CPA FAR and Audit Exam-Bank Reconciliations by Darius Clark of i-75 CPA Review

The CPA Exam will test a FAR and Audit candidate on Bank Reconciliations. The bank rec is part of the cash cycle in auditing and of course the true cash balance is the financial statement amount of cash that appears on the balance sheet. Bank recs involve the bank statement, deposits in transit, error corrections and adjustments, NSF checks for insufficient funds will impact the book balance of cash. NASBA and the AICPA will expect a CPA candidate to be familiar with this concept in multiple choice or even simulation. Other FAR topics to know for multiple choice and simulation include Accounting, debit, credit, journal entry, ledger, sub-ledger, rollback, accruals, deferrals, cash basis, accrual basis, accrued liabilities, accrued expenses, prepaid expenses, unearned revenue, earned revenue, expenses, expenditure, income, gain, loss, realization, recognition, current assets, current liabilities, net income, working capital, MD&A, summary of significant policies, footnotes, disclosures, financial statements, balance sheet, income statement, stockholders’ equity, concentrations, estimates, subsequent events, segment reporting, FASB Framework, Fair value framework, relevance, faithful representation, consistency, conservatism, materiality, accounts receivable, gross and net, bad debt expense, credit loss, allowance for doubtful accounts, write-offs and recovery, factoring, pledging, assigning, discounting a note, revenue recognition, contract with customer, variable consideration, input and output methods, incremental costs, Bill and Hold, re-purchase agreements, sale with right of return, refund liabilities, contract modifications, gift cards, franchise and royalty, gift card, licensing, long term construction, percentage of completion, software, cloud based, accounting changes, estimate, principle, error corrections, restatement, retrospective, research and development, interim reporting, retained earnings, Fixed asset valuation, land improvements, betterment, capitalization of interest, impairment. Patent, intangible, goodwill, equity method, indefinite life, finite, straight-line depreciation, double declining, sum of the years digits, depletion, units of production, composite, operating lease finance lease, lessor, lessee, minimum lease payment, bargain purchase, guaranteed residual value, sales type lease, sale leaseback, time value of money, ordinary annuity, annuity due, payroll tax, sales tax, contingent liabilities, purchase commitments, bonds, present value, effective interest, bond extinguishment, troubled debt, cash equivalents, bank reconciliation, statement of cash flows, operating, investing, financing, asset retirement obligations, accrued interest, common stock, preferred stock, treasury stock, cumulative, convertible, participating, dividend, cost, retirement, par value, appropriated, quasi-reorganization, statement of changes in stockholders’ equity, OCI, other comprehensive income, stock option, rights, bundled securities, debt securities, available for sale, financial instruments, trading, held to maturity, mark to market, fair value net income, equity, cash surrender life insurance, foreign currency, export, import, hedging, translation, re-measurement, fair value hedge, cash flow hedge, interest rate swap, business combinations, acquisition, non-controlling, eliminating, inter-company inventory, consolidated financial statements, proprietary funds, governmental funds, fund balance, fiduciary funds, budget, other financing sources, uses, encumbrances, major funds, non-major funds, fund level reporting, government wide reporting, reconciliation, modified accrual, full accrual, required supplementary information, CAFR, Not for profit, program, support, conditional, unconditional, with restriction, without restriction, endowment, functional expenses, basic earnings per share, fully diluted, options, warrants, permanent differences, temporary difference, income tax expense, deferred, valuation allowance, net operating loss, perpetual, periodic, errors, consignment, cost of goods sold, FIFO, LIFO, Dollar Value LIFO, Weighted Average, Moving Average, Pension, Ratios, Non-Monetary Exchanges, Commercial Substance, accretion, partnership, liquidation.