2013 CPA exam review wiley financial accounting and reporting

CONTENTS Preface About the Authors About the Contributor Introduction Chapter 1: Beginning Your CPA Review Program General Comments on the Examination Attributes of Examination Success Purpose and Organization of This Review Textbook Self-Study Program Planning For The Examination Chapter 2: Examination Grading Chapter 3: The Solutions Approach Chapter 4: Taking The Examination Examination Strategies Chapter 5: Exam Content Overview Aicpa Content and Skills Specification Researching Fasb Accounting Standards Financial Accounting and Reporting Module 9: Basic Theory and Financial Reporting Module 10: Inventory Module 11: Fixed Assets Module 12: Monetary Current Assets and Current Liabilities Module 13: Present Value Module 14: Deferred Taxes Module 15: Stockholders’ Equity Module 16: Investments Module 17: Statement of Cash Flows Module 18: Business Combinations and Consolidations Module 19: Derivative Instruments and Hedging Activities Module 20: Miscellaneous Module 21: Governmental (State and Local) Accounting Module 22: Not-for-Profit Accounting ARB, APB, and FASB Pronouncements Appendices Appendix A: Financial Accounting and Reporting Sample Examination Appendix B: Sample Financial Accounting and Reporting Testlet Released by the AICPA Appendix C: 2012 Released AICPA Questions for Financial Accounting and Reporting Index The following items, copyright © by the American Institute of Certified Public Accountants, Inc., are reprinted (or adapted) with permission Material from Uniform CPA Examination Questions and Answers, 1978 through 2000 Information for Uniform CPA Examination Candidates, Board of Examiners, 2000 Material from the Certified Internal Auditor Examination, Copyright © 1994 through 1997 by the Institute of Internal Auditors, Inc., are reprinted and/or adapted by permission Material from the Certified Management Accountant Examinations, Copyright © 1993 through 1997 by the Institute of Certified Management Accountants are reprinted and/or adapted by permission Example financial statements from Industry Audit Guides: Audits of Colleges and Universities, Audits of Voluntary Health and Welfare Organizations, and Audits of Providers of Health Care Services Example of Statement of Activity from SOP 78-10 Reproduction and adaptation of pronouncements, copyright © Financial Accounting Standards Board, Norwalk, Connecticut 06856-5116, with permission Reproduction of “Combined Statement of Revenues, Expenditures, and Changes in Fund Balances–All Governmental Fund Types and Expendable Trust Funds,” copyright © Governmental Accounting Standards Board, Norwalk, Connecticut 06856-5116, with permission Statement of changes in fund balances for an educational institution from College and University Business Administration with permission of the National Association of College and University Business Officers Copyright © 2013 by John Wiley & Sons, Inc All rights reserved Published by John Wiley & Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-646-8600, or on the Web at www.copyright.com Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, 201-748-6011, fax 201-748-6008, or online at http://www.wiley.com/go/permissions Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose No warranty may be created or extended by sales representatives or written sales materials The advice and strategies contained herein may not be suitable for your situation You should consult with a professional where appropriate Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages For general information on our other products and services or for technical support, please contact our Customer Care Department within the US at 800-762-2974, outside the US at 317-572-3993 or fax 317-572-4002 Wiley also publishes its books in a variety of electronic formats Some content that appears in print may not be available in electronic books For more information about Wiley products, visit our Web site at www.wiley.com ISBN 978-1-118-27722-5 (paperback); 978-1-118-41959-5 (ebk); 978-1-118-42119-2 (ebk); 978-1-118-56222-2 (ebk) PREFACE DON’T FORGET TO VISIT OUR WEBSITE AT WWW.WILEY.COM/CPA FOR SUPPLEMENTS AND UPDATES Passing the CPA exam upon your first attempt is possible! The Wiley CPA Examination Review preparation materials provide you with the necessary materials (visit our website at www.wiley.com/cpa for more information) It’s up to you to add the hard work and commitment Together we can beat the pass rate on each section of about 45% All Wiley CPA products are continuously updated to provide you with the most comprehensive and complete knowledge base Choose your products from the Wiley preparation materials and you can proceed confidently