The FAR (Financial Accounting and Reporting) section of the CPA exam covers a wide range of topics related to financial Accounting and reporting for various entities. This includes key areas such as:
Conceptual Framework, Standard-Setting, and Financial Reporting: This includes an understanding of the conceptual framework behind financial reporting, standard-setting processes, and general purpose financial statements.
Select Financial Statement Accounts: Candidates should have a deep understanding of specific accounts and items, such as cash and cash equivalents, accounts receivable, inventory, property plant and equipment, and intangibles among others.
Select Transactions: This involves Accounting for and reporting specific transactions, including business combinations, consolidations, derivatives, and foreign currency transactions.
State and Local Governments: The FAR exam also covers standards for governmental accounting as prescribed by the Governmental Accounting Standards Board (GASB), involving fund accounting and specific financial reporting requirements unique to governmental entities.
Not-for-Profit Organizations: Candidates need to be knowledgeable about accounting practices and financial reporting for not-for-profit organizations, focusing on unique requirements such as the classification of net assets and contributions.
Other Financial Reporting Frameworks: While focusing primarily on U.S. GAAP, CPA candidates should also be familiar with other frameworks, like International Financial Reporting Standards (IFRS), especially as they pertain to recognition and measurement differences.
Each of these topics requires not only an understanding of the basic principles but also the ability to apply this knowledge to complex scenarios that a professional accountant might face. The FAR section is known for its breadth and detail, demanding a strong command of accounting concepts and regulations.
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