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CPA Exam FAR 1 Questions and Answers 2024 $13.99   Add to cart

Exam (elaborations)

CPA Exam FAR 1 Questions and Answers 2024

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  • Course
  • CPA
  • Institution
  • CPA

Exam of 6 pages for the course CPA at CPA (CPA Exam FAR 1)

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  • August 9, 2024
  • 6
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • CPA
  • CPA
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jopewa
CPA Exam FAR 1

M1 - answer

Two fundamental qualitative characteristics of useful information - answer1. Relevant
2. Reliable aka faithful

Relevance - answer- Capable of making a difference in the decisions made by users
- Must include predictive value, confirmatory value, and materiality

Faithful Representation - answer- Faithfully represents the reported economic
phenomena
- Must be complete and neutral

What are the four Enhancing Qualitative Characteristics of financial information? -
answer1. Comparability
2. Verifiability
3. Timeliness
4. Understandability

In order to recognize an item through a journal entry, what three characteristics must it
have? - answer1. Measurability
2. Relevance
3. Reliability

What is the difference between Current Market Value and Replacement cost? - answer-
Replacement cost is the amount of cash that would be paid to acquire or replace an
asset currently. It is an acquisition cost
- Current market value is the price to sell, not acquire, an asset

How should interim financial reporting be primarily viewed? - answerAs reporting for an
integral part of an annual period

What are revenues according to FASB? - answer- Inflows or other enhancements of
assets
- Settlements (decreases) in liabilities resulting from the entity's ongoing major
operations, not from "incidental" operations

M2 - answer

What are three things the income statement is useful for? - answer1. Determining
profitability
2. Determining value for investment purposes

, 3. Determining creditworthiness

What is a balance sheet useful for? - answerAssessing financial risk

What is a Classified Balance Sheet? - answerA balance sheet that distinguishes current
and non-current assets and liabilities

How should a material transaction that is infrequent and/or unusual in nature be
presented in the financial statements? - answerSeparately as a component of income
from continuing operations regardless of whether the transaction is a gain or loss

In a single-step income statement, where does amounts from discontinued operations
appear? - answerIn discontinued operations, separate from the normal "revenues" and
"expenses" sections

For a prepaid expense to be considered a current asset, how far out may the expense
be paid for? - answer12 months. Prepaid expenses that exceed 12 months are no
longer current

M5 - answer1. Impairment loss of the component

Five components of an Entity for which operations and cash flows can be clearly
distinguished, both operationally and for financial reporting purposes - answer1. An
operating segment
2. A reportable segment
3. A reporting unit
4. A subsidiary
5. An asset group

In order for a business component to be classified as "held for sale", what criteria must
be met? - answer1. Management commits to a plan to sell the component
2. The component is available for immediate sale
3. An active program to locate a buyer has been initiated
4. *The sale of the component is probable and the sale is expected to be completed
within one year*
5. Sale is actively marketed
6. Actions required to complete the sale make it unlikely that significant changes to the
plan will be made or that the plan will be withdrawn

What three calculations must be done for a Discontinued Operation? - answer1.
Impairment loss of the component
2. Results of operations of the component
3. Gain or loss on disposal of the component

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