You can select support materials that are exam-based and user-friendly You can select products that will help you pass! Remaining current is one of the keys to examination success Here is a list of what’s new in this edition of the Wiley CPA Examination Review Financial Accounting and Reporting text The new AICPA Content Specification Outlines on Financial Accounting and Reporting for the computerized CPA Examination beginning in 2012 AICPA questions released in 2012 The new task-based simulations Complete coverage of standards, especially The newest FASB accounting standards International accounting standards SEC reporting requirements The objective of this work is to provide you with the knowledge to pass the Financial Accounting and Reporting portion of the Uniform Certified Public Accounting (CPA) Exam The text is divided up into fourteen areas of study called modules Each module contains written text with discussion, examples, and demonstrations of the key exam concepts Following each text area, actual American Institute of Certified Public Accountants (AICPA) unofficial questions and answers are presented to test your knowledge We are indebted to the AICPA for permission to reproduce and adapt examination materials from past examinations Author constructed questions and simulations are provided for new areas or areas that require updating All author constructed questions and simulations are modeled after AICPA question formats The multiple-choice questions are grouped into topical areas, giving candidates a chance to assess their areas of strength and weakness Selection and inclusion of topical content is based upon current AICPA Content Specification Outlines Only testable topics are presented If the CPA exam does not test it, this text does not present it The CPA exam is one of the toughest exams you will ever take It will not be easy But if you follow our guidelines and focus on your goal, you will be thrilled with what you can accomplish Ray Whittington November 2012 ABOUT THE AUTHORS Ray Whittington, PhD, CPA, CMA, CIA, is the dean of the Driehaus College of Business at DePaul University Prior to joining the faculty at DePaul, Professor Whittington was the Director of Accountancy at San Diego State University From 1989 through 1991, he was the Director of Auditing Research for the American Institute of Certified Public Accountants (AICPA), and he previously was on the audit staff of KPMG He previously served as a member of the Auditing Standards Board of the AICPA and as a member of the Accounting and Review Services Committee and the Board of Regents of the Institute of Internal Auditors Professor Whittington has published numerous textbooks, articles, monographs, and continuing education courses Patrick R Delaney, deceased, was the dedicated author and editor of the Wiley CPA Exam Review books for twenty years He was the Arthur Andersen LLP Alumni Professor of Accountancy and Department Chair at Northern Illinois University He received his PhD in Accountancy from the University of Illinois He had public accounting experience with Arthur Andersen LLP and was coauthor of GAAP: Interpretation and Application, also published by John Wiley & Sons, Inc He served as Vice President and a member of the Illinois CPA Society’s Board of Directors, and was Chairman of its Accounting Principles Committee; was a past president of the Rockford Chapter, Institute of Management Accountants; and had served on numerous other professional committees He was a member of the American Accounting Association, American Institute of Certified Public Accountants, and Institute of Management Accountants Professor Delaney was published in The Accounting Review and was a recipient of the Illinois CPA Society’s Outstanding Educator Award, NIU’s Excellence in Teaching Award, and Lewis University’s Distinguished Alumnus Award He was involved in NIU’s CPA Review Course as director and instructor ABOUT THE CONTRIBUTOR Natalie T Churyk, PhD, CPA, is the Caterpillar Professor of Accountancy at Northern Illinois University She teaches in the undergraduate and L.M.A.S programs as well as developing and delivering continuing professional education in Northern Illinois University’s CPA Review program Professor Churyk has published in professional and academic journals She serves on state and national committees relating to education and student initiatives and is a member of several editorial review boards Professor Churyk is a coauthor on two textbooks: Accounting and Auditing Research: Tools and Strategies and Mastering the Codification and eIFRS: A Case Approach INTRODUCTION To maximize the efficiency of your review program, begin by studying (not merely reading) chapters through of this