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Exam Code: AICPA FAR
Exam Name: AICPA CPA Financial Accounting and Reporting
Total Questions: 50 MCQs
Scoring: 50% from MCQs
otal Duration: 4 hours
Number of Testlets: 5

Area I : (30–40%) Financial Reporting
Area II : (30–40%) II. Select Balance Sheet Accounts
Area III : (25-35%) Select Transactions


Area I : Financial Reporting

- Conceptual Framework and Standard Setting
- Objectives of financial reporting
- Qualitative characteristics of accounting information
- Elements of financial statements
- Recognition and measurement criteria
- Constraints and assumptions (e.g., going concern, accrual basis)

- Standard-Setting Bodies and Their Roles
- FASB (Financial Accounting Standards Board)
- GASB (Governmental Accounting Standards Board)
- SEC (Securities and Exchange Commission)
- AICPA

- FASB Codification Structure
- Topics, subtopics, sections, and paragraphs
- Research using the FASB Codification

- US GAAP vs IFRS
- Similarities and key differences
- Principles vs rules-based standards
- Inventory, leases, revenue recognition, PPE, impairment, etc.

- Presentation of Financial Statements
- Income statement (multiple-step vs single-step)
- Statement of comprehensive income
- Balance sheet
- Statement of cash flows (direct vs indirect method)
- Statement of changes in equity

- Notes to Financial Statements
- Summary of significant accounting policies
- Subsequent events
- Related-party disclosures
- Contingencies

- Interim and Segment Reporting
- Reporting requirements for interim financial statements
- Operating segments and disclosure thresholds
- Major customers, products, geographic areas

- SEC Reporting
- 10-K, 10-Q, 8-K, S-1 forms
- Regulation S-X and S-K
- Inline XBRL requirements

- Accrual accounting
- Fair value hierarchy (Level 1, 2, 3)
- OCI (Other Comprehensive Income)
- EPS (Basic vs Diluted)
- Comprehensive income
- Component of an entity
- Materiality
- Consistency vs comparability
- Subsequent events (Type I vs Type II)
- Form 10-K/Q filings


Area II : (30–40%) II. Select Balance Sheet Accounts

- Cash & Cash Equivalents:
- Bank reconciliations
- Restricted cash, compensating balances

- Receivables:
- Allowance for Doubtful Accounts (Direct Write-off vs. Allowance Method)
- Factoring, Pledging, Discounting of receivables
- Impairment of receivables

- Inventory:
- Costing methods (FIFO, LIFO, Weighted Average)
- Lower of Cost or Market (LCM) / Net Realizable Value (NRV)
- Inventory valuation (Gross Profit Method, Retail Method)
- Purchase commitments and write-downs

- Property, Plant & Equipment (PP&E):
- Capitalization vs. Expensing
- Depreciation methods (Straight-line, Double Declining Balance, Units of Production)
- Asset retirement obligations (AROs)
- Impairment & disposal of long-lived assets (ASC 360)

- Intangible Assets:
- Recognition & amortization (Goodwill, Patents, Copyrights)
- Research & Development (R&D) costs
- Impairment testing (Goodwill under ASC 350)

- Investments:
- Debt vs. Equity securities (Trading, Available-for-Sale, Held-to-Maturity)
- Equity method vs. consolidation
- Fair value adjustments & impairments

- Leases (ASC 842):
- Lessee accounting (Finance vs. Operating leases)
- Lessor accounting (Sales-type, Direct financing, Operating leases)
- Lease modifications & terminations

- Liabilities:
- Current vs. Long-term liabilities
- Contingencies & provisions (ASC 450)
- Warranty obligations

- Debt Financing:
- Bonds payable (Premium/Discount amortization, Effective Interest Method)
- Convertible debt & debt extinguishment
- Troubled debt restructuring

- Equity:
- Common vs. Preferred stock
- Treasury stock (Cost method)
- Stock dividends & splits
- Retained earnings restrictions

- NRV (Net Realizable Value)
- Market (LCM valuation)
- Depreciable base
- Capital lease vs operating lease (pre-ASC 842)
- Lease liability
- Fair value option
- Amortized cost
- Impairment loss
- Carrying amount
- Recoverability test
- ADA (Allowance for Doubtful Accounts)


Area III : (25-35%) Select Transactions

- Revenue Recognition (ASC 606)
- Five-step model:
- Identify contract
- Identify performance obligations
- Determine transaction price
- Allocate transaction price
- Recognize revenue
- Contract modifications
- Principal vs agent
- Licensing, warranties

- Income Taxes (ASC 740)
- Current vs deferred tax
- Temporary vs permanent differences
- Deferred tax assets and liabilities
- Valuation allowance
- Uncertain tax positions

- Pensions and Postemployment Benefits (ASC 715)
- Defined benefit vs defined contribution plans
- PBO, ABO, FV of plan assets
- Net periodic pension cost components
- Funded status reporting

- Stockholders' Equity
- Common and preferred stock
- Stock dividends and stock splits
- Treasury stock (cost and par method)
- Retained earnings appropriations

- Share-Based Compensation (ASC 718)
- Stock options (vesting, grant date, expense recognition)
- Restricted stock
- Fair value estimation models (Black-Scholes)

- Earnings per Share (EPS)
- Basic and diluted EPS
- Complex capital structures
- Convertible securities, options, and warrants

- Statement of Cash Flows
- Operating, investing, financing activities
- Direct vs indirect methods
- Non-cash investing and financing activities

- Deferred tax asset/liability
- Temporary difference
- Stock compensation expense
- Treasury stock
- Dilutive securities
- Defined benefit obligation
- Pension expense components
- Operating cash flow
- Option intrinsic vs fair value
- Convertible debt/equity
- Vesting period