ISC-CPA Exam 2025/2026
Complete Study Bundle |
Updated Modules, Verified
Questions & Answers, Exam
Review Notes, Practice Tests
& Accurate Rationales | High-
Scoring Procurement &
Accounting Prep Guide
Fundamental Characteristics of Accounting Information - Answer✅1. Relevance
2. Reliability (faithful representation)
Comprehensive Income - Answer✅NI + OCI
Unrealized G/L AFS Securities - Answer✅OCI: Not on income statement
Unusual, frequent items - Answer✅No separate disclosures
,Aspects of Relevance - Answer✅Predictive Value, Confirmatory Value, Materiality
Aspects of Reliability - Answer✅Comparability (consistency), verifiability, timeliness,
understandability
Single source of US GAAP
Amended through - Answer✅FASB Accounting Standards Codification
Accounting Standards Updates
All US public companies - Answer✅Required to follow US GAAP
Accounting standards update issued - Answer✅Only after majority vote by members of FASB
Replacement Cost - Answer✅Amount of cash or cash equivalent
Continued vs. discontinued income - Answer✅Predictive value
Royalties paid - Answer✅Reported as expense in the period incurred
Disposal on component of a business - Answer✅Discontinued
Overdraft reported as - Answer✅Current liability
Cash account for payment into a bond sinking fund - Answer✅Noncurrent asset
Non current asset - Answer✅Cash realized time beyond operating cycle or 1 year
Deposits received from customer - Answer✅Liabilities
Service Contracts sold - Answer✅Deferred revenue increases, but service revenue doesn't increase
until services are performed
JE when contract is performed - Answer✅None
Journal entries sales of service contract - Answer✅Cash received:
Dr. Cash 15000
Cr. Unearned Sales revenue 15000
Product transferred:
Dr. Unearned Sales Revenue 15000
Cr. Sales Revenue 15000
Dr. COGS 9000
Cr. Inventory 9000
Revenue recognition process - Answer✅ISTAR
1. Identify Contract
2. Separate performance obligations
3. Transaction price expected to be entitled to
4. Allocate to separate performance obligations
5. Recognize revenue based on either a point in time or over time
Bill and hold - Answer✅Recognize all revenue now. 0 unearned
,Discount - Answer✅Allocated
Consignment - Answer✅No unearned revenue--didn't sell anything
Service contracts - Answer✅Deferred revenue= Unearned Liability
Service revenue= earned income
Milestones achieved - Answer✅Output method to recognize revenue
Incremental costs - Answer✅Can recover costs. Would not have been incurred if didn't enter the
contract. Recognized as an asset
Revenue recognition:
1. Principal
2. Agent - Answer✅1. Gross consideration entity expects to receive
2. Fee or commission performing the agent function
Forward or Call Option
Repurchase price > Original Selling Price - Answer✅Financing arrangement
Forward or call option Financing arrangement JE - Answer✅Dr. Cash 350000
Cr. Financial Liability 350000
Recognize interest exp:n 385000 (RP) - 350000 (Cash received)
Dr. Interest exp 35000
Cr. Financial Liability 35000
Option lapses unexercised: Derecognize liability and record sale
Dr. Financial Liability 385000
Cr. Revenue 385000
If you get extended warranty - Answer✅Separate performance obligation. Longer the coverage
period, higher likelihood it's a performance obligation
Forward - Answer✅Obligation to repurchase the asset
Call option - Answer✅Right to repurchase the asset
Forward or call option
Repurchase Price < Original SP - Answer✅Lease
Forward or call option
Repurchase price >/= original SP - Answer✅Financing arrangement. Entity recognizes asset, financial
liability for any consideration received from customer, recognize interest expense= Consideration
received from customer - amount of consideration to be paid by customer
Put option - Answer✅Obligation to repurchase asset at customer's request
, Put option. Repurchase price < Original SP - Answer✅1. Lease if customer has significant economic
incentive to exercise the right. Repurchase price > expected MV
2. Sale with right of return (customer doesn't have significant economic incentive)
Put option. RP price >/= Original SP - Answer✅1. Financing arrangement (if RP price is > expected MV
of the asset)
2. Sale with right of return (if RP price is < expected MV or asset and customer doesn't have significant
