About Me
CPA
1 Regulation (REG)
1.1 Ethics, Professional Responsibilities, and Federal Tax Procedures
1.1 1 Professional ethics and responsibilities
1.1 2 Federal tax procedures and practices
1.1 3 Circular 230
1.2 Business Law
1.2 1 Legal rights, duties, and liabilities of entities
1.2 2 Contracts and sales
1.2 3 Property and bailments
1.2 4 Agency and employment
1.2 5 Business organizations
1.2 6 Bankruptcy
1.2 7 Secured transactions
1.3 Federal Taxation of Property Transactions
1.3 1 Basis determination and adjustments
1.3 2 Gains and losses from property transactions
1.3 3 Like-kind exchanges
1.3 4 Depreciation, amortization, and depletion
1.3 5 Installment sales
1.3 6 Capital gains and losses
1.3 7 Nontaxable exchanges
1.4 Federal Taxation of Individuals
1.4 1 Gross income inclusions and exclusions
1.4 2 Adjustments to income
1.4 3 Itemized deductions and standard deduction
1.4 4 Personal and dependency exemptions
1.4 5 Tax credits
1.4 6 Taxation of individuals with multiple jobs
1.4 7 Taxation of nonresident aliens
1.4 8 Alternative minimum tax
1.5 Federal Taxation of Entities
1.5 1 Taxation of C corporations
1.5 2 Taxation of S corporations
1.5 3 Taxation of partnerships
1.5 4 Taxation of trusts and estates
1.5 5 Taxation of international transactions
2 Financial Accounting and Reporting (FAR)
2.1 Conceptual Framework, Standard-Setting, and Financial Reporting
2.1 1 Financial reporting framework
2.1 2 Financial statement elements
2.1 3 Financial statement presentation
2.1 4 Accounting standards and standard-setting
2.2 Select Financial Statement Accounts
2.2 1 Revenue recognition
2.2 2 Inventory
2.2 3 Property, plant, and equipment
2.2 4 Intangible assets
2.2 5 Liabilities
2.2 6 Equity
2.2 7 Compensation and benefits
2.3 Specific Transactions, Events, and Disclosures
2.3 1 Leases
2.3 2 Income taxes
2.3 3 Pensions and other post-retirement benefits
2.3 4 Derivatives and hedging
2.3 5 Business combinations and consolidations
2.3 6 Foreign currency transactions and translations
2.3 7 Interim financial reporting
2.4 Governmental Accounting and Not-for-Profit Accounting
2.4 1 Governmental accounting principles
2.4 2 Governmental financial statements
2.4 3 Not-for-profit accounting principles
2.4 4 Not-for-profit financial statements
3 Auditing and Attestation (AUD)
3.1 Engagement Planning and Risk Assessment
3.1 1 Engagement acceptance and continuance
3.1 2 Understanding the entity and its environment
3.1 3 Risk assessment procedures
3.1 4 Internal control
3.2 Performing Audit Procedures and Evaluating Evidence
3.2 1 Audit evidence
3.2 2 Audit procedures
3.2 3 Analytical procedures
3.2 4 Substantive tests of transactions
3.2 5 Tests of details of balances
3.3 Reporting on Financial Statements
3.3 1 Audit report content
3.3 2 Types of audit reports
3.3 3 Other information in documents containing audited financial statements
3.4 Other Attestation and Assurance Engagements
3.4 1 Types of attestation engagements
3.4 2 Standards for attestation engagements
3.4 3 Reporting on attestation engagements
4 Business Environment and Concepts (BEC)
4.1 Corporate Governance
4.1 1 Internal controls and risk assessment
4.1 2 Code of conduct and ethics
4.1 3 Corporate governance frameworks
4.2 Economic Concepts
4.2 1 Microeconomics
4.2 2 Macroeconomics
4.2 3 Financial risk management
4.3 Financial Management
4.3 1 Capital budgeting
4.3 2 Cost measurement and allocation
4.3 3 Working capital management
4.3 4 Financial statement analysis
4.4 Information Technology
4.4 1 IT controls and security
4.4 2 Data analytics
4.4 3 Enterprise resource planning (ERP) systems
4.5 Operations Management
4.5 1 Strategic planning
4.5 2 Project management
4.5 3 Quality management
4.5 4 Supply chain management
2 3 Specific Transactions, Events, and Disclosures Explained

3 Specific Transactions, Events, and Disclosures Explained

Key Concepts

Recognition of Transactions

Recognition of transactions involves identifying and recording business events that have a financial impact on the company. These events must meet the criteria for recognition, which includes being reliably measurable and having a future economic benefit.

Example: A company receives an order for goods. The transaction is recognized when the goods are shipped and the risk of ownership transfers to the customer.

Measurement of Transactions

Measurement of transactions refers to the process of determining the monetary value of recognized transactions. This involves selecting appropriate accounting policies and applying them consistently.

Example: A company sells goods for $1,000. The cost of goods sold is $600. The measurement of this transaction results in a revenue of $1,000 and an expense of $600, leading to a gross profit of $400.

Disclosure Requirements

Disclosure requirements dictate the information that must be provided in financial statements to ensure transparency and comparability. This includes both quantitative and qualitative information.

Example: A company must disclose its revenue recognition policy, including the methods used and any significant judgments made in determining revenue.

Non-Recurring Events

Non-recurring events are unusual or infrequent occurrences that have a significant impact on the financial statements. These events are typically disclosed separately to highlight their impact.

Example: A company incurs a one-time loss from a natural disaster. This event is disclosed separately in the financial statements to clearly show its impact on the company's financial position.

Materiality

Materiality refers to the importance of an item or event to the financial statements. Items that are material must be disclosed accurately and prominently, while immaterial items can be aggregated or omitted.

Example: A small adjustment to inventory valuation that does not significantly impact the financial statements is considered immaterial and may not require separate disclosure.

Examples and Analogies

Consider recognition of transactions as "capturing moments" in the life of a business. Measurement is like "weighing" the impact of these moments to determine their financial value.

Disclosure requirements are akin to "telling the full story" in financial statements, ensuring that all relevant information is communicated.

Non-recurring events are like "storms" that temporarily disrupt the business, requiring special attention in the financial reporting.

Materiality is the "filter" that determines which details are crucial to the story and which can be summarized or left out.

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