PrepPass team · Verified against AICPA · How we review
Free · printable · no signup
CPA Exam — Financial Accounting and Reporting (FAR) Exam Cheat Sheet (2026)
A free, printable CPA Exam — Financial Accounting and Reporting (FAR) exam cheat sheet: the 58 highest-yield points to know, grouped into 6 sections that follow the exam's content areas, each section with its published weight.
- Free to read, print and keep — no signup, no email, no paywall.
- 58 of the 58 points carry a citation to the rule they come from.
- The real CPA Exam — Financial Accounting and Reporting (FAR) exam: 240 minutes.
- Prints from your browser (Ctrl-P, or Cmd-P on a Mac) — the navigation, buttons and links drop out of the printed copy.
- 122 free CPA Exam — Financial Accounting and Reporting (FAR) practice questions on the same material, every one explained.
- Last updated: September 2026.
Studying in order?
Practice stays free. The full CPA Exam — Financial Accounting and Reporting (FAR) study guide is the material itself, taught start to finish — a downloadable PDF + EPUB you keep.
Area I: For-Profit and Public Company Reporting
Area I, 30–40% of the exam- Short-term debt refinanced
- A short-term obligation may be excluded from current liabilities if a long-term refinancing is completed, or a qualifying financing agreement is in place, before the statements are issued.· FASB ASC 470-10-45-14
- Discontinued operations
- A disposal of a component that represents a strategic shift with a major effect on operations is reported separately, net of tax, including the component's results and any disposal gain or loss.· FASB ASC 205-20-45-1B and 45-3
- Cash flow classification
- Interest paid and dividends received are operating; dividends paid are financing; purchases and sales of productive assets and investments are investing.· FASB ASC 230-10-45-12 to 45-17
- Full goodwill
- Goodwill equals consideration transferred plus the fair value of any noncontrolling interest, less the fair value of identifiable net assets acquired.· FASB ASC 805-30-30-1
- Intra-entity eliminations
- Intra-entity sales, balances and unrealized profit on assets still held in the group are eliminated in full.· FASB ASC 810-10-45-1
- Two presentation formats
- Comprehensive income is shown in one continuous statement or in two separate but consecutive statements.· FASB ASC 220-10-45-1
- What goes to OCI
- Available-for-sale debt security holding gains and losses go to OCI; changes in fair value of equity securities with readily determinable fair values go to net income.· FASB ASC 320-10-35-1; ASC 321-10-35-1
- Foreign currency transactions
- Receivables and payables denominated in a foreign currency are remeasured at each balance sheet date, with transaction gains and losses in net income.· FASB ASC 830-20-35-1
- Prior-period adjustments
- Correction of an error in previously issued statements adjusts opening retained earnings, net of tax.· FASB ASC 250-10-45-23
- Accounting policy note
- Policies such as inventory pricing and depreciation methods are disclosed without repeating details, such as inventory composition or debt maturities, presented elsewhere.· FASB ASC 235-10-50-4 and 50-5
- Form 10-K deadlines
- Due 60, 75 or 90 days after fiscal year-end for large accelerated, accelerated and other filers respectively.· Form 10-K, General Instruction A.(2)
- Form 10-Q Part I
- Items 1 to 3 are financial statements, MD&A, and quantitative and qualitative disclosures about market risk.· Form 10-Q, Part I
- Basic EPS numerator
- Income available to common stockholders deducts current-year dividends on cumulative preferred stock whether or not declared.· FASB ASC 260-10-45-11
- Dilution tests
- Options use the treasury stock method; convertible debt and preferred stock use the if-converted method; antidilutive securities are excluded.· FASB ASC 260-10-45-23 and 45-40
- Suitably titled statements
- Special purpose statements must be suitably titled and describe how the basis differs from GAAP, for example a statement of revenue collected and expenses paid for the cash basis.· AU-C Section 800
Area I: Not-for-Profit and Government Reporting