economic incentive to exercise the right
Refund liabilities & right to return - Answer✅1. Keep revenue for transferred products
2. Give back a refund liability
3. Get back an asset related to the subsequent recovery of products when refund liability is settled
Percentage of Completion (revenue over time) - Answer✅GAAP and IFRS
Percentage of completion: Construction in progress - Answer✅CIP (inventory): Construction costs &
estimated GP earned
Progress billings: Billings on construction, contra inventory
Percentage of completion: current asset accounts - Answer✅1. Due on accounts (receivables)
2. CIP: costs and estimated earnings of uncompleted contracts in excess of progress billings
Percentage of completion: Current liabilities - Answer✅Progress billings in excess of cost + estimated
earnings on uncompleted contracts
Percentage of completion: GP or loss recognized each period - Answer✅1. GP of completed
contract= Contract price - estimated total cost
2. % of completion: Total costs to date/total estimated cost of contract
3. Profit to date= 1 x 2
4. GP earned for the current year= PTD (step 3) - PTD beginning of the period= Current YTD GP
Completed contract or percentage of completion: estimated loss on total contract - Answer✅Loss is
recognized immediately in year discovered: Reverse previous profit. Recognize immediately-
percentage becomes 100%
% of job earned - Answer✅Cost incurred/total expected cost= work done/total expected work
Completed contract - Answer✅US GAAP only. IFRS doesn't permit
Completed contract appropriate when - Answer✅Difficult to estimate, many contracts, short
duration
Completed contract revenue and GP recognized - Answer✅When contract is completed. Unless loss
is reocgnized
Completed contract current asset accounts - Answer✅1. Due on A/R
2. Cost of uncompleted contracts in excess of progress billings: construction in progress (like
inventory)
Completed contract current liabilities - Answer✅1. Progress billings on uncompleted contracts in
excess of cost
Completed Contract at completion: GP or loss= - Answer✅Contract price - total costs
Complete Study Bundle |
Updated Modules, Verified
Questions & Answers, Exam
Review Notes, Practice Tests
& Accurate Rationales | High-
Scoring Procurement &
Accounting Prep Guide
Fundamental Characteristics of Accounting Information - Answer✅1. Relevance
2. Reliability (faithful representation)
Comprehensive Income - Answer✅NI + OCI
Unrealized G/L AFS Securities - Answer✅OCI: Not on income statement
Unusual, frequent items - Answer✅No separate disclosures
,Aspects of Relevance - Answer✅Predictive Value, Confirmatory Value, Materiality
Aspects of Reliability - Answer✅Comparability (consistency), verifiability, timeliness,
understandability
Single source of US GAAP
Amended through - Answer✅FASB Accounting Standards Codification
Accounting Standards Updates
All US public companies - Answer✅Required to follow US GAAP
Accounting standards update issued - Answer✅Only after majority vote by members of FASB
Replacement Cost - Answer✅Amount of cash or cash equivalent
Continued vs. discontinued income - Answer✅Predictive value
Royalties paid - Answer✅Reported as expense in the period incurred
Disposal on component of a business - Answer✅Discontinued
Overdraft reported as - Answer✅Current liability
Cash account for payment into a bond sinking fund - Answer✅Noncurrent asset
Non current asset - Answer✅Cash realized time beyond operating cycle or 1 year
Deposits received from customer - Answer✅Liabilities
Service Contracts sold - Answer✅Deferred revenue increases, but service revenue doesn't increase
until services are performed
JE when contract is performed - Answer✅None
Journal entries sales of service contract - Answer✅Cash received:
Dr. Cash 15000
Cr. Unearned Sales revenue 15000
Product transferred:
Dr. Unearned Sales Revenue 15000
Cr. Sales Revenue 15000
Dr. COGS 9000
Cr. Inventory 9000
Revenue recognition process - Answer✅ISTAR
1. Identify Contract
2. Separate performance obligations
3. Transaction price expected to be entitled to
4. Allocate to separate performance obligations
5. Recognize revenue based on either a point in time or over time
Bill and hold - Answer✅Recognize all revenue now. 0 unearned
