Home / Flashcard library / Careers & certifications / CPA Exam (core) / Framework, Revenue & Financial Statements

Careers & certifications

CPA FAR — Framework, Revenue & Financial Statements flashcards

10 of 65 cards free to study here · 9 topics · the whole deck is built into Willys

Conceptual framework, statement presentation and cash flow classification, ASC 606 revenue, inventory, PP&E, intangibles and goodwill impairment, accounting changes and subsequent events for the FAR section of the CPA Exam.

Get the app All CPA Exam (core) decks

Learn deck · part of CPA Exam (core) · written against: AICPA CPA Exam Blueprints under CPA Evolution (2024 core: FAR, AUD, REG); no year-indexed tax figures. Updated 2026-10-10.

Study the free sample

10 cards from the deck as they are. Flip, rate yourself, filter by topic; your progress stays in this browser.

The 10 sample cards as a list
  1. What are the two fundamental qualitative characteristics of useful financial information in the FASB conceptual framework?
    Relevance and faithful representation. Information needs both to be useful; the enhancing characteristics only add to information that already has them.
    Conceptual Framework
  2. Which four enhancing qualitative characteristics make relevant, faithfully represented information more useful?
    Comparability, verifiability, timeliness and understandability. None of them can make information useful if it is irrelevant or not faithfully represented.
    Conceptual Framework
  3. When is an asset classified as current on a classified balance sheet?
    When it is expected to be realized in cash, sold or consumed within one year or the operating cycle, whichever is longer.
    Financial Statements
  4. Under US GAAP, how are interest paid, interest received and dividends received classified on the statement of cash flows?
    All three are operating activities.

    Watch out: dividends paid are a financing activity.
    Cash Flows
  5. In a period of rising prices, which cost-flow method gives the highest ending inventory and highest net income?
    FIFO — the oldest, cheapest costs go to cost of goods sold, and the newest, higher costs stay in ending inventory.
    Inventory
  6. Which costs are capitalized as part of a new machine's cost?
    All costs necessary to get the asset ready for its intended use: purchase price (net of discounts), sales tax, freight, insurance in transit, installation and testing.

    Watch out: repairing damage that occurred in transit is expensed.
    PP&E
  7. Does a public business entity amortize goodwill?
    No. Goodwill is tested for impairment at the reporting unit level at least annually (and between tests when a triggering event occurs).

    Watch out: private companies may elect to amortize goodwill, generally over 10 years or less.
    Intangibles & Goodwill
  8. What are the five steps of revenue recognition under ASC 606?
    • 1 identify the contract,
    • 2 identify the performance obligations,
    • 3 determine the transaction price,
    • 4 allocate the price to the obligations,
    • 5 recognize revenue when (or as) each obligation is satisfied.
    Revenue Recognition
  9. A company switches inventory costing from FIFO to weighted average. How is the change reported?
    As a change in accounting principle applied retrospectively — prior periods presented are adjusted as if the new method had always been used, with the cumulative effect in opening retained earnings of the earliest period.
    Accounting Changes
  10. After year-end but before the statements are issued, a major customer files for bankruptcy because of financial problems that existed for months. How is this handled?
    It is a recognized subsequent event — the condition existed at the balance sheet date, so the allowance for credit losses is adjusted in the year-end statements.
    Subsequent Events

Unlock the whole deck

You are studying a free 10-card sample. All 65 cards of CPA FAR — Framework, Revenue & Financial Statements, the other 6 CPA Exam (core) decks, and spaced-repetition scheduling are built into Willys. 14-day free trial, then $14.99 a year.

Get the app

In Willys, tap Exam Library at the top of your Decks (or Browse Exam Library… under the + button), find the exam on its shelf or by search, tick it and tap Add.

More CPA Exam (core) decks

Liabilities, Leases, Equity & GovernmentalAuditing & AttestationFederal Tax Concepts & Business LawCloze: Standards, Thresholds & RulesPractice Questions, FARPractice Questions, AUD and REG

← All CPA Exam (core) decks, with the study guide and topic outline.

About these cards

Review status: Second-reader reviewed, with corrections applied.

Checked against:

  • Checked against the AICPA CPA Exam FAR blueprint (topic list only; no text copied).
  • Checked against FASB Concepts Statement 8 and the ASC topic structure (Topics 205, 220, 230, 250, 330, 350, 360, 606, 855) for rules; reference only, no codification text copied.

These are independent study notes written for Willys. They are not official exam material, may contain mistakes, and are no substitute for your course, your teacher or the exam owner's own publications. Found an error? Tell us — corrections ship as a new version of the deck.

Not financial, tax or legal advice. These cards prepare you for an exam; rules and figures change, so check current standards before relying on any of it.

The AICPA and NASBA are not affiliated with and do not endorse this product.

Use of these pages is covered by our Terms of Use.