Area I, 30–40% of the exam- Two net asset classes
- Net assets are reported as with donor restrictions or without donor restrictions; board designations remain without donor restrictions.· FASB ASC 958-210-45-1; ASU 2016-14
- Expenses by nature and function
- Every NFP presents an analysis of expenses by both nature and function in one location, on the face of a statement or in the notes.· FASB ASC 958-720-45-15
- Governmental fund basis
- Governmental funds use the current financial resources measurement focus and modified accrual basis; government-wide, proprietary and fiduciary reporting use economic resources and accrual.· GASB Statement 34; GASB Codification Sec. 1600
- Fund definitions
- Special revenue, capital projects, debt service and permanent funds are defined by the restriction or commitment of their resources.· GASB Statement 54
- Custodial funds
- Fiduciary activities not held in a qualifying trust, such as taxes collected for other governments, are reported in custodial funds.· GASB Statement 84
Area II: Cash, Receivables, Inventory, PP&E and Intangibles
Area II, 30–40% of the exam- Cash equivalents
- Short-term, highly liquid investments with original maturities to the holder of three months or less.· FASB ASC 305-10-20
- Expected credit losses
- The allowance reflects lifetime expected credit losses; an aging schedule is one acceptable estimation method.· FASB ASC 326-20-30-1; ASC 326-20-55
- Sale of receivables
- A transfer is a sale when the assets are isolated from the transferor, the transferee can pledge or exchange them, and the transferor keeps no effective control.· FASB ASC 860-10-40-5
- LCNRV versus LCM
- FIFO and average-cost inventory uses lower of cost and net realizable value; LIFO and retail-method inventory uses lower of cost or market with a ceiling and floor.· FASB ASC 330-10-35-1B and 35-1C
- Right of return
- Revenue is recognized only for goods expected to be kept, with a refund liability and a recovery asset for expected returns.· FASB ASC 606-10-55-23
- Historical cost
- Cost includes the amounts necessarily incurred to bring an asset to the condition and location for its intended use.· FASB ASC 360-10-30-1
- Recoverability test
- An impairment loss arises only when carrying amount exceeds undiscounted cash flows, and is measured as carrying amount minus fair value.· FASB ASC 360-10-35-17
- Held for sale
- Measured at the lower of carrying amount or fair value less cost to sell, and not depreciated while so classified.· FASB ASC 360-10-35-43
- Indefinite-lived intangibles
- Not amortized; tested for impairment at least annually.· FASB ASC 350-30-35-4 and 35-18
- Cloud computing implementation costs
- Capitalized implementation costs of a hosting service contract are expensed over the arrangement's term in the same line as the hosting fees.· FASB ASC 350-40; ASU 2018-15
Area II: Investments, Liabilities, Debt and Equity
Area II, 30–40% of the exam- Debt security categories
- Trading and available-for-sale at fair value (changes to net income and OCI respectively); held-to-maturity at amortized cost.· FASB ASC 320-10-35-1
- Equity securities
- Measured at fair value through net income; the measurement alternative is cost less impairment adjusted for observable price changes.· FASB ASC 321-10-35-1 and 35-2
- AFS credit losses
- Credit losses are recognized through an allowance, limited to the excess of amortized cost over fair value.· FASB ASC 326-30-35
- Equity method
- Presumed at 20% or more of voting stock; the investment rises with the investor's share of earnings and falls with dividends.· FASB ASC 323-10-15-8; ASC 323-10-35
- Asset retirement obligations
- Recognized at fair value when incurred, capitalized into the asset, and accreted using the credit-adjusted risk-free rate.· FASB ASC 410-20-30-1 and 35-5
- One-time termination benefits
- Recognized at communication if no service beyond the minimum retention period is required; otherwise ratably over the service period.· FASB ASC 420-10-25
- Interest method and issuance costs
- Interest expense is carrying amount times the effective rate; debt issuance costs reduce the debt's carrying amount.· FASB ASC 835-30-35-2 and 45-1A
