PART II: AREA I – FINANCIAL REPORTING

In this section

• Chapter 3: General Purpose Financial Reporting for For-Profit Entities
  • Comprehensive Review of the Balance Sheet (Statement of Financial Position)
    Dive into the classification, measurement, and presentation requirements of the statement of financial position, including best practices and typical disclosures, essential for success on the FAR exam.
  • Income Statement: Single-Step vs. Multi-Step Formats
    Discover the core distinctions between single-step and multi-step income statements, emphasizing the importance of operating vs. nonoperating items, and where various revenues and expenses are reported.
  • Statement of Comprehensive Income (OCI Components and Presentation)
    A comprehensive exploration of Other Comprehensive Income (OCI) items, reclassification adjustments, and the presentation of total comprehensive income under U.S. GAAP, including illustrative examples and best practices.
  • Statement of Changes in Equity (Share Capital, Retained Earnings, Other Equity Items)
    Explore the components of equity—share capital, retained earnings, additional paid-in capital, and AOCI—and learn how to prepare and interpret the Statement of Changes in Equity, focusing on common transactions like share issuances, repurchases, dividends, and accumulated other comprehensive income entries.
  • Statement of Cash Flows (Operating, Investing, Financing; Indirect/Direct Methods)
    Learn the ins and outs of the Statement of Cash Flows, including the direct and indirect methods, operating vs. investing vs. financing classifications, and common reconciliation practices. Perfect your FAR knowledge and prepare for the CPA Exam with illustrative case studies, diagrams, and best practices.
  • Notes to the Financial Statements (Policies, Related Party Disclosures)
    Explore key components of significant accounting policies, related party transactions, and essential footnote disclosures that enhance transparency and support the integrity of financial statements.
  • Advanced Illustrative Examples and Critical Issues for For-Profit Entities
    Explore comprehensive case studies, multi-entity structures, and advanced transactions in for-profit financial reporting, emphasizing the synergy among core financial statements and vital disclosures.
• Chapter 4: Financial Reporting for Nongovernmental Not-for-Profit Entities
  • Overview of Not-for-Profit Accounting and Governing Principles
    Discover the unique environment of not-for-profit accounting, including stakeholder expectations, specialized standards under FASB ASC 958, and net asset classifications crucial for mission-driven financial reporting.
  • Statement of Financial Position (Net Assets: With/Without Donor Restrictions)
    Explore how not-for-profit organizations classify and present net assets with and without donor restrictions, including reclassification guidelines when donor restrictions expire. Discover best practices for SoFP disclosures and essential insights into FASB ASC 958 compliance.
  • Statement of Activities (Classification of Revenues, Expenses, Support)
    Explore the comprehensive presentation of revenues, expenses, and support under the Statement of Activities for nongovernmental not-for-profit entities, including the classification of donor restrictions, contributions, grants, and program service revenue.
  • Statement of Cash Flows (Direct vs. Indirect Methods) for Not-for-Profit Entities
    Explore how not-for-profit organizations apply direct and indirect methods when preparing the statement of cash flows, focusing on the distinct treatment of pledges, donor contributions, and restricted funds.
  • Functional Expense Reporting (By Nature and Function)
    Learn how not-for-profit entities classify expenses by nature and function, create matrix-based disclosures, and comply with GAAP requirements for functional expense reporting.
  • Disclosures and Special Topics in Not-for-Profit Accounting
    Comprehensive guide to NFP specialized disclosures, including endowment funds, underwater endowments, donor restrictions, and advanced split-interest agreements.
• Chapter 5: State and Local Government Concepts (Expanded Coverage)
  • Measurement Focus and Basis of Accounting (Current vs. Economic Resources)
    Explore the key principles of measurement focus and basis of accounting in state and local government reporting, distinguishing how current financial resources and the economic resources measurement focus affect the recognition and reporting of transactions.
  • Governmental, Proprietary, Fiduciary Funds (Types and Major vs. Nonmajor Funds)
    Discover essential insights into the classification of state and local government funds, including Governmental, Proprietary, and Fiduciary funds. Learn how to identify Major vs. Nonmajor funds, understand their reporting significance, and explore real-world examples for effective financial statement preparation.