volume They have been carefully organized and written to provide you with important information to assist you in successfully completing the Financial Accounting and Reporting section of the CPA exam Beyond providing a comprehensive outline to help you organize the material tested on the Financial Accounting and Reporting section of the exam, these chapters will assist you in organizing a study program to prepare for the Financial Accounting and Reporting portion Self-discipline is essential Chapter 1: Beginning Your CPA Review Program Chapter 2: Examination Grading Chapter 3: The Solutions Approach Chapter 4: Taking the Examination Chapter 5: Exam Content Overview interfund transfers interim reporting APB 28 defined FASB Interpretation No 18 key terms segment reporting internal service funds (governmental) accounting for defined International Financial Reporting Standards (IFRS) accounting changes rules bonds business combinations and consolidations debt restructure deferred taxes derivative instruments and hedging error correction financial statements first-time adoption of foreign currency translation Framework for interim reporting inventory investments leases monetary current assets and current liabilities pensions present value revenue recognition segment reporting statement of cash flows stockholders’ equity US GAAP vs intersegment sales intrinsic value introductory section (CAFR) inventory Accounting Standards Codification consignments cost of FASB Interpretation No SFAS 151 determining determining cost of goods sold IFRS rules for intercompany transactions items to include in key terms long-term construction contracts completed-contract method contract losses percentage-of-completion on statement of cash flows pricing (ARB 43) ratios US GAAP vs IFRS rules for valuation and cost-flow methods cost apportionment by relative sales value direct (variable) costing dollar-value LIFO first-in, first-out gross profit last-in, first-out link-chain technique losses on purchase commitments lower of cost or market market moving average simple average specific identification standard costs weighted-average inventory depreciation inventory errors, correcting inventory turnover investing activities defined on statement of cash flows transactions included in investment property defined IFRS rules for investment trust funds (governmental) accounting for defined investments Accounting Standards Codification available-for-sale securities (mark-to-market) cash surrender value of life insurance cost adjusted for fair value method when significant influence does exist debt securities deferred taxes related to equity method and deferred income taxes APB 18 changes to or from FASB Interpretation No 35 when significant influence does exist equity securities fair value option governmental accounting for held by not-for-profits (SFAS 124) IFRS rules in which significant influence does exist cost adjusted for fair value method equity method in which significant influence does not exist held-to-maturity securities (amortized cost) income statement presentation trading securities (mark-to-market) transfers between categories key terms recording securities stock dividends and stock splits stock rights investments by owners, defined involuntary conversion of assets involuntary termination benefits, governmental accounting for J journal entries (bonds) L last-in, first-out (LIFO) defined dollar-value inventory lease bonus (fee) lease term lease(s) Accounting Standards Codification business combinations and consolidations capital defined direct financing disclosure requirements FASB Technical Bulletin 85-3 IFRS rules initial direct costs key terms operating sale-leaseback sales-type SFAS 13 SFAS 91 SFAS 98 software developed for study program for US GAAP vs IFRS rules for leasehold improvements length of operating cycle Level inputs Level inputs Level inputs liability method (deferred taxes) liability(-ies) contingent compensated absences defined gain contingencies loss contingencies recording and disclosing current ARB 43 contingencies defined monetary See monetary current assets and current liabilities on balance sheet types of US GAAP vs IFRS rules for deferred tax changing tax rates defined identification and measurement of on statement of cash flows scheduling and recording defined determinable disposal of (SFAS 146) environmental remediation estimated warranty liability extinguishment of (SFAS 140) financial fair value option for reporting IFRS definition of monetary nonmonetary on personal financial statments SFAS 146 share-based payments classified as LIBOR (London Interbank Offered Rate) life insurance cash surrender value of premium expense LIFO See last-in, first-out LIFO conformity