CPA FAR Candidates often ask me what topics are most likely to be asked when they go the Prometric testing center and face off against NASBA and the AICPA blueprint. I am Darius Clark of the i-75 CPA Review course and a CPA Exam Tutor. Here are several topics that I consider a "must know" for all Financial Accounting and Reporting candidates. Other FAR topics to know for your multiple choice and simulations include adjusting journal entries that require reconciliation of cash basis to accrual basis are a "must know". For bonds, be sure to know when interest expense is higher than cash paid to the bondholders and when cash paid to the bond holders is higher than interest expense. This has to do with whether the bonds are sold at a discount vs sold at a premium. Recording treasury stock has two methods, the cost method and the par value method. Retirement of treasury stock is a popular question on the CPA Exam. Inter-company eliminations for consolidated financial statements is also heavily tested resulting from business combinations. Leases are also a heavily tested topic as well as government funds and not for profit accounting. FASB Framework questions, revenue recognition topics are tested and include variable consideration, input and output methods, incremental costs, principal and agent, consignment, bill and hold, warranties, re-purchase agreements, sale with right of return, refund liabilities, contract modifications, gift cards, franchise and royalty revenue, and long term construction contracts. Adjusting entries for accrued interest revenue involve both the income statement and balance sheet and the exam could ask for the impact on the financial statements, working capital, stockholders equity etc, if these entries are not made. Other FAR topics to review before your test include capitalization of interest on fixed assets, depreciation, and accounting changes. Be sure to know the difference between a change in principle and a change in accounting estimate. The concept of retrospective application and prospective treatment is often tested in simulation and multiple choice questions. Know how to test for impairment of both goodwill and assets with a finite life. Patents for example are often tested for impairment on the CPA exam. Know the difference between land and land improvements. For leases, be sure to know the criteria for a finance lease and how the right of use of asset and lease liability are impacted when there is an immediate payment (annuity due) and a first payment one year from lease inception. Know the difference between accounting for operating leases and finance leases for both the lessee and lessor. This accounting homework is very important if you want to pass the CPA FAR exam. Other FAR topics that are heavily tested include the statement of cash flows both direct and indirect methods. Knowing what goes to other comprehensive income and what is reported on the income statement is often tested. Be sure to know the difference between re-measurement and translation methods of converting financial statements in a foreign currency. With GASB, know the difference between modified accrual and full accrual accounting. Know the difference between Fund Level Financial reporting and government wide financial reporting especially with regard to assets and liabilities. Know when the term "expenditure" is used and when the term "expense" is used. Non-monetary exchanges are tested in FAR and you need to know how to handle the gains and losses. Pensions are a topic that sometimes candidates find difficult. Knowing how to calculate the total income statement impact and the asset and liability to be reported on the balance sheet. Deferred taxes is another big topic, knowing the difference between a deferred tax asset and deferred tax liability and how and when it reverses.

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