Free FAR CPA Practice Question Walkthroughs

On this page you’ll find free FAR CPA practice question walkthroughs on topics from the AICPA CPA exam blueprints for the FAR exam.

FAR I: Financial Reporting

A1

Application: Prepare a classified balance sheet from a trial balance and supporting documentation.

Application: Adjust the balance sheet to correct identified errors.

A2

Application: Prepare a single-step or multi-step income statement (e.g., operating, nonoperating, discontinued operations) from a trial balance and supporting documentation.

Application: Adjust the income statement to correct identified errors.

Application: Calculate transaction gains or losses recognized from monetary transactions denominated in a foreign currency.

A3

Remembering & Understanding: Recall the purpose, objectives and structure of the statement of comprehensive income.

Remembering & Understanding: Identify items classified as other comprehensive income.

A4

Application: Prepare a statement of changes in equity from a trial balance and supporting documentation.

Application: Adjust the statement of changes in equity to correct identified errors.

A5

Application: Prepare a statement of cash flow using the indirect method and required disclosures from supporting documentation.

Application: Adjust a statement of cash flows to correct identified errors.

A6

Application: Prepare consolidated financial statements (adjustments, and/or eliminations) from supporting documentation.

Application: Adjust consolidated financial statements to correct identified errors.

A7

Application: Adjust the notes to the financial statements to correct identified errors and omissions.

B1

Remembering & Understanding: Recall the purpose and objectives of the statement of financial position for a nongovernmental, not-for-profit entity.

Application: Prepare a statement of financial position for a nongovernmental, not-for-profit entity from a trial balance and supporting documentation.

Application: Adjust the statement of financial position for a nongovernmental, not-for-profit entity to correct identified errors.

B2

Remembering & Understanding: Recall the purpose and objectives of the statement of activities for a nongovernmental, not-for-profit entity.

Application: Prepare a statement of activities for a nongovernmental, not-for-profit entity, including donor restrictions and releases from donor restrictions, from a trial balance and supporting documentation.

Application: Adjust the statement of activities for a nongovernmental, not-for-profit entity to correct identified errors.

B3

Remembering & Understanding: Recall the purpose and objectives of the statement of cash flows for a nongovernmental, not-for-profit entity.

Application: Prepare a statement of cash flows and required disclosures using the direct method or indirect method for a nongovernmental, not-for-profit entity.

Application: Adjust the statement of cash flows for a nongovernmental, not-for-profit entity to correct identified errors.

C

Remembering & Understanding: Recall the measurement focus and basis of accounting used by state and local governments for fund and government-wide financial reporting.

Application: Determine the appropriate fund(s) that a state or local government should use to record its activities.

D

Remembering & Understanding: Recall the purpose of forms 10-Q, 10-K and 8-K that a U.S. registrant is required to file with the U.S. Securities and Exchange Commission under the Securities Exchange Act of 1934.

Remembering & Understanding: Identify the items of Form 10-Q (Part I Items 1 through 3) and Form 10-K (Part II Items 7, 7A and 8) filed with the U.S. Securities and Exchange Commission.

Application: Calculate basic earnings per share and diluted earnings per share considering the impact of stock options, preferred stock, convertible preferred stock and/or convertible debt.

E

Remembering & Understanding: Recall appropriate financial statement titles to be used for the financial statements prepared under a special purpose framework.

Application: Perform calculations to convert cash basis or modified cash basis financial statements to accrual basis financial statements.

Application: Prepare financial statements using the cash basis or modified cash basis of accounting.

Application: Prepare financial statements using the income tax basis of accounting.

F

Remembering & Understanding: Identify the appropriate financial statement ratio or performance metric to perform a specified type of analysis.

Application: Calculate profitability ratios (e.g., gross profit margin, return on sales, return on assets, return on equity).

Application: Calculate liquidity ratios (e.g., current, quick, accounts receivable turnover, inventory turnover, accounts payable turnover).

Application: Calculate solvency ratios (e.g., debt-to-equity, total debt, times interest earned).

Application: Calculate performance metrics (e.g., EBITDA, price-to-earnings, dividend payout, asset turnover).

Application: Calculate variances between budget and actual results.

FAR II: Select Balance Sheet Accounts

A

Analysis: Reconcile the cash balance per the bank statement to the general ledger.

B

Application: Calculate trade receivables and allowances (e.g., credit losses, sales returns) and prepare journal entries.

Application: Prepare any required journal entries to record the transfer of trade receivables (secured borrowings, factoring, assignment, pledging).