CPA EXAM @x
Exam Solution
@x
CPA Exam FAR 2026 A+ GRADE ASSURED COMPLETE S
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OLUTIONS AND VERIFIED ANSWERS (A9087) @x @x @x @x
QUESTION 1 @x
Cash
ANSWER
Money that is FREE and CLEAR and available to be spend in current operations.
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QUESTION 2 @x
Not Cash:
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ANSWER
Security deposits & bond sinking funds
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QUESTION 3 @x
Three-Month Rule @x
ANSWER
Highly liquid securities with ORIGINAL maturity dates of three months or less are treated as cash.
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QUESTION 4 @x
Bad Debts - Direct Write-Off Method
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ANSWER
- No entry for bad debts until customer actually defaults. -
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At default, the cutomer's account is written off. - Theoretically weak, matching issue -
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Only allowed if bad debt expense is immaterial
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, QUESTION 5 @x
Bad Debts - Allowance Method
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ANSWER
Income Statement Approach Balance Sheet Approach
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QUESTION 6 @x
Income Statement Approach
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ANSWER
- Matching Concept - Estimate of bad debt expense is based on the income statement -
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Allowance account balance has no bearing on the amount of adjustment
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QUESTION 7 @x
Balance sheet reporting:
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ANSWER
Accounts Receivable Less: Allowance for bad debts = Net realizable value of A/R
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QUESTION 8 @x
Balance Sheet Approach
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ANSWER
- Estimate of bad debt expense is based on the balance sheet -
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Period sales have no bearing on the amount of adjustment
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QUESTION 9 @x
Written-off account later collected
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ANSWER
Reverse write-off entry. Collect as usual.
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QUESTION 10 @x
Assigning Accounts Receivable
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ANSWER
- Assignment of A/R normally is done with recourse -
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Assignment usually is done without notification to customers
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Exam Solution
@x
CPA Exam FAR 2026 A+ GRADE ASSURED COMPLETE S
@x @x @x @x @x @x @x @x
OLUTIONS AND VERIFIED ANSWERS (A9087) @x @x @x @x
QUESTION 1 @x
Cash
ANSWER
Money that is FREE and CLEAR and available to be spend in current operations.
@x @x @x @x @x @x @x @x @x @x @x @x @x
QUESTION 2 @x
Not Cash:
@x
ANSWER
Security deposits & bond sinking funds
@x @x @x @x @x
QUESTION 3 @x
Three-Month Rule @x
ANSWER
Highly liquid securities with ORIGINAL maturity dates of three months or less are treated as cash.
@x @x @x @x @x @x @x @x @x @x @x @x @x @x @x
QUESTION 4 @x
Bad Debts - Direct Write-Off Method
@x @x @x @x @x
ANSWER
- No entry for bad debts until customer actually defaults. -
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At default, the cutomer's account is written off. - Theoretically weak, matching issue -
@x @x @x @x @x @x @x @x @x @x @x @x @x @x
Only allowed if bad debt expense is immaterial
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, QUESTION 5 @x
Bad Debts - Allowance Method
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ANSWER
Income Statement Approach Balance Sheet Approach
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QUESTION 6 @x
Income Statement Approach
@x @x
ANSWER
- Matching Concept - Estimate of bad debt expense is based on the income statement -
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Allowance account balance has no bearing on the amount of adjustment
@x @x @x @x @x @x @x @x @x @x @x
QUESTION 7 @x
Balance sheet reporting:
@x @x
ANSWER
Accounts Receivable Less: Allowance for bad debts = Net realizable value of A/R
@x @x @x @x @x @x @x @x @x @x @x @x
QUESTION 8 @x
Balance Sheet Approach
@x @x
ANSWER
- Estimate of bad debt expense is based on the balance sheet -
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Period sales have no bearing on the amount of adjustment
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QUESTION 9 @x
Written-off account later collected
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ANSWER
Reverse write-off entry. Collect as usual.
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QUESTION 10 @x
Assigning Accounts Receivable
@x @x
ANSWER
- Assignment of A/R normally is done with recourse -
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Assignment usually is done without notification to customers
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