CPA FAR Exam Comprehensive Questions with Verified Answers
Graded A
1. Identifying a Variable Interest (VIE): All Must be Met:
1. There is an arrangement between company and business entity
2. The business entity is a legal entity
3. The business fails to qualify for an exclusion
4. The interest is more than insignificant
5. The company has an explicit or implicit variable interest in the entity
2. Securities and Exchange Commission: - established in 1934 by Securities and
Exchange Act
-all public and large private companies are subject to their rules and regulations
-has issued specific accounting rules and regulations in Regulation S-X, Financial Reporting Releases
(FRR), Accounting Series Releases (ASR), Interpretative Releases (IR), etc.
3. Committee on Accounting Procedures: determined GAAP from 1939 to 1959
- part-time committee of the AICPA that promulgated Accounting Research Bulletins
4. Accounting Principles Board: determined GAAP from 1959 to 1973
- part time committee of the AICPA that issued Accounting Principles Board Opinions and APB interpretatio
5. Financial Accounting Standards Board: established in 1973 and has determined
GAAP ever since then
-up to 2009 issued Financial Accounting Standards, FASB interpretations, FASB technical Bulletins,
Emerging Issues Task Force Statements, FASB Statt Positions, FASB implementation Guides, and
Statements of Financial Accounting Concepts
-has 7 full time members with 5 year terms
6. FASB Accounting Standards Codification: - codified on July 2009
- became the single source of authoritative nongovernmental US GAAP
7. FASB updates to ASC & SEC content: - FASB amendments issued for public
comment through exposure drafts
-majority vote of the Board need to approve an exposure draft for issuance
-FASB statt analyzes all comment letters from public and then the Board re-deliberates the issue
-FASB statt prepares an Accounting Standards Update for Board
-majority vote of Board needed to amend the ASC
8. IASB: established in 2001 as part of the International Financial Reporting Standards Foundation
9. FASB Conceptual Framework: - statements of financial accounting concepts
-serve as basis for financial accounting concepts for business and nonbusiness enterprises
, CPA FAR Exam Comprehensive Questions with Verified Answers
Graded A
- NOT GAAP, just basic reasoning of why
, CPA FAR Exam Comprehensive Questions with Verified Answers
Graded A
10. Objective of General Purpose Financial Reporting: to provide financial
information about the reporting entity that is useful to the primary users in making decisions about
providing resources to the reporting entity
11. Form 10-K Deadlines: - Large Accelerated = 60 days
-Accelerated = 75 days
-All Others = 90 days
12. Form 10K: must be filed annually by US registered companies
- contains financial disclosures, including a summary of financial data, management's discussion
and analysis, and audited financial statements prepared using GAAP
13. Form 10Q: filed quarterly by US registered companies
- includes unaudited financial statements, interim period MD & A and certain disclosures
14. Form 10-Q Deadlines: - Large Accelerated = 40 days
-Accelerated = 40 days
-All Others = 45 days
15. Form 11K: Employee Benefit Plans
16. Form 20 F: - non US annual report
17. Form 40 F: Canadian annual report
18. Form 6 K: filed semiannually by FOREIGN
private issuers similar to 10-Q
19. Form 8 K: reports major events
Ex: new CEO, audit firm, asset acquisitions, disposals
20. Forms 3, 4, and 5: forms required by 10% owners
21. Interim Financial Reporting: - Balance Sheets: end of the most recent fiscal
quarter and as of the end of the preceding fiscal year
-Income Statements: most recent fiscal quarter, for period between the end of the preceding fiscal year
and the end of the most recent fiscal quarter, and for the corresponding periods of the preceding fiscal
year
also for the cumulative 12 month period ended during the most recent fiscal quarter & the corresponding
preceding period
-Statement of Cash Flows: period between the end of the preceding fiscal year and the end of the most
recent fiscal
, CPA FAR Exam Comprehensive Questions with Verified Answers
Graded A
quarter, and corresponding period for the preceding fiscal year
cumulative 12 month period ended during the most recent fiscal quarter and for the corresponding
preceding period
22. Annual Financial Reporting: - 2 Balance Sheets
-3 Income Statements
-3 Cash Flows
-3 Changes in Owner's Equity
23. Annual financial Reporting IFRS: - 2 balance sheets
-2 statements of comprehensive income
-2 statements of changes in equity
-2 statements of cash flows
24. XBRL: software that uses XML to electronically file data and link it
25. Tag: a machine readable code
includes descriptive labels, definitions, references to US GAAP that provide contextual information
26. instance document: XBRL formatted document that contains tagged data
27. SEC interactive data rule: requires US public companies to present financial
statements using XBRL
-SEC registration statements
-quarterly and annual reports
-6K and 8K
-notes
-schedules
* management's discussion & analysis NOT required
28. Required Disclosure of Operating Segments: - for public companies
only
-disclose segment profit/loss, assets, and certain related items
-NOT liabilities (IFRS ONLY)
29. Operating Segments: A component of an entity that
-engages in business activities
-its operating results are regularly reviewed by entity's Chief Operating Decision maker
-its discrete financial information is available
Graded A
1. Identifying a Variable Interest (VIE): All Must be Met:
1. There is an arrangement between company and business entity
2. The business entity is a legal entity
3. The business fails to qualify for an exclusion
4. The interest is more than insignificant
5. The company has an explicit or implicit variable interest in the entity
2. Securities and Exchange Commission: - established in 1934 by Securities and
Exchange Act
-all public and large private companies are subject to their rules and regulations
-has issued specific accounting rules and regulations in Regulation S-X, Financial Reporting Releases
(FRR), Accounting Series Releases (ASR), Interpretative Releases (IR), etc.