rule LIFO reserve limited-use financial forecasts/projections link-chain technique (inventory) liquidating dividends liquidation(s) defined of partnership “safe payment” in installment method of cash distribution statement of partnership liquidation steps in litigation, as loss contingency loan origination costs and fees loan participations loans impairment of (SFAS 114) interfund SFAS 91 local governmental accounting See governmental (state and local) accounting long-lived assets, impairment or disposal of long-term construction contracts ARB 43 completed-contract method contract losses percentage-of-completion long-term obligations, disclosure of loss account for fixed assets loss carrybacks deferred taxes defined loss contingencies loss sharing ratio (partnerships) loss(es) defined holding nonmonetary exchanges of operating segments on fixed assets to be disposed of on inventory purchase commitments pension expense realized transaction unrecognized lower of cost or market M major customers, enterprise-wide disclosures about major funds (governmental) management approach management, defined management’s discussion and analysis (MD&A) market approach market inventory market value of bonds of pension plan assets market-related value of plan assets matching MD&A (management’s discussion and analysis) measurability measurement business combinations and consolidations for foreign currency financial statements in acquisition accounting in governmental accounting remeasurement SFAC SFAC measurement focus and basis of accounting (MFBA) milestone method minimum lease payments (MLP) modification of terms (debt restructure) modified cash-basis financial statements monetary assets and liabilities, defined monetary current assets and current liabilities Accounting Standards Codification bank reconciliations cash current liabilities contingencies types of fair value option IFRS rules for key terms ratios for receivables anticipation of sales discounts bad debts expense disclosures transfers and servicing of financial assets US GAAP vs IFRS rules for most advantageous market moving average multiple-deliverable revenue arrangements multiple-employer plan municipal bond interest income N net assets permanently restricted Statement of Changes in Fiduciary Net Assets Statement of Fiduciary Net Assets Statement of Net Assets for governmental proprietary funds public colleges and universities Statement of Revenues, Expenditures, and Changes in Net Assets (or Fund Equity) Statement of Revenues, Expenses, and Changes in Net Assets temporarily restricted unrestricted net carrying amount net cash flows net income adjustments for indirect method on income statement net investment in foreign operations initial net method defined net pension expense net periodic pension cost net periodic postretirement benefit cost net realizable (settlement) value net settlements net worth, statement of changes in noncontrolling interest acquisition accounting acquisitions SFAS 160 nonexchange revenues defined government-wide financial statements nonexchange transactions, governmental accounting for nonexpendable trust funds nonmonetary assets and liabilities, defined nonmonetary exchanges defined fixed assets SFAS 153 nonmonetary transactions (APB 29) nonprofit organizations See not-for-profit accounting nonreciprocal transfer nonrefundable security deposits (leases) nonretirement postemployment benefits nonspendable fund balances notes payable and receivable exchanged for cash and unstated rights and privileges exchanged for cash only exchanged in a noncash transaction present value of notes to financial statements changes in accounting principles governmental accounting not-for-profit accounting governmental nonprofits GASB provisions for health care organizations key terms mergers and acquisitions private sector nonprofits See also not-for-profit accounting college and university accounting FASB and AICPA standards for health care organization accounting SFAS 116 SFAS 117 SFAS 124 SFAS 164 notional amount number of days’ sales in average receivables number of days’ supply in average inventory O objectives (of financial reporting) observable inputs OCBOA (other comprehensive basis of accounting) OPEB See postretirement benefits other than pensions operating activities defined on statement of cash flows transactions included in operating cycle operating leases business combinations and consolidations defined operating profit or loss (segment) operating segments defined segment reporting operation efficiency operational efficiency ratios operations, reporting results of APB APB 30 ordinary annuity future value of present value of other comprehensive basis of accounting (OCBOA) other comprehensive income