asset/liabilities, firm
commitments, written loan commitments, rights/obligations, insurance contracts
What instruments can't the fair value option be applied to? - ✔✔-investment in a consolidated entity,
obligations to employee plans (e.g. pensions), leases, demand deposits, investment in equity
What is the difference between a discounted cash flow and an expected cash flow? - ✔✔-discounted
uses a single cash flow value and discounts it using the risk-adjusted rate while the expected cash flow
has different cash flow periods and they are discounted using a risk-free rate/interest rate
What are the disclosing requirements for fair value? - ✔✔-reporting date, valuation techniques, and
inputs used in those techniques
What is the main difference between level 1, 2 and 3 of the fair value hierarchy? - ✔✔-- level 1 includes
quoted prices in active market for identical assets/liabilities
- level 2 includes similar assets/liabilities or other inputs that are observable in an active market or
identical in a nonactive market
- level 3 includes unobservable inputs and assumptions (discounted cash flows)
What are the disclosure requirements when fair value is on a recurring basis? - ✔✔-a table showing
items in each level
The process of converting noncash resources and rights into cash or claims to cash - ✔✔-realization
Breakdown of multi-step income statement - ✔✔-Revenues - COGS
= Gross Profits - Operation exp
= income from operations +/- other income/exps
= income from continuing operations before tax - income tax
= income from continuing operations +/- discontinued operations (net of tax)
= net income
, What are the items in OCI? - ✔✔-unrealized G/L on A4S securities, G/L from pension costs, foreign
currency translation adjustments, unrealized G/L from derivative transactions from cash flow hedge
What are items in owner's equity? - ✔✔-common/preferred stock, APIC, retained earnings, treasury
stock , AOCI
Where are changes in equity disclosed in the financial statements? - ✔✔-in the footnotes, supplemental
schedules or as a separate statement
Which statements do companies in the SEC have to report showing the breakdown of the past 3 years? -
✔✔-owner's equity statement, income statement and statement of cash flows
Current ratio - ✔✔-CA / CL
Quick-acid test ratio - ✔✔-(cash + short term invesments + receivables) / current liabilities
Cash inflows/outfows from operating activities - ✔✔-+ from customers
+ dividends/interest
- to suppliers and employees
- interest and tax exp
Cash inflows/outflows from investing activities - ✔✔-+ sales of PPE
+ collection of loan principal
+ disposal of A4S, H2M or equity securities
- purchase of PPE
- purchase of stocks and CD's
- lending
- investment in securities
Cash inflows/outflows from financing activities - ✔✔-+ sale of stock
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