3. Committee on Accounting Procedures: determined GAAP from 1939 to 1959
- part-time committee of the AICPA that promulgated Accounting Research Bulletins
4. Accounting Principles Board: determined GAAP from 1959 to 1973
- part time committee of the AICPA that issued Accounting Principles Board Opinions and APB interpretatio
5. Financial Accounting Standards Board: established in 1973 and has determined
GAAP ever since then
-up to 2009 issued Financial Accounting Standards, FASB interpretations, FASB technical Bulletins,
Emerging Issues Task Force Statements, FASB Statt Positions, FASB implementation Guides, and
Statements of Financial Accounting Concepts
-has 7 full time members with 5 year terms
6. FASB Accounting Standards Codification: - codified on July 2009
- became the single source of authoritative nongovernmental US GAAP
7. FASB updates to ASC & SEC content: - FASB amendments issued for public
comment through exposure drafts
-majority vote of the Board need to approve an exposure draft for issuance
-FASB statt analyzes all comment letters from public and then the Board re-deliberates the issue
-FASB statt prepares an Accounting Standards Update for Board
-majority vote of Board needed to amend the ASC
8. IASB: established in 2001 as part of the International Financial Reporting Standards Foundation
9. FASB Conceptual Framework: - statements of financial accounting concepts
-serve as basis for financial accounting concepts for business and nonbusiness enterprises
, CPA FAR Exam Comprehensive Questions with Verified Answers
Graded A
- NOT GAAP, just basic reasoning of why
, CPA FAR Exam Comprehensive Questions with Verified Answers
Graded A
10. Objective of General Purpose Financial Reporting: to provide financial
information about the reporting entity that is useful to the primary users in making decisions about
providing resources to the reporting entity
11. Form 10-K Deadlines: - Large Accelerated = 60 days
-Accelerated = 75 days
-All Others = 90 days
12. Form 10K: must be filed annually by US registered companies
- contains financial disclosures, including a summary of financial data, management's discussion
and analysis, and audited financial statements prepared using GAAP
13. Form 10Q: filed quarterly by US registered companies
- includes unaudited financial statements, interim period MD & A and certain disclosures
14. Form 10-Q Deadlines: - Large Accelerated = 40 days
-Accelerated = 40 days
-All Others = 45 days
15. Form 11K: Employee Benefit Plans
16. Form 20 F: - non US annual report
17. Form 40 F: Canadian annual report
18. Form 6 K: filed semiannually by FOREIGN
private issuers similar to 10-Q
19. Form 8 K: reports major events
Ex: new CEO, audit firm, asset acquisitions, disposals
20. Forms 3, 4, and 5: forms required by 10% owners
21. Interim Financial Reporting: - Balance Sheets: end of the most recent fiscal
quarter and as of the end of the preceding fiscal year
-Income Statements: most recent fiscal quarter, for period between the end of the preceding fiscal year
and the end of the most recent fiscal quarter, and for the corresponding periods of the preceding fiscal
year
also for the cumulative 12 month period ended during the most recent fiscal quarter & the corresponding
preceding period
-Statement of Cash Flows: period between the end of the preceding fiscal year and the end of the most
recent fiscal
, CPA FAR Exam Comprehensive Questions with Verified Answers
Graded A
quarter, and corresponding period for the preceding fiscal year
cumulative 12 month period ended during the most recent fiscal quarter and for the corresponding
preceding period
22. Annual Financial Reporting: - 2 Balance Sheets
-3 Income Statements
-3 Cash Flows
-3 Changes in Owner's Equity
23. Annual financial Reporting IFRS: - 2 balance sheets
-2 statements of comprehensive income
-2 statements of changes in equity
-2 statements of cash flows
24. XBRL: software that uses XML to electronically file data and link it
25. Tag: a machine readable code
includes descriptive labels, definitions, references to US GAAP that provide contextual information
26. instance document: XBRL formatted document that contains tagged data
27. SEC interactive data rule: requires US public companies to present financial
statements using XBRL
-SEC registration statements
-quarterly and annual reports
-6K and 8K
-notes
-schedules
* management's discussion & analysis NOT required
28. Required Disclosure of Operating Segments: - for public companies
only
-disclose segment profit/loss, assets, and certain related items
-NOT liabilities (IFRS ONLY)
29. Operating Segments: A component of an entity that
-engages in business activities
-its operating results are regularly reviewed by entity's Chief Operating Decision maker
-its discrete financial information is available
