FAR- CPA QUESTIONS WITH 100%
CORRECT ANSWERS [GRADED A+]
Foward contract - ✔✔An agreement negotiated between two parties for
the purchase and sale of a stated amount of a foreign currency with
delivery at a stated future date. keyword here is stated. a stated amount of
a commodity, foreign currency, or financial instrument at a stated price. the
receiving party is subject to default risk that the other may not perform.
Give examples of cash outflows (inflows) from investing activities. -
✔✔Cash payments to acquire (cash receipts from sale of or maturity of:
Property
Plant and equipment
Intangible assets
Other long-lived assets
Equity instruments
Debt securities (held-to-maturity and available-for-sale securities only)
©morren2026/2027.Year published 2026.
,Cash advances and loans made to other parties (cash receipts from
repayment)
CONSERVATISM - ✔✔when in doubt, you need to choose the option that
will least likely to overstate asset or income, (as you will pay less tax.) and
understate liability and expense.
CONSOLIDATION - ✔✔where the parent company has several children
company, the children company retains their own legal entity and each that
their own financial statement, but all of those can be combined into 1
financial statement. FACEBOOK is a parent company that owns,
WhatsApp, Instagram and many other. Tough, the other retains their entity,
when filing the financial statement, FACEBOOK will include them into her
financial statement.
DIVIDEND IN AREAS - ✔✔if the company were supposed to pay
dividend, they do not pay it, the amount they did not pay will go on the
books as dividends on areas. For preferred stock, dividends are
cumulative, they build up and the preferred shareholder will be able to get
them whenever they give them out.
©morren2026/2027.Year published 2026.
,BOOK ROYALTY - ✔✔when a publisher and an author, reaches an
agreement, the amount the author get is royalty.
SOLVENCY - ✔✔are you able to pay your long-term debt so you can stay
in business for a long time
SINKING FUND - ✔✔a money you set aside for a general purpose. When
Rachelle was going to get her car, we set aside 10,000 so that she could
put down as down payment. Investment funds. a bond sinking
BOOK VALUE OF ASSET - ✔✔the cost of the asset less accumulated
depreciation. Salvage value is not included
FREIGHT OUT - ✔✔Truck trailer. when the supplier pays the cost of
transportation for the delivery of the goods. This is a selling cost, the
product is going out, General Mills is selling to Publix so General Mills has
to pay for transportation.
©morren2026/2027.Year published 2026.
, BOND DISCOUNT - ✔✔when you par value is higher than bond carrying
value itself. This happens sometimes when investors do not trust in you
and they want higher interest than the market for their money. You sell
500,000 worth of bond for 420,000. It is a contra liability.
FREIGHT IN - ✔✔this is an inventory cost. When you receive the
inventory the cost you pay to have them ship it to you can be added to the
cost of inventory.
WARRANTS/OPTIONS - ✔✔derivatives, when the company wants to
raise money, they sell you this piece of paper that basically states you can
buy their stock at this price at this date, you buy the warrants and the
company receives money. you can leave it as a warrant or an option, when
you do convert it into common stock, the number of common stocks
increases
COSIGNMENT AGREEMENT - ✔✔this agreement allows someone else
to sell something that you own on your behalf.
©morren2026/2027.Year published 2026.
CORRECT ANSWERS [GRADED A+]
Foward contract - ✔✔An agreement negotiated between two parties for
the purchase and sale of a stated amount of a foreign currency with
delivery at a stated future date. keyword here is stated. a stated amount of
a commodity, foreign currency, or financial instrument at a stated price. the
receiving party is subject to default risk that the other may not perform.
Give examples of cash outflows (inflows) from investing activities. -
✔✔Cash payments to acquire (cash receipts from sale of or maturity of:
Property
Plant and equipment
Intangible assets
Other long-lived assets
Equity instruments
Debt securities (held-to-maturity and available-for-sale securities only)
©morren2026/2027.Year published 2026.
,Cash advances and loans made to other parties (cash receipts from
repayment)
CONSERVATISM - ✔✔when in doubt, you need to choose the option that
will least likely to overstate asset or income, (as you will pay less tax.) and
understate liability and expense.
CONSOLIDATION - ✔✔where the parent company has several children
company, the children company retains their own legal entity and each that
their own financial statement, but all of those can be combined into 1
financial statement. FACEBOOK is a parent company that owns,
WhatsApp, Instagram and many other. Tough, the other retains their entity,
when filing the financial statement, FACEBOOK will include them into her
financial statement.
DIVIDEND IN AREAS - ✔✔if the company were supposed to pay
dividend, they do not pay it, the amount they did not pay will go on the
books as dividends on areas. For preferred stock, dividends are
cumulative, they build up and the preferred shareholder will be able to get
them whenever they give them out.
©morren2026/2027.Year published 2026.
,BOOK ROYALTY - ✔✔when a publisher and an author, reaches an
agreement, the amount the author get is royalty.
SOLVENCY - ✔✔are you able to pay your long-term debt so you can stay
in business for a long time
SINKING FUND - ✔✔a money you set aside for a general purpose. When
Rachelle was going to get her car, we set aside 10,000 so that she could
put down as down payment. Investment funds. a bond sinking
BOOK VALUE OF ASSET - ✔✔the cost of the asset less accumulated
depreciation. Salvage value is not included
FREIGHT OUT - ✔✔Truck trailer. when the supplier pays the cost of
transportation for the delivery of the goods. This is a selling cost, the
product is going out, General Mills is selling to Publix so General Mills has
to pay for transportation.
©morren2026/2027.Year published 2026.
, BOND DISCOUNT - ✔✔when you par value is higher than bond carrying
value itself. This happens sometimes when investors do not trust in you
and they want higher interest than the market for their money. You sell
500,000 worth of bond for 420,000. It is a contra liability.
FREIGHT IN - ✔✔this is an inventory cost. When you receive the
inventory the cost you pay to have them ship it to you can be added to the
cost of inventory.
WARRANTS/OPTIONS - ✔✔derivatives, when the company wants to
raise money, they sell you this piece of paper that basically states you can
buy their stock at this price at this date, you buy the warrants and the
company receives money. you can leave it as a warrant or an option, when
you do convert it into common stock, the number of common stocks
increases
COSIGNMENT AGREEMENT - ✔✔this agreement allows someone else
to sell something that you own on your behalf.
©morren2026/2027.Year published 2026.
