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AICPA Financial Accounting and Reporting - Additional Information

At ExamEdge.com, we focus on making our clients' career dreams come true by offering world-class practice tests designed to cover the same topics and content areas tested on the actual American Institute of Certified Public Accountants AICPA Financial Accounting and Reporting (FAR) Certification Exam. Our comprehensive AICPA Financial Accounting and Reporting practice tests are designed to mimic the actual exam. You will gain an understanding of the types of questions and information you will encounter when you take your American Institute of Certified Public Accountants AICPA Financial Accounting and Reporting Certification Exam. Our AICPA Financial Accounting and Reporting Practice Tests allow you to review your answers and identify areas of improvement so you will be fully prepared for the upcoming exam and walk out of the test feeling confident in your results.

Because our practice tests are web-based, there is no software to install and no need to wait for a shipment to arrive to start studying. Your AICPA Financial Accounting and Reporting practice tests are available to you anytime from anywhere on any device, allowing you to study when it works best for you. There are 5 practice tests available, each with 100 questions and detailed explanations to help you study. Every exam is designed to cover all of the aspects of the AICPA FAR exam, ensuring you have the knowledge you need to be successful!


AICPA Financial Accounting and Reporting - Additional Info Sample Questions

Working capital ratio is the difference between current assets and current liabilities.  Which of the following is NOT a Current liability?





Correct Answer:
marketable securities


the question involves identifying which item listed is not a current liability. current liabilities are financial obligations a company needs to settle within one year or within its operating cycle, whichever is longer. these include accounts payable, short-term notes payable, current maturities of long-term debt, unearned revenue, and other accrued liabilities.

accounts payable represents money owed by a company to its suppliers or creditors for goods or services received that have not yet been paid for. short-term notes payable are obligations due within one year, typically involving borrowed funds. current maturities of long-term debt refer to the portion of a long-term debt that is due within the next year. unearned revenue pertains to money received by a company for goods or services yet to be delivered or performed, which is considered a liability until the service or product is delivered.

in contrast, marketable securities are investment assets that are liquid and can be quickly converted into cash at a known value. they are typically held as part of a company’s current assets and not liabilities. examples of marketable securities include stocks, bonds, and treasury bills. these are intended either for short-term profit on trading or for temporary investment of idle cash.

therefore, the correct answer to the question is marketable securities, as they do not represent a liability but rather an asset. understanding the distinction between types of assets and liabilities is crucial for accurately interpreting a company’s financial health through metrics like the working capital ratio, which is calculated as current assets minus current liabilities. this ratio provides insight into a company’s operational efficiency and short-term financial health.

Which of the following is an example of disaggregated data that a CPA is required to compare in a review of interim financial information for an issuer?





Correct Answer:
disaggregated revenue data for the current interim period with that of comparable prior periods


the correct choice among the listed options is: "disaggregated revenue data for the current interim period with that of comparable prior periods". this option correctly identifies the type of data comparison that a certified public accountant (cpa) is required to perform during a review of interim financial information for an issuer.

disaggregated data refers to financial data that has been broken down into more specific, detailed components. this could include categorizations such as revenue by product line, geographic region, or customer type. the purpose of disaggregating data is to provide a clearer insight into the specific areas of business performance, thereby aiding more informed decision-making and providing a clearer picture of where changes or improvements may be necessary.

in the context of an interim financial review, cpas are required to compare current interim period data with that of comparable prior periods, using disaggregated data. this comparison helps in understanding trends, detecting inconsistencies, or identifying areas of concern that may require further investigation. for instance, if revenue by product line for a current quarter shows a significant deviation from the same quarter in the previous year, it could signal issues like changes in consumer preference, increased competition, or operational challenges.

comparing disaggregated data is a form of analytical procedure, which is a key aspect of conducting financial reviews. analytical procedures involve the evaluation of financial information through analysis of plausible relationships among both financial and non-financial data. these procedures often include comparison of recorded amounts to expectations derived from other information.

benchmarking, which involves comparing financial metrics against industry standards or peers, is another analytical procedure, but it is not a mandatory requirement in a review. it is more of an optional tool that can provide additional insights and comparative analysis, helping to position the company within the industry landscape.

therefore, the necessity lies in the comparison of disaggregated revenue data for the current interim period with that of comparable prior periods. such analysis is essential for a thorough review and provides crucial insights into the company's operational performance and financial health during the interim period.