CPA FAR 2026 questions and answers.
What is meant by a "classified" balance sheet? - Answer it distinguishes current and noncurrent
assets and liabilities
What should a full set of financial statements include? - Answer- Statement of Financial Position (BS)
- Statement of Earnings (IS)
- Stat of Comprehensive income
- Stat of CF
- Stat of changes in owner's equity
Are gains and losses on the disposal of assets shown on a "gross basis" or on the "net basis"? -
Answer Net (proceeds less net book value)
How does multistep IS differ from single step IS? - Answer- Multistep IS reports operating revenues
and expenses separately from nonoperation revenues and expenses and other gains and losses
- Single-step income stat’s presentation of income from continuing operations, total expenses are
subtracted from total revenues without separation between operating and nonoperation revenues
and expenses
The gain (loss) from discontinued operations can consist of... - Answer an impairment loss, a gain
(loss) from actual operations, and a gain (loss) on disposal
How do we account for subsequent increases in the fair value of a discontinued component? -
Answer gain is recognized for the subsequent increase in fair value minus costs to sell (but not in
excess of the previously recognized cumulative loss). The gain is reported in the period of increase.
What conditions must be present for a disposal to be reported in discontinued operations? - Answer
disposal of a component, group of components, business activity, or non-profit activity is reported in
discontinued operations if the disposal represents a strategic shift that has or will have a major
effect on an entity's operations and financial results
State two types of foreign currency translations - Answer- operating transactions, such as importing,
exporting, borrowing, lending, and investing transactions.
- Forward exchange contracts, which are agreements to exchange two different currencies at a
specific future date and at a specific rate.
What is meant by a "classified" balance sheet? - Answer it distinguishes current and noncurrent
assets and liabilities
What should a full set of financial statements include? - Answer- Statement of Financial Position (BS)
- Statement of Earnings (IS)
- Stat of Comprehensive income
- Stat of CF
- Stat of changes in owner's equity
Are gains and losses on the disposal of assets shown on a "gross basis" or on the "net basis"? -
Answer Net (proceeds less net book value)
How does multistep IS differ from single step IS? - Answer- Multistep IS reports operating revenues
and expenses separately from nonoperation revenues and expenses and other gains and losses
- Single-step income stat’s presentation of income from continuing operations, total expenses are
subtracted from total revenues without separation between operating and nonoperation revenues
and expenses
The gain (loss) from discontinued operations can consist of... - Answer an impairment loss, a gain
(loss) from actual operations, and a gain (loss) on disposal
How do we account for subsequent increases in the fair value of a discontinued component? -
Answer gain is recognized for the subsequent increase in fair value minus costs to sell (but not in
excess of the previously recognized cumulative loss). The gain is reported in the period of increase.
What conditions must be present for a disposal to be reported in discontinued operations? - Answer
disposal of a component, group of components, business activity, or non-profit activity is reported in
discontinued operations if the disposal represents a strategic shift that has or will have a major
effect on an entity's operations and financial results
State two types of foreign currency translations - Answer- operating transactions, such as importing,
exporting, borrowing, lending, and investing transactions.
- Forward exchange contracts, which are agreements to exchange two different currencies at a
specific future date and at a specific rate.
