CPA EXAM A+ GRADE ASSURED COMPLETE SOLUTIONS AND VERIFIED ANSWERS

CPA EXAM @x




Exam Solution
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CPA Exam FAR 2026 A+ GRADE ASSURED COMPLETE S
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OLUTIONS AND VERIFIED ANSWERS (88C9C) @x @x @x @x




QUESTION 1 @x




Cash
ANSWER

Money that is FREE and CLEAR and available to be spend in current operations.
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QUESTION 2 @x




Not Cash:
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ANSWER

Security deposits & bond sinking funds
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QUESTION 3 @x




Three-Month Rule @x




ANSWER

Highly liquid securities with ORIGINAL maturity dates of three months or less are treated as cash.
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QUESTION 4 @x




Bad Debts - Direct Write-Off Method
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ANSWER

- No entry for bad debts until customer actually defaults. -
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At default, the cutomer's account is written off. - Theoretically weak, matching issue -
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Only allowed if bad debt expense is immaterial
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, QUESTION 5 @x




Bad Debts - Allowance Method
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ANSWER

Income Statement Approach Balance Sheet Approach
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QUESTION 6 @x




Income Statement Approach
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ANSWER

- Matching Concept - Estimate of bad debt expense is based on the income statement -
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Allowance account balance has no bearing on the amount of adjustment
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QUESTION 7 @x




Balance sheet reporting:
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ANSWER

Accounts Receivable Less: Allowance for bad debts = Net realizable value of A/R
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QUESTION 8 @x




Balance Sheet Approach
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ANSWER

- Estimate of bad debt expense is based on the balance sheet -
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Period sales have no bearing on the amount of adjustment
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QUESTION 9 @x




Written-off account later collected
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ANSWER

Reverse write-off entry. Collect as usual.
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QUESTION 10 @x




Assigning Accounts Receivable
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ANSWER

- Assignment of A/R normally is done with recourse -
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Assignment usually is done without notification to customers
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