accumulated earnings per share on on financial statements on income statement other supplementary information (general-purpose governmental units) out of the money outflows of cash ownership of goods P par value method defined of stock dividends treasury stock transactions partial equity method participating interests accounting for transfers of receivables participating share (preferred stock) partnership accounting allocation of partnership income (loss) dissolution of partnership (changes in ownership) formation of partnership incorporation of partnerships key terms liquidation of partnership payables, interest on (APB 21) PBO See projected benefit obligation PCs (purchase commitments) penalty payments pension (and other employee benefit) trust funds (governmental) accounting for defined pension benefits defined SFAS 132 (revised) pension cost (term) pensions Accounting Standards Codification deferred compensation determination of pension expense disclosures for employer sponsor’s vs plan’s accounting and reporting employer’s accounting for funded status of plans IFRS rules for key terms nonretirement postemployment benefits postretirement benefits other than pensions reconciling projected benefit obligation SFAS 87 percentage-of-completion defined long-term construction contracts period costs periodic system period-specific effects, of new accounting principles permanent differences (deferred taxes) permanent funds (governmental) accounting for classification of defined GASB definition of permanently restricted net assets permanently restricted resources perpetual system personal financial statements assets and liabilities on business interests on personal property taxes (ARB 43) physical capital physical usage depreciation plan amendment plan assets (pensions) actual return on defined fair value and market value of plant assets plant, property, and equipment (PPE) and first-time adoption of IFRS defined fixed assets pledges of receivables, governmental accounting for pollution remediation obligations, governmental accounting for postemployment benefits (SFAS 112) postretirement benefits other than pensions (OPEB) governmental accounting for SFAS 106 SFAS 132 (revised) SFAS 158 PPE See plant, property, and equipment predictive value preferred stock IFRS rules redeemable redemption of stockholders’ equity premiums defined life insurance on forward contracts prepaid insurance present value (PV) Accounting Standards Codification bonds accounting for Accounting Standards Codification bonds payable and bond investments convertible debt issued with detachable purchase warrants effective interest vs straight-line amortization methods extinguishment of debt IFRS rules for journal entries key terms debt restructure Accounting Standards Codification IFRS rules for impairment key terms modification of terms settlement of debt defined disclosures fair value option IFRS rules for key terms leases Accounting Standards Codification capital direct financing disclosure requirements IFRS rules initial direct costs operating sale-leaseback sales-type study program for loan origination costs and fees nonretirement postemployment benefits notes receivable and payable of a future amount of an ordinary annuity of future cash flows partnership assets pensions Accounting Standards Codification deferred compensation determination of pension expense disclosures for employer sponsor’s vs plan’s accounting and reporting employer’s accounting for funded status of plans IFRS rules for key terms nonretirement postemployment benefits postretirement benefits other than pensions reconciling projected benefit obligation time value of money factors present value of an ordinary annuity primary beneficiary defined of variable interest entities primary government principal market principle owners prior period adjustments (SFAS 16) prior service costs or credit private sector nonprofits college and university accounting FASB and AICPA standards for financial statements for health care organization accounting illustrative transactions of private-purpose trust funds (governmental) accounting for classification of defined privileges, unstated probable events product costs productive assets products, enterprise-wide disclosures about profit (of operating segments) profit centers profit sharing ratio (partnerships) projected benefit obligation (PBO) defined interest on reconciling proof of cash property dividends property taxes (ARB 43) proprietary funds (governmental) accounting for defined financial statements for prospective application prospective financial information defined on financial statements public colleges and universities, governmental accounting for purchase commitments (PCs) purchase groups of (basket purchase) push-down accounting put option PV See present value Q quasi reorganizations ARB 43 defined stockholders’ equity R quick ratio R&D See research and development rate of return on common stockholders’ equity rational depreciation ratios for stockholders’ equity inventory monetary current assets and current liabilities RE (retained earnings) reacquired rights reacquisition price real estate transactions sales (SFAS 66) time sharing (SFAS 152) real property taxes (ARB 43) realization realized gains holding gains on income statement realized income realized loss on available-for-sale securities on income statement reasonably possible events receivables interest on (APB 21) monetary current assets and current liabilities anticipation of sales discounts bad debts expense disclosures transfers and servicing of pledges of receivables turnover reclassification adjustments recognition See also revenue recognition accrual-basis business combinations and consolidations cash-basis cost recovery method defined franchise agreements IFRS in acquisition accounting installment sales of goodwill postretirement benefits principles for real estate transactions research or development on milestone basis sales basis SFAC US GAAP vs IFRS rules for reconciliations (segment reporting) recorded investment recording of contingent liabilities securities redeemable preferred stock redemption (of preferred stock) reduced profit method refinancing (SFAS 6) refunding Regulation AB Regulation Fair Disclosure (FD) Regulation S-K Regulation S-X regulatory-basis financial statements reimbursements governmental nonexchange transactions interfund related parties related-party transactions disclosure of (SFAS 57) governmental accounting for relative sales value, cost apportionment by relevance reliability remainder (partnerships) remeasurement defined for foreign currency financial statements remote events reorganizations and stockholders’ equity quasi reportable segments reporting See also International Financial Reporting Standards (IFRS) changes in fair value option for bonds defined investments monetary current assets and current liabilities present value SFAS 159 financial GASB Concepts Statement No SFAC SFAS 89 interim APB 28 defined FASB Interpretation No 18 key terms segment reporting of comprehensive income of start-up costs results of operations APB APB 30 SEC requirements financial statements Form 8-K Form 8-K/6-K Form 10-K Form 10-K/20-F Form 10-Q Form S-1/F-1 Regulation AB Regulation Fair Disclosure Regulation S-K Regulation S-X Schedule 14A segment Accounting Standards Codification disclosures enterprise-wide disclosures IFRS standards for operating segments restatement of previously reported segment information SFAS 131 reporting currency See also foreign currency translation reporting entities changes in GASB definition of governmental accounting reporting model (governmental accounting) repurchase agreements required supplementary information (RSI) requisite service period (share-based payments) research and development (R&D) costs of SFAS research or development accounted for on milestone basis reserves, appropriations of residual (partnerships) residual value responsible party restatements restricted fund balances restructuring retained earnings (RE) retained earnings statement deferred taxes on formats for retirement of stock retroactive allowance (pensions) retrospective application revaluation model (intangible assets) revenue expenditures defined fixed assets revenue recognition accrual-basis adjustment of cash-basis cost recovery method franchise agreements IFRS for installment sales multiple-deliverable revenue arrangements principles for real estate transactions research or development on milestone basis sales basis software revenue US GAAP vs IFRS rules for when right of return exists (SFAS 48) revenue(s) consolidated defined derived tax business combinations measurement period governmental exchange transactions exchange defined government revenues from government-wide financial statements franchise fee (SFAS 45) from major customers future governmental (state and local) accounting for sales and pledges of receivables and future revenues for special revenue funds See also special revenue funds (governmental) interim reporting of multiple-deliverable revenue arrangements nonexchange recognizing segment unearned rent (royalty) revenue-expense view right of offset rights unstated risk adverse risk premiums risk(s) defined on financial statements RSI (required supplementary information) S “safe payment” (liquidation of partnership) sale(s) governmental accounting for installment of fixed assets, gain on of real estate (SFAS 66) software developed for sale-leaseback