CPA FAR MNEMONICS questions
and answers
predict and confirm your material value - Answerrelevance
completely neutral is free from error - Answerreliability, faithful representation
compare and verify in time to understand - Answerenhancing qualitative characteristics
REGL ALE needs ID - Answerelements of financial statements - revenues, expenses, gains, losses,
assets, liabilities, equity, investments by owners, distributions to owners
Eccentric Turtle is Rarely Under Ocean - Answer5 elements of PV measurement - estimate of FCF,
timing variation FCF, risk-free rate of interest, uncertainty credit risk, other factors
ISTAR - Answer5-step approach to revenue recognition:
1. identify the contract with the 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 - Answer3 things in discontinued operations - impairment loss, G/L actual
operations, G/L disposal NET OF TAX
An estimate is prospectively right or wrong! - Answerchanges in accounting estimate - do not restate
A principle is always retro! - Answerchanges in accounting principle - restate, except for change to
LIFO or change in depreciation method
An entity consolidation makes it cool and retro! - Answerchanges in accounting entity - restate as if
always one
, An error correction must always be fixed! - Answererror correction - prior period adjustment
PUFIER - Answergoes 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 - AnswerDR: cash
CR: unearned revenue
DR: unearned revenue
CR: revenue
PCEP for prepaid expenses - AnswerDR: prepaid expense
CR: cash
DR: expense
CR: prepaid expense
it's an accrued AREA - AnswerDR: accounts receivable
CR: revenue
DR: expense
CR: accrued liability
NUCC - AnswerGAAP required disclosures of risks and uncertainties - nature of operations, use of
estimates, certain significant estimates, current vulnerability due to certain concentrations
IS it gonna work? - Answermitigating factors to conditions that raised substantial doubt about going
concern - implemented and successful
HOPMM - AnswerFV terminology - highest and best use, orderly transaction, principal market,
market participants, most advantageous market
on the MIC! - AnswerFV valuation techniques - market approach, income approach, cost approach
10-K 60-75-90 - Answerannual report filing dates - large accelerated filer, accelerated, all others
and answers
predict and confirm your material value - Answerrelevance
completely neutral is free from error - Answerreliability, faithful representation
compare and verify in time to understand - Answerenhancing qualitative characteristics
REGL ALE needs ID - Answerelements of financial statements - revenues, expenses, gains, losses,
assets, liabilities, equity, investments by owners, distributions to owners
Eccentric Turtle is Rarely Under Ocean - Answer5 elements of PV measurement - estimate of FCF,
timing variation FCF, risk-free rate of interest, uncertainty credit risk, other factors
ISTAR - Answer5-step approach to revenue recognition:
1. identify the contract with the 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 - Answer3 things in discontinued operations - impairment loss, G/L actual
operations, G/L disposal NET OF TAX
An estimate is prospectively right or wrong! - Answerchanges in accounting estimate - do not restate
A principle is always retro! - Answerchanges in accounting principle - restate, except for change to
LIFO or change in depreciation method
An entity consolidation makes it cool and retro! - Answerchanges in accounting entity - restate as if
always one
, An error correction must always be fixed! - Answererror correction - prior period adjustment
PUFIER - Answergoes 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 - AnswerDR: cash
CR: unearned revenue
DR: unearned revenue
CR: revenue
PCEP for prepaid expenses - AnswerDR: prepaid expense
CR: cash
DR: expense
CR: prepaid expense
it's an accrued AREA - AnswerDR: accounts receivable
CR: revenue
DR: expense
CR: accrued liability
NUCC - AnswerGAAP required disclosures of risks and uncertainties - nature of operations, use of
estimates, certain significant estimates, current vulnerability due to certain concentrations
IS it gonna work? - Answermitigating factors to conditions that raised substantial doubt about going
concern - implemented and successful
HOPMM - AnswerFV terminology - highest and best use, orderly transaction, principal market,
market participants, most advantageous market
on the MIC! - AnswerFV valuation techniques - market approach, income approach, cost approach
10-K 60-75-90 - Answerannual report filing dates - large accelerated filer, accelerated, all others
