CPA Financial Accounting and Reporting (FAR) : Special Purpose Frameworks
Study concepts, example questions & explanations for CPA Financial Accounting and Reporting (FAR)
All CPA Financial Accounting and Reporting (FAR) Resources
Example Questions
Example Question #4 : Financial Reporting Standards
A city government is currently preparing fund-based financial statements. What guides the timing of recognition for the transactions to be reported?
Modified accrual accounting for the governmental funds and accrual accounting for the proprietary funds
Modified accrual accounting
Accrual accounting
Accrual accounting for the governmental funds and modified accrual accounting for the proprietary funds
Modified accrual accounting for the governmental funds and accrual accounting for the proprietary funds
Governmental funds are prepared using the modified accrual basis of accounting, while proprietary funds use regular accrual accounting.
Example Question #5 : Financial Reporting Standards
Which of the following is true regarding cash basis and accrual basis revenue in regards to accounts receivable?
Both of these
None of these
Under the cash basis, revenue is recognized when the receivable is initially recorded.
A decrease in accounts receivable from the beginning of the year to the end of the year generally represents cash collections.
A decrease in accounts receivable from the beginning of the year to the end of the year generally represents cash collections.
Under both the cash and accrual basis of accounting, reductions in accounts receivable is generally due to cash collections.
Example Question #6 : Financial Reporting Standards
When adjusting service revenue from cash basis to accrual basis, which of the following adjustments must be made?
The beginning balance of accounts receivable must be added to cash fees collected
Customer deposits received during the year must be added to cash fees collected
The ending balance of accounts receivable must be added to cash fees collected
Beginning unearned service revenue must be subtracted from cash fees collected
The ending balance of accounts receivable must be added to cash fees collected
To adjust cash received to accrual basis income, ending AR is added back to cash received and beginning AR is subtracted.
Example Question #1 : Special Purpose Frameworks
Under modified accrual basis accounting, revenue is recognized when:
Measurable and available
Earned
Both
Neither
Measurable and available
Modified accrual is used by governmental funds and income is recognized when it can be reasonably measured and when it is available for usage during the year or 60 days after.
All CPA Financial Accounting and Reporting (FAR) Resources