sales basis sales discounts, anticipation of sales-type leases SAR (stock appreciation rights) Schedule 14A scrip dividends SEA (service efforts and accomplishments) reporting SEC reporting requirements financial statements Form 8-K Form 8-K/6-K Form 10-K Form 10-K/20-F Form 10-Q Form S-1/F-1 Regulation AB Regulation Fair Disclosure Regulation S-K Regulation S-X Schedule 14A secured borrowings defined receivables securities See also specific types (e.g.: debt securities) on balance sheets recording securitizations defined receivables security deposits (leases) segment assets segment operating profit or loss segment reporting Accounting Standards Codification disclosures enterprise-wide disclosures IFRS standards for operating segments restatement of previously reported segment information SFAS 131 segment revenues separable serial bonds service concession arrangements, governmental accounting for service cost defined of net periodic pension cost pension expense service efforts and accomplishments (SEA) reporting service inception date (share-based payments) services enterprise-wide disclosures about interfund services provided and used servicing defined servicing of financial assets receivables SFAS 140 SFAS 156 settlement defined in debt restructure SFAS 88 settlement amount settlement rate (projected benefit obligation) SFAC See Statements of Financial Accounting Concepts SFAS See Statements of Financial Accounting Standards share-based payments business combinations and consolidations defined IFRS rules SFAS 123 (revised) stockholders’ equity accounting entries for diluted earnings per share earnings per share to employees to nonemployees shareholder equity accounts (APB 12) short-term obligations FASB Interpretation No SFAS simple average simple liquidation single-employer plan software costs of developed for internal use developed for sale or lease SFAS 86 software revenue recognition solvency solvency ratios special assessments, governmental accounting for special items, on government-wide financial statements special revenue funds (governmental) accounting for budgetary accounting for classification of defined GASB definition of special-purpose entities special-purpose governments specific identification defined inventory split See also stock splits split-interest agreements standard costs start-up costs defined fixed assets reporting state bond interest income state governmental accounting See governmental (state and local) accounting Statement of Activities statement of affairs statement of cash flows Accounting Standards Codification capital leases classification of transactions defined example of financing activities on for governmental proprietary funds for private sector nonprofits IFRS rules for investing activities on key terms objectives of operating activities on public colleges and universities SFAC SFAS 95 Statement of Changes in Fiduciary Net Assets statement of changes in net worth statement of comprehensive income, IFRS rules for Statement of Earnings and Comprehensive Income (SFAC 5) Statement of Fiduciary Net Assets statement of financial condition Statement of Financial Position for private sector nonprofits SFAC Statement of Investments by and Distributions to Owners (SFAC 5) Statement of Net Assets for governmental proprietary funds public colleges and universities statement of partnership liquidation Statement of Revenues, Expenditures, and Changes in Fund Balances Statement of Revenues, Expenditures, and Changes in Net Assets (or Fund Equity) Statement of Revenues, Expenses, and Changes in Net Assets Statements of Financial Accounting Concepts (SFAC) SFAC SFAC SFAC SFAC SFAC SFAC Statements of Financial Accounting Standards (SFAS) for private sector nonprofits SFAS SFAS SFAS SFAS SFAS 13 SFAS 15 SFAS 16 SFAS 34 SFAS 43 SFAS 45 SFAS 47 SFAS 48 SFAS 52 SFAS 57 SFAS 66 SFAS 78 SFAS 84 SFAS 86 SFAS 87 SFAS 88 SFAS 89 SFAS 91 SFAS 94 SFAS 95 SFAS 98 SFAS 106 SFAS 107 SFAS 109 SFAS 112 SFAS 114 SFAS 115 SFAS 116 SFAS 117 SFAS 123 SFAS 124 SFAS 128 SFAS 129 SFAS 130 SFAS 131 SFAS 132 (revised) SFAS 133 SFAS 138 SFAS 140 SFAS 141(R) SFAS 142 SFAS 143 SFAS 144 SFAS 145 SFAS 146 SFAS 147 SFAS 149 SFAS 150 SFAS 151 SFAS 152 SFAS 153 SFAS 154 SFAS 155 SFAS 156 SFAS 157 SFAS 158 SFAS 159 SFAS 160 SFAS 161 SFAS 162 SFAS 163 SFAS 164 SFAS 165 SFAS 166 SFAS 167 SFAS 168 Statements of Financial Position See also balance sheets Statements of Position (SOP) No 96-1 statistical section (CAFR) step acquisition stock See also dividends appreciation rights (SAR) callable common book value of contingent issuances of rate of return on common stockholders’ equity stockholders’ equity convertible employee stock ownership plans preferred IFRS rules redeemable redemption