Please name all of the CPA sections and give a short description of each section.
ChatGPT said:
ChatGPT
The CPA (Certified Public Accountant) exam consists of four sections that test candidates on different aspects of accounting, business, and auditing. Here’s an overview of each section:
1. AUD - Auditing and Attestation
- Focus: Auditing processes, ethics, and procedures.
- Covers topics like audit planning, performing audits, internal controls, and compliance. Also tests knowledge of attestation engagements and review services.
- Emphasizes professional skepticism and adherence to auditing standards.
2. BEC - Business Environment and Concepts
- Focus: Business principles and concepts.
- Includes topics like corporate governance, economic concepts, financial management, information technology, and business strategy.
- Tests the ability to write professional business communications, such as memos or recommendations.
3. FAR - Financial Accounting and Reporting
- Focus: Financial reporting frameworks used by entities.
- Covers the preparation of financial statements, application of GAAP, and specialized accounting topics like governmental and nonprofit accounting.
- Requires a deep understanding of conceptual frameworks and financial transaction analysis.
4. REG - Regulation
- Focus: Taxation, ethics, and law.
- Includes federal taxation for individuals and businesses, ethics in taxation practice, and business law topics such as contracts and negotiable instruments.
- Tests knowledge of compliance and regulatory considerations in accounting.
Each section is scored on a scale of 0–99, with a passing score of 75. Candidates typically spend months preparing for these sections, as they are comprehensive and require detailed knowledge and application skills.
4o
You said:
I would like some help understanding Financial Accounting and Reporting. I want a list of all the topics that could be included in that section.
ChatGPT said:
ChatGPT
The Financial Accounting and Reporting (FAR) section of the CPA exam covers a broad range of financial accounting and reporting topics based on frameworks like U.S. GAAP (Generally Accepted Accounting Principles) and, to some extent, IFRS (International Financial Reporting Standards). Here’s a comprehensive list of topics that may be tested in FAR:
I. Conceptual Framework and Financial Reporting
- Conceptual Framework
- Objectives of financial reporting
- Qualitative characteristics of useful financial information
- Elements of financial statements
- Recognition, measurement, and disclosure concepts
- Financial Reporting
- General-purpose financial statements
- Notes to financial statements
- SEC reporting requirements
- Financial statement presentation (e.g., balance sheet, income statement, statement of cash flows, statement of changes in equity)
II. Select Financial Statement Accounts
- Cash and Cash Equivalents
- Receivables
- Allowance for doubtful accounts
- Factoring and securitization
- Inventory
- Cost methods (FIFO, LIFO, weighted average)
- Lower of cost or market (LCM) or lower of cost and net realizable value (LCNRV)
- Property, Plant, and Equipment (PP&E)
- Acquisition, depreciation, impairment, and disposal
- Asset retirement obligations
- Intangible Assets
- Goodwill and impairment
- Research and development costs
- Investments
- Equity method vs. fair value method
- Trading, available-for-sale, and held-to-maturity securities
- Liabilities
- Accounts payable
- Notes payable
- Bonds (issuance, amortization, premium/discount)
- Equity
- Stock transactions (issuance, dividends, stock splits)
- Treasury stock
- Earnings per share (EPS) calculations
- Revenue Recognition
- 5-step model under ASC 606
- Leases
- Lessee and lessor accounting under ASC 842
- Income Taxes
- Deferred tax assets and liabilities
- Temporary and permanent differences
III. Transactions and Events
- Business Combinations and Consolidation
- Acquisition accounting
- Consolidated financial statements
- Derivatives and Hedge Accounting
- Types of derivatives
- Hedge effectiveness and accounting
- Contingencies
- Loss contingencies (e.g., litigation, warranties)
- Gain contingencies
- Foreign Currency Transactions and Translation
- Translation and remeasurement of financial statements
- Nonmonetary Transactions
- Exchanges of assets without monetary consideration
- Fair Value Measurement
- Valuation techniques
- Inputs (Level 1, Level 2, Level 3)
IV. Governmental Accounting
- Fund Accounting
- Types of funds (governmental, proprietary, fiduciary)
- Measurement focus and basis of accounting
- Government-wide Financial Statements
- Statement of net position
- Statement of activities
- Fund Financial Statements
- Balance sheet and statement of revenues, expenditures, and changes in fund balance
- Budgetary Accounting
- Encumbrances
- Interfund transactions
- Governmental Fund Types
- General, special revenue, capital projects, debt service, and permanent funds
- Proprietary and Fiduciary Funds
- Enterprise and internal service funds
- Pension, investment, and agency funds
V. Not-for-Profit Accounting
- Financial Statement Presentation
- Statement of financial position
- Statement of activities
- Statement of cash flows
- Contributions
- Revenue recognition
- Restrictions (unrestricted, temporarily restricted, permanently restricted)
- Functional Expenses
- Program vs. support services
VI. Other Topics
- Subsequent Events
- Adjusting vs. non-adjusting events
- Interim Financial Reporting
- Segment Reporting
- Accounting Changes and Error Corrections
- Changes in accounting principle, estimates, and reporting entity
- Correction of prior period errors
- Statement of Cash Flows
- Direct vs. indirect method
- Specialized Accounting Topics
- Software development costs
- Oil and gas accounting
- Disclosures
- Related party transactions
- Risks and uncertainties
Tips for Success in FAR:
- Focus on practice: FAR is calculation-heavy. Familiarize yourself with the types of computations commonly tested.
- Memorize key frameworks: Know the conceptual framework and common GAAP rules.
- Practice journal entries: Understanding entries will help clarify complex topics like leases or consolidations.
Let me know if you’d like help breaking down specific topics!
4o
You said:
generate two practice questions about Governmental Accounting.
ChatGPT said:
ChatGPT
Here are two practice questions related to Governmental Accounting:
Question 1: Fund Accounting
A city government issued bonds to fund the construction of a new public library. The proceeds from the bond issuance were $5 million. The funds will be used solely for this project, and expenditures will occur over several years. Which fund should the city government use to account for these transactions?
A. General Fund
B. Special Revenue Fund
C. Capital Projects Fund
D. Debt Service Fund
Question 2: Modified Accrual Basis
A city government operates under the modified accrual basis of accounting for its governmental funds. Which of the following statements is correct regarding revenue recognition under this basis?
A. Revenue is recognized when earned, regardless of when it is measurable or available.
B. Revenue is recognized only when cash is received.
C. Revenue is recognized when it is both measurable and available to finance expenditures of the current period.
D. Revenue is recognized only when it is due within 90 days of the end of the fiscal year.