CPA Financial Accounting and Reporting (FAR)

Certified Public Accountant Financial Accounting and Reporting examination.

Conceptual Framework and Standard SettingFinancial Statements and DisclosuresRevenue Recognition
LeasesFinancial Instruments and Fair Value MeasurementBusiness Combinations and Consolidations
Analyzing Real-World Financial StatementsPreparing Adjusting and Closing EntriesApplying GAAP to New Business Transactions
Mastering Multiple-Choice QuestionsSimulations and Task-Based Testlets
Conceptual Framework...Financial Statements...Revenue RecognitionLeasesFinancial Instrument...Business Combination...Analyzing Real-World...Preparing Adjusting ...Applying GAAP to New...Mastering Multiple-C...Simulations and Task...
Practical Applications

Applying GAAP to New Business Transactions

Navigating Unfamiliar Territory

Businesses constantly face new types of transactions—think cryptocurrency, carbon credits, or complex service contracts. Applying Generally Accepted Accounting Principles (GAAP) ensures these are recorded and reported correctly.

How to Apply GAAP

  • Research relevant standards and guidance.
  • Document the rationale for the chosen accounting treatment.
  • Disclose any judgments or estimates in the notes.

Real-World Example

When something new pops up, such as a company accepting Bitcoin, accountants must use GAAP to decide how to measure, record, and disclose the transaction.

Examples

  • A company starts accepting cryptocurrency and consults GAAP for proper accounting treatment and disclosure.

  • A business launches a loyalty program and applies GAAP to account for the value of rewards issued.

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Mastering Multiple-Choice Questions