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Free Financial Accounting and Reporting (FAR) Exam Questions and Answers
Last updated: April 1, 2025
Examtopics Financial Accounting and Reporting (FAR) Prepaway Real Exam Questions and dumps free download
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Financial Accounting and Reporting (FAR)
#Question
If an audit reveals an understatement of expenses, what is the effect on retained earnings?
A.
Cannot determine
B.
No effect
C.
Decrease
D.
Increase
Correct Answer:
C
Understated expenses result in higher net income and therefore overstated retained earnings; correcting this decreases retained earnings.
#Question
If a company signs a 5-year lease, how are future payments indicated on financial statements?
A.
Not recorded
B.
As future capital
C.
As an expense immediately
D.
As a liability on the balance sheet
Correct Answer:
D
Future lease payments are classified as liabilities on the balance sheet under the applicable accounting rules.
#Question
A company recognizes revenue for tax purposes prior to financial reporting. What should it do?
A.
Ignore it
B.
Recognize immediately
C.
Accrue the revenue
D.
Defer the revenue
Correct Answer:
D
Revenue recognized for tax purposes should be deferred for financial reporting until the revenue is earned under accounting standards.
#Question
If goodwill is determined to be impaired, what is the effect on the financial statements?
A.
Decrease in cash
B.
Clarifies financial position
C.
Decrease net income
D.
Increase assets
Correct Answer:
C
Impairment of goodwill results in a loss that decreases net income when recognized on the income statement.
#Question
What accounting tool is used to compare budgeted to actual results?
A.
Asset allocation strategy
B.
SWOT analysis
C.
Critical success factors
D.
Variance analysis
Correct Answer:
D
Variance analysis is used to compare budgeted figures to actual results, assessing deviations and performance.
#Question
If prepaid expenses are expired, how does it impact the income statement?
A.
Increase revenue
B.
No effect
C.
Decrease expenses
D.
Increase expenses
Correct Answer:
D
Expired prepaid expenses are charged to expense, thus resulting in increased total expenses reflected in the income statement.
#Question
Interest on a loan taken for investment purposes can be classified as which type of cash flow?
A.
Non-cash activities
B.
Financing activities
C.
Investing activities
D.
Operating activities
Correct Answer:
B
Interest on loans for investments is classified within financing activities impacting cash flow statements.
Financial Accounting and Reporting (FAR)
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Q2: Why should I pursue AICPA Certification? A: AICPA Certification enhances your professional credibility, demonstrating your proficiency in accounting and finance. This can lead to better job opportunities, higher salaries, and career advancement in the accounting and finance sectors.
Q3: What are the benefits of AICPA Certification? A: Benefits include recognition as a certified accounting professional, improved job performance, access to exclusive resources, continuing education opportunities, and the ability to stay current with the latest accounting standards and best practices.
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Q5: What types of AICPA Certification Exams are available? A: The primary certification offered by AICPA is the CPA (Certified Public Accountant) exam, which consists of four sections: Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR), and Regulation (REG).
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