of stockholders’ equity retirement of stock appreciation rights treasury ARB 43 defined stockholders’ equity stock appreciation rights (SAR) stock rights investments stockholders’ equity stock splits ARB 43 defined investments stockholders’ equity stock subscriptions stockholders’ equity accounting standards codification appropriations of retained earnings (reserves) common stock corporate bankruptcy defined dividends employee stock ownership plans IFRS rules key terms preferred stock quasi reorganizations ratios for reorganizations retirement of stock share-based payments accounting entries for diluted earnings per share earnings per share stock rights stock splits stock subscriptions treasury stock transactions straight-line amortization method bonds pensions straight-line depreciation subsequent events defined governmental accounting for on financial statements SFAS 165 substantive pension plans summarized interim data Summary of Significant Accounting Policies swap swaption systematic depreciation systematic risk T tangible property tax loss carryforwards deferred taxes defined tax rates for deferred tax assets and liabilities taxable amounts (deferred taxes) tax-basis financial statements taxes current tax expense or benefit deferred See deferred taxes income See income taxes property (ARB 43) temporarily restricted net assets temporarily restricted resources temporary differences deferred taxes defined term bonds termination benefits termination costs (operating leases) theory(-ies) theory time requirements, for governmental nonexchange transactions time value of money factors (TVMF) annuities due applications of compounding future value of an amount future value of an ordinary annuity present value of a future amount present value of an ordinary annuity time value of options timelines trade discounts trading securities (mark-to-market) defined investments in which significant influence does not exist other securities transferred from/to unrealized gain on transaction gain or loss transactions defined of private sector nonprofits transfer of assets business combinations and consolidations SFAS 140 SFAS 166 transfer pricing (intersegment sales) transfers of receivables accounting for accounting for collateral factoring participating interests secured borrowings securitizations types of with recourse without recourse transfers, interfund transition asset transition obligation translation adjustments treasury stock ARB 43 defined stockholders’ equity troubled debt restructuring trusts financial statements of U unamortized prior service cost or credit unassigned fund balance uncertainty(ies) and risk defined on financial statements unconditional purchase obligations underlyings understandability unearned rent (royalty) revenue uneven payments (leases) unfunded projected benefit obligation unguaranteed residual value Uniform CPA Examination applying to take attributes for success in taking content of Content Specification Outlines for grading of nondisclosure and computerization of obtaining Notice to Schedule planning for process for sitting for purpose of researching FASB accounting standards self-study program for Skill Specification Outlines for solutions approach to strategy for taking types of questions on university accounting See college and university accounting unrealized gains holding gains on trading securities unrecognized net gain or loss unrecognized transition asset unrecognized transition obligation unrestricted net assets unrestricted resources unstated rights or privileges (APB 21) unsystematic risk unusual items APB 30 defined on financial statements US GAAP US Securities and Exchange Commission See SEC reporting requirements V valuation allowances (business combinations and consolidations) variable interest entities (VIEs) defined FASB Interpretation No 46 verifiability vested benefit obligation VIEs See variable interest entities voluntary nonexchange transactions voluntary termination benefits W warrant defined detachable, debt issued with weighted-average working capital (APB 10) worksheets (consolidated financial statements) written pension plans ... APB, and FASB Pronouncements Appendices Appendix A: Financial Accounting and Reporting Sample Examination Appendix B: Sample Financial Accounting and Reporting Testlet Released by the AICPA Appendix... to examination success Here is a list of what’s new in this edition of the Wiley CPA Examination Review Financial Accounting and Reporting text The new AICPA Content Specification Outlines on Financial. .. Fasb Accounting Standards Financial Accounting and Reporting Module 9: Basic Theory and Financial Reporting Module 10: Inventory Module 11: Fixed Assets Module 12: Monetary Current Assets and