CPA FAR: Financial statements, disclosures and ratios
Blueprint I.A, I.D, I.E, I.F · Area I, Financial Reporting · 30–40% of FAR
Ten FAR questions on financial statements, disclosures and ratios, untimed, with a reason for every answer option.
Or take the full FAR mock examTarn Co. has a current ratio of 2.0 to 1. It pays $50,000 of accounts payable with cash. What is the effect on the current ratio?
Financial statements, disclosures and ratios on CPA FAR
Area I of FAR (30–40% of the section) starts with general-purpose statements for business entities: the balance sheet, income statement, comprehensive income, equity and cash flows, plus notes. It also covers public company topics such as EPS and segments, special purpose frameworks, and the ratios used to read the statements.
- Blueprint groups
- I.A, I.D, I.E, I.F
- Share of the section
- Area I, Financial Reporting: 30–40%
- Our drill
- 10 questions from 13 on this topic, untimed, with a reason for every option; one free attempt, unlimited with a pass
What to know
- The indirect method starts with net income, adds back noncash charges such as depreciation, removes gains and losses on investing items, and adjusts for changes in operating working capital (ASC 230-10-45-28).
- U.S. GAAP classifies interest paid, interest received and dividends received as operating cash flows and dividends paid as financing (ASC 230-10-45-15 to 45-17).
- Basic EPS = (net income − preferred dividends) ÷ weighted-average common shares; cumulative preferred dividends are deducted whether or not declared (ASC 260-10-45-11).
- Diluted EPS adds back after-tax interest on convertible debt and adds the conversion shares when the effect is dilutive; options use the treasury stock method (ASC 260-10-45-23 and 45-40).
- An operating segment is reportable if its revenue (external plus intersegment), absolute profit or loss, or assets are 10% or more of the combined amounts (ASC 280-10-50-12).
- Special purpose frameworks include the cash, tax, regulatory and contractual bases and other bases such as the FRF for SMEs (AU-C 800.07).
Test yourself on financial statements, disclosures and ratios
Ten FAR questions on financial statements, disclosures and ratios, untimed, with a reason for every answer option.
Or take the full FAR mock examCommon questions
How much of the FAR section is financial statements, disclosures and ratios?
It sits in Blueprint Area I (I.A, I.D, I.E, I.F). The AICPA weights whole areas, not single topics; see the area’s range on the FAR page. Our 50-question mock draws each area at the middle of its range.
Are these real FAR questions?
No. The AICPA does not release live exam questions. These are original practice questions written to the published 2027 CPA Exam Blueprints, with a reason for every answer option and the standard or code section behind the key.
More FAR topics
- Not-for-profit and government reportingdrill
- Cash, receivables, inventory, PP&E, intangibles and investmentsdrill
- Payables, debt and equitydrill
- Revenue recognition, lessee accounting and income taxesdrill
- Accounting changes, contingencies, fair value and subsequent eventsdrill
FAR full mock exam: 4 hours, 5 testletsFAR task-based simulations
Blueprint and exam facts checked November 2026: AICPA: Learn what is tested on the CPA Exam (Blueprints effective January 1, 2027) · AICPA: CPA Exam score release and testing windows · NASBA: CPA Exam FAQ · Virginia Board of Accountancy: CPA Exam fees.
Original independent practice questions written to the AICPA CPA Exam Blueprints. Not affiliated with or endorsed by the AICPA or NASBA.