CPA FAR MNEMONICS NEW EXAM 100% CORRECT
predict and confirm your material value - ANSWER relevance
completely neutral is free from error - ANSWER reliability, faithful representation
compare and verify in time to understand - ANSWER enhancing qualitative
characteristics
REG L ALE needs ID - ANSWER elements of financial statements - revenues, expenses,
gains, losses, assets, liabilities, equity, investments by owners, distributions to owners
Weird Turtle is Seldom Under Water - ANSWER 5 components of PV measurement -
estimate of FCF, timing difference FCF, risk-free interest rate, uncertainty credit risk,
other factors
ISTAR - ANSWER 5-step process for revenue recognition:
1. identify contract with customer
2. separate performance obligations
3. transaction price
4. allocate transaction price to separate performance obligations
5. recognize revenue as performance obligation is satisfied
IOD at the DISCO - ANSWER 3 things in discontinued operations - impairment loss, G/L
actual operations, G/L disposal NET OF TAX
An estimate is prospectively right or wrong! - ANSWER changes in accounting estimate -
do not restate
, A principle is always retro! - ANSWER changes in accounting principle - restate, except
for change to LIFO or change in depreciation method
Consolidation of an entity makes it cool and retro! - ANSWER change in accounting
entity - restatement as if always one
An error correction must always be fixed! - ANSWER error correction - prior period
adjustment
PUFIER - ANSWER goes straight to equity (AOCI) - pension adjustments, unrealized G/L
on available-for-sale debt securities, foreign currency translation adjustments,
instrument-specific credit risk, effective portion of cash flow hedges, revaluation
surplus (IFRS only)
CUUR for unearned revenues - ANSWER Dr: cash
Cr: unearned revenue
Dr: unearned revenue
Cr: revenue
PCEP for prepaid expenses - ANSWER Dr: prepaid expense
Cr: cash
Dr: expense
Cr: prepaid expense
it's an accrued AREA - ANSWER Dr: accounts receivable
Cr: revenue
Dr: expense
Cr: accrued liability
predict and confirm your material value - ANSWER relevance
completely neutral is free from error - ANSWER reliability, faithful representation
compare and verify in time to understand - ANSWER enhancing qualitative
characteristics
REG L ALE needs ID - ANSWER elements of financial statements - revenues, expenses,
gains, losses, assets, liabilities, equity, investments by owners, distributions to owners
Weird Turtle is Seldom Under Water - ANSWER 5 components of PV measurement -
estimate of FCF, timing difference FCF, risk-free interest rate, uncertainty credit risk,
other factors
ISTAR - ANSWER 5-step process for revenue recognition:
1. identify contract with customer
2. separate performance obligations
3. transaction price
4. allocate transaction price to separate performance obligations
5. recognize revenue as performance obligation is satisfied
IOD at the DISCO - ANSWER 3 things in discontinued operations - impairment loss, G/L
actual operations, G/L disposal NET OF TAX
An estimate is prospectively right or wrong! - ANSWER changes in accounting estimate -
do not restate
, A principle is always retro! - ANSWER changes in accounting principle - restate, except
for change to LIFO or change in depreciation method
Consolidation of an entity makes it cool and retro! - ANSWER change in accounting
entity - restatement as if always one
An error correction must always be fixed! - ANSWER error correction - prior period
adjustment
PUFIER - ANSWER goes straight to equity (AOCI) - pension adjustments, unrealized G/L
on available-for-sale debt securities, foreign currency translation adjustments,
instrument-specific credit risk, effective portion of cash flow hedges, revaluation
surplus (IFRS only)
CUUR for unearned revenues - ANSWER Dr: cash
Cr: unearned revenue
Dr: unearned revenue
Cr: revenue
PCEP for prepaid expenses - ANSWER Dr: prepaid expense
Cr: cash
Dr: expense
Cr: prepaid expense
it's an accrued AREA - ANSWER Dr: accounts receivable
Cr: revenue
Dr: expense
Cr: accrued liability