,Discount - Answer✅Allocated
Consignment - Answer✅No unearned revenue--didn't sell anything
Service contracts - Answer✅Deferred revenue= Unearned Liability
Service revenue= earned income
Milestones achieved - Answer✅Output method to recognize revenue
Incremental costs - Answer✅Can recover costs. Would not have been incurred if didn't enter the
contract. Recognized as an asset
Revenue recognition:
1. Principal
2. Agent - Answer✅1. Gross consideration entity expects to receive
2. Fee or commission performing the agent function
Forward or Call Option
Repurchase price > Original Selling Price - Answer✅Financing arrangement
Forward or call option Financing arrangement JE - Answer✅Dr. Cash 350000
Cr. Financial Liability 350000
Recognize interest exp:n 385000 (RP) - 350000 (Cash received)
Dr. Interest exp 35000
Cr. Financial Liability 35000
Option lapses unexercised: Derecognize liability and record sale
Dr. Financial Liability 385000
Cr. Revenue 385000
If you get extended warranty - Answer✅Separate performance obligation. Longer the coverage
period, higher likelihood it's a performance obligation
Forward - Answer✅Obligation to repurchase the asset
Call option - Answer✅Right to repurchase the asset
Forward or call option
Repurchase Price < Original SP - Answer✅Lease
Forward or call option
Repurchase price >/= original SP - Answer✅Financing arrangement. Entity recognizes asset, financial
liability for any consideration received from customer, recognize interest expense= Consideration
received from customer - amount of consideration to be paid by customer
Put option - Answer✅Obligation to repurchase asset at customer's request
, Put option. Repurchase price < Original SP - Answer✅1. Lease if customer has significant economic
incentive to exercise the right. Repurchase price > expected MV
2. Sale with right of return (customer doesn't have significant economic incentive)
Put option. RP price >/= Original SP - Answer✅1. Financing arrangement (if RP price is > expected MV
of the asset)
2. Sale with right of return (if RP price is < expected MV or asset and customer doesn't have significant
economic incentive to exercise the right
Refund liabilities & right to return - Answer✅1. Keep revenue for transferred products
2. Give back a refund liability
3. Get back an asset related to the subsequent recovery of products when refund liability is settled
Percentage of Completion (revenue over time) - Answer✅GAAP and IFRS
Percentage of completion: Construction in progress - Answer✅CIP (inventory): Construction costs &
estimated GP earned
Progress billings: Billings on construction, contra inventory
Percentage of completion: current asset accounts - Answer✅1. Due on accounts (receivables)
2. CIP: costs and estimated earnings of uncompleted contracts in excess of progress billings
Percentage of completion: Current liabilities - Answer✅Progress billings in excess of cost + estimated
earnings on uncompleted contracts
Percentage of completion: GP or loss recognized each period - Answer✅1. GP of completed
contract= Contract price - estimated total cost
2. % of completion: Total costs to date/total estimated cost of contract
3. Profit to date= 1 x 2
4. GP earned for the current year= PTD (step 3) - PTD beginning of the period= Current YTD GP
Completed contract or percentage of completion: estimated loss on total contract - Answer✅Loss is
recognized immediately in year discovered: Reverse previous profit. Recognize immediately-
percentage becomes 100%
% of job earned - Answer✅Cost incurred/total expected cost= work done/total expected work
Completed contract - Answer✅US GAAP only. IFRS doesn't permit
Completed contract appropriate when - Answer✅Difficult to estimate, many contracts, short
duration
Completed contract revenue and GP recognized - Answer✅When contract is completed. Unless loss
is reocgnized
Completed contract current asset accounts - Answer✅1. Due on A/R
2. Cost of uncompleted contracts in excess of progress billings: construction in progress (like
inventory)
Completed contract current liabilities - Answer✅1. Progress billings on uncompleted contracts in
excess of cost
Completed Contract at completion: GP or loss= - Answer✅Contract price - total costs