- Ten percent test
- A change in cash flows of at least 10% in present value terms makes an exchange or modification an extinguishment.· FASB ASC 470-50-40-10
- Small stock dividends
- Recorded at the fair value of the shares issued; a stock split changes par value and share count, not total equity.· FASB ASC 505-20-30-3
Area III: Accounting Changes, Contingencies and Revenue
Area III, 25–35% of the exam- Change in principle
- Applied retrospectively to all periods presented unless impracticable, with the cumulative effect in opening retained earnings.· FASB ASC 250-10-45-5
- Change in estimate
- Applied in the period of change and future periods; a change in depreciation method is a change in estimate effected by a change in principle.· FASB ASC 250-10-45-17 and 45-18
- Accrual threshold
- Accrue a loss when it is probable that a liability was incurred and the amount is reasonably estimable.· FASB ASC 450-20-25-2
- Range with no best estimate
- Accrue the minimum of the range and disclose the possible additional loss.· FASB ASC 450-20-30-1
- Reasonably possible losses
- Not accrued, but disclosed with an estimate of the possible loss or a statement that one cannot be made.· FASB ASC 450-20-50-3 and 50-4
- Five steps
- Identify the contract, identify performance obligations, determine the transaction price, allocate it, and recognize revenue when or as obligations are satisfied.· FASB ASC 606-10-05-4
- Relative standalone selling price
- The transaction price is allocated in proportion to standalone selling prices.· FASB ASC 606-10-32-31
- Principal versus agent
- An entity that does not control the good before transfer reports only its fee or commission.· FASB ASC 606-10-55-36 to 55-38
- Donor-imposed conditions
- A condition requires both a barrier and a right of return or release; the promise is recognized when the barrier is substantially met.· FASB ASC 958-605-25-5A and 25-11
- Contributed services
- Recognized only if they create or enhance nonfinancial assets, or require specialized skills that would otherwise be purchased.· FASB ASC 958-605-25-16
Area III: Income Taxes, Fair Value, Leases and Subsequent Events
Area III, 25–35% of the exam- Enacted rates
- Deferred taxes use the enacted rate expected to apply when temporary differences reverse.· FASB ASC 740-10-30-8
- Noncurrent classification
- All deferred tax assets and liabilities are noncurrent in a classified balance sheet.· FASB ASC 740-10-45-4; ASU 2015-17
- Valuation allowance
- Required when it is more likely than not that some or all of a deferred tax asset will not be realized.· FASB ASC 740-10-30-5(e)
- Uncertain tax positions
- A position must be more likely than not to be sustained; it is measured at the largest benefit greater than 50% likely on settlement.· FASB ASC 740-10-25-6 and 30-7
- Principal market and costs
- Fair value uses the principal market price, adjusted for transport costs but not transaction costs.· FASB ASC 820-10-35-5 and 35-9B to 35-9C
- Valuation approaches
- Market, income and cost approaches; the cost approach reflects current replacement cost of service capacity.· FASB ASC 820-10-35-24A; ASC 820-10-55-3A to 55-3G
- Finance lease criteria
- Transfer of ownership, reasonably certain purchase option, major part of economic life, substantially all of fair value, or specialized asset.· FASB ASC 842-10-25-2
- Lease payments
- Include fixed payments, index- or rate-based variable payments, and amounts probable of being owed under residual value guarantees; usage- or sales-based payments are excluded.· FASB ASC 842-10-30-5
- Recognized versus nonrecognized events
- Events giving evidence about conditions at the balance sheet date adjust the statements; events arising afterward are disclosed if material.· FASB ASC 855-10-25-1 and 25-3
Now prove you know them
Reading an outline is not the same as recalling it under exam pressure. Drill the free CPA Exam — Financial Accounting and Reporting (FAR) questions to find the areas you keep missing, then sit a full timed mock.
Study aid, not a substitute for the official material — always confirm the current rule with AICPA.