Wiley CPAexcel Exam Review 2014 Study Guide, Financial Accounting and Reporting

1216 Pages·2013·8.34 MB·English

by  O. Ray Whittington

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4 Wiley
1 C PA e x c e l®
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E X A M R E V I E W
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S T U DY G U I D E
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Wiley
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®
C PA e x c e l
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EXAM REVIEW
ST U DY G U I D E
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FINANCIAL ACCOUNTING
AND REPORTING
O. Ray Whittington,
CPA, PhD
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Cover Design by David Riedy
Cover image: © turtleteeth/iStockphoto
The following items, copyright © by the American Institute of Certifi ed Public Accountants, Inc., are reprinted (or adapted) with
permission.
1. Material from Uniform CPA Examination Questions and Answers, 1978 through 2000.
2. Information for Uniform CPA Examination Candidates, Board of Examiners, 2013.
3. Example fi nancial statements from Industry Audit Guides: Audits of Colleges and Universities, Audits of Voluntary Health and
Welfare Organizations, and Audits of Providers of Health Care Services.
4. Example of Statement of Activity from SOP 78-10.
Material from the Certifi ed Internal Auditor Examination, Copyright © 1994 through 1997 by the Institute of Internal Auditors, Inc., are
reprinted and/or adapted by permission.
Material from the Certifi ed Management Accountant Examinations, Copyright © 1993 through 1997 by the Institute of Certifi ed
Management Accountants are reprinted and/or adapted by permission.
Reproduction and adaptation of pronouncements, copyright © Financial Accounting Standards Board, Norwalk, Connecticut
06856-5116, with permission.
Reproduction of “Combined Statement of Revenues, Expenditures, and Changes in Fund Balances–All Governmental Fund Types and
Expendable Trust Funds,” copyright © Governmental Accounting Standards Board, Norwalk, Connecticut 06856-5116, with permission.
Statement of changes in fund balances for an educational institution from College and University Business Administration with
permission of the National Association of College and University Business Offi cers.
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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CONTENTS
Preface vii
About the Author ix
About the Contributor ix
INTRODUCTION
Chapter 1: Beginning Your CPA Review Program 3
Chapter 2: Examination Grading 17
Chapter 3: The Solutions Approach 19
Chapter 4: Taking the Examination 27
Chapter 5: Exam Content Overview 31
FINANCIAL ACCOUNTING AND REPORTING
Module 9: Basic Theory and Financial Reporting 41
Module 10: Inventory 217
Module 11: Fixed Assets 267
Module 12: Monetary Current Assets and Current Liabilities 329
Module 13: Present Value 395
Module 14: Deferred Taxes 537
Module 15: Stockholders’ Equity 577
Module 16: Investments 639
Module 17: Statement of Cash Flows 687
Module 18: Business Combinations and Consolidations 725
Module 19: Derivative Instruments and Hedging Activities 785
Module 20: Miscellaneous 825
Module 21: Governmental (State and Local) Accounting 897
Module 22: Not-for-Profi t Accounting 983
Outlines of Accounting Pronouncements 1017
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APPENDICES
Appendix A: Financial Accounting and Reporting
Sample Examination 1125
Appendix B: Sample Financial Accounting and Reporting
Testlet Released by AICPA 1159
Appendix C: 2013 Released AICPA Questions for
Financial Accounting and Reporting 1167
INDEX 1187
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PREFACE
Passing the CPA exam upon your fi rst attempt is possible! The
Wiley CPAexcel Exam Review 2014 Study Guide: Financial Accounting
and Reporting preparation materials provide you with the necessary
materials (visit our website at www.wiley.com/cpa for more
information). It’s up to you to add the hard work and commitment.
Together we can beat the pass rate on each section of about 50%. All
Wiley CPAexcel products are continuously updated to provide you
with the most comprehensive and complete knowledge base. Choose
your products from the Wiley prepara tion materials and you can
proceed confi dently. You can select support materials that are
exam-based and user-friendly. You can select products that will
help you pass!
Remaining current is one of the keys to examination success.
Here is a list of what’s new in this edition of the Wiley CPAexcel
Exam Review 2014 Study Guide: Financial Accounting and
Reporting text.
• The new AICPA Content Specifi cation Outlines on Financial
Accounting and Reporting for the computerized CPA
Exami nation beginning in 2014
• AICPA questions released in 2013
• The new task-based simulations
D ’
ON T FORGET TO
• Complete coverage of standards, especially

VISIT OUR WEBSITE • The newest FASB accounting standards
AT • International accounting standards
. . / • SEC reporting requirements
WWW WILEY COM CPA
FOR SUPPLEMENTS The objective of this work is to provide you with the
. knowledge to pass the Financial Accounting and Reporting portion
AND UPDATES
of the Uniform Certifi ed Public Accounting (CPA) Exam. The text is
divided up into fourteen areas of study called mod ules. Each module
contains written text with discussion, examples, and demonstrations
of the key exam concepts. Fol lowing each text area, actual American
In stitute of Certifi ed Public Accountants (AICPA) unoffi cial
questions and an swers are presented to test your knowledge. We are
indebted to the AICPA for permission to reproduce and adapt
exami nation materials from past examina tions. Author-constructed
questions and simulations are provided for new areas or areas that
require updat ing. All author-con structed questions and simulations
are modeled after AICPA ques tion formats. The multiple-choice
questions are grouped into topi cal areas, giving candidates a chance
to assess their areas of strength and weakness. Selection and
inclusion of topical content is based upon current AICPA Content
Specifi cation Out lines. Only testable topics are presented. If the CPA
exam does not test it, this text does not present it.
The CPA exam is one of the toughest exams you will ever take. It
will not be easy. But if you follow our guidelines and focus on your
goal, you will be thrilled with what you can accomplish.
Ray Whittington
November 2013
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