Reviewer for Financial Accounting and Reporting (FAR), a CPA Licensure Examination subject under RA 9298.
The Financial Statements
| Statement | Shows |
|---|---|
| Statement of Financial Position | Assets, liabilities, equity |
| Statement of Comprehensive Income | Income & expenses |
| Statement of Cash Flows | Cash in/out |
| Statement of Changes in Equity | Equity movements |
Conceptual Framework
Financial reporting follows PFRS/PAS. Qualitative characteristics: relevance and faithful representation (fundamental); comparability, verifiability, timeliness, understandability (enhancing).
Recognize an asset when it is probable future benefits will flow AND its cost/value is measurable.
Key Measurement
Assets may be measured at historical cost, fair value, or present value. The accrual basis records transactions when they occur, not when cash moves.
The Accounting Equation
Under accrual accounting, revenue is recognized when EARNED, not when cash is received.
Before your exam, make sure you can confidently explain and apply each of the following:
- The Financial Statements
- Conceptual Framework
- Key Measurement
- The Accounting Equation
Re-read any section above where you hesitate, then explain it aloud in your own words — if you can teach it simply, you understand it. Focus your final review on the tables, formulas, and the common-mistake warnings, since those are where most points are won or lost.