  • Government-Wide vs. Fund-Level Statements and Required Reconciliations
    Explore how government-wide and fund-level statements differ, and learn step-by-step reconciliation techniques for state and local governments, highlighting best practices and avoiding common pitfalls.
  • Budgetary Accounting, Encumbrances, and Appropriations
    Explore the foundational concepts of budgetary accounting, encumbrances, and appropriations for state and local governments, including how budgets are recorded and the differences between appropriations and actual expenditures.
  • MD&A Requirements, Required Supplementary Information (RSI)
    Comprehensive guidance on state and local government MD&A, RSI requirements, budgeting comparisons, and pension disclosures, fulfilling key GASB mandates.
  • Illustrative Examples (Basic Transactions and Sample Disclosures)
    Comprehensive government accounting illustrations covering property tax levies, bond issuance, intergovernmental grants, and related disclosures.
• Chapter 6: Public Company Reporting Topics
  • SEC Regulatory Environment (Securities Exchange Act of 1934)
    Explore the comprehensive landscape of the Securities Exchange Act of 1934, the SEC's regulatory framework, and its integration with FASB standards, ensuring transparent and trustworthy public company reporting.
  • Interim Reporting and Required Disclosures
    Discover how interim financials differ from annual statements and explore special rules for income tax accruals, extraordinary items, and adjustments.
  • Annual Filings and Form 10-K/10-Q/8-K Requirements
    Explore the SEC reporting framework for public companies, including key deadlines, critical disclosures, and how material events and guidance updates are communicated through Forms 10-K, 10-Q, and 8-K.
  • Earnings per Share (Basic and Diluted Calculation)
    Learn how to calculate and present Basic and Diluted Earnings Per Share (EPS), including handling of common share equivalents, convertible debt/preferred stock, and distinctions between continuing operations and net income.
  • Segment Reporting (Identifying Reportable Segments, Disclosure Requirements)
    A comprehensive guide to identifying and disclosing reportable segments under US GAAP, detailing quantitative thresholds, reconciliation requirements, and best practices.
• Chapter 7: Special Purpose Frameworks
  • Cash-Basis and Modified Cash-Basis Financial Statements
    Explore how transactions are recognized under pure cash-basis and modified cash-basis frameworks, including best practices, examples, and a deep dive into partial accrual aspects.
  • Tax-Basis Financial Statements (Common Adjustments vs. GAAP)
    Learn how to reconcile GAAP financial statements to tax-basis statements, exploring key adjustments involving depreciation methods, timing differences, and common pitfalls for CPAs.
  • Other Regulatory or Contractual-Basis Financial Statements
    Explore specialized accounting frameworks required by regulators or contractual agreements, unraveling the unique rules, reporting formats, and best practices for organizations operating outside traditional GAAP.
  • Reporting and Compilation Considerations
    An in-depth exploration of compilation and reporting considerations for accountants when preparing financial statements under special purpose frameworks, with emphasis on disclaimers, modifications, and professional responsibilities.
• Chapter 8: Financial Statement Analysis, Ratios, and Performance Metrics
  • Horizontal and Vertical Analysis Techniques
    Explore the fundamentals of horizontal and vertical analysis, key comparative techniques for financial statement analysis essential to the FAR section of the CPA Exam.
  • Profitability Ratios (Gross Margin, ROE, ROA, etc.)
    Explore essential profitability ratios—from Gross Margin to Return on Equity and Return on Assets—understanding their formulas, interpretations, and real-world applications.
  • Liquidity Ratios (Current, Quick, Receivables, Inventory Turnover)
    Learn how to evaluate a company's short-term financial solvency using the major liquidity ratios, including the Current, Quick, Receivables Turnover, and Inventory Turnover, with real-world examples and best practices.
  • Solvency Ratios (Debt to Equity, Times Interest Earned)
    Learn how Debt to Equity and Times Interest Earned ratios measure a company's long-term solvency and financial stability. This in-depth analysis discusses capital structure impacts, interest coverage, and best practices for evaluating financial risk.
  • Non-GAAP Measures and Non-Financial Indicators
    Explore adjusted EBITDA, free cash flow, and intangible performance metrics, and learn how non-GAAP measures offer deeper insights into organizational performance while requiring critical analysis to avoid misinterpretation.