CPA Financial Accounting and Reporting (FAR)

Certified Public Accountant Financial Accounting and Reporting examination.

Conceptual Framework of Financial AccountingFinancial Statement Preparation and PresentationRevenue Recognition
Accounting for Income TaxesLeases: Lessee and Lessor AccountingBusiness Combinations and Consolidation
Analyzing Financial StatementsApplying GAAP and IFRS to Real-World ScenariosEthics and Professional Responsibility in Financial Reporting
Mastering Multiple-Choice QuestionsTime Management on Exam DayApproaching Simulations and Case Studies
Conceptual Framework...Financial Statement ...Revenue RecognitionAccounting for Incom...Leases: Lessee and L...Business Combination...Analyzing Financial ...Applying GAAP and IF...Ethics and Professio...Mastering Multiple-C...Time Management on E...Approaching Simulati...
Basic Concepts

Financial Statement Preparation and Presentation

Building the Financial Statements

Financial statements are the primary tools for communicating a company's financial performance and position. The main statements include:

  • Statement of Financial Position (Balance Sheet)
  • Statement of Profit or Loss and Other Comprehensive Income (Income Statement)
  • Statement of Changes in Equity
  • Statement of Cash Flows

Key Steps in Preparation

  1. Record transactions using double-entry accounting.
  2. Adjust accounts for accruals and deferrals.
  3. Prepare a trial balance and make correcting entries.
  4. Draft and review the financial statements.

Presentation Requirements

Presentation must comply with standards such as GAAP or IFRS, ensuring comparability and transparency.

Real-World Application

Businesses use these statements to attract investors, acquire loans, and comply with regulations.

Examples

  • A startup preparing its first set of annual financial statements to present to potential investors.

  • A multinational company consolidating results from different countries into one set of financial statements.

In a Nutshell

Financial statements are vital summaries that show a company's financial health, following structured rules for preparation and presentation.

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Revenue Recognition