FAR · High-yield
ASC 606 revenue — exam machine
Most FAR score movement on revenue comes from control transfer, variable consideration, and principal/agent presentation — not from memorizing the step titles alone.
- Walk the five steps in order on every MCQ before jumping to journal entries.
- Separate contract assets (conditional) from receivables (unconditional except time).
- Constraint variable consideration; do not book the optimistic bonus by default.
- Principal = gross; agent = net. Control before transfer is the hinge.
- Licenses: right to use vs right to access can change timing.
Exam tip: If cash collection is mentioned, ask: did control transfer? Cash ≠ revenue.
FAR · High-yield
ASC 842 leases — lessee focus
Almost all leases >12 months are on-balance-sheet. Classification drives the expense pattern, not whether a liability exists.
- Initial measurement: PV of unpaid lease payments → liability; ROU asset starts from that (adjusted for IDC/prepaids/incentives).
- Finance: interest + amortization (front-loaded). Operating: single lease expense (often straight-line).
- Watch reasonably certain renewals/purchase options — they change lease term and payments.
- Short-term lease election can keep some leases off-balance-sheet.
- Know the classification criteria that push toward finance.
Exam tip: If they ask for Year-1 expense, classification is the first fork in the road.
FAR · High-yield
ASC 740 deferred taxes
Book-tax differences that reverse create deferred taxes. Permanent differences affect effective rate but not DTAs/DTLs.
- Taxable temporary difference → DTL. Deductible temporary difference → DTA.
- Valuation allowance if DTA realization is not more likely than not.
- Enacted rates used for measurement — not hoped-for future rates.
- Intraperiod allocation can send tax expense to continuing ops / discontinued / OCI.
- NOL and credit carryforwards are DTA sources (with allowance analysis).
Exam tip: Always identify temporary vs permanent before computing deferred balances.
FAR · High-yield
Not-for-profit net assets
Donor restrictions drive net asset class. Board intent does not create donor-restricted net assets.
- Two classes: with donor restrictions / without donor restrictions.
- Release restrictions when purpose/time conditions met.
- Contributed services recognized only if specialized skills/criteria met.
- Functional expense reporting matters (program vs support).
- Agency transactions are not contributions.
Exam tip: If the board 'restricts' funds, classification is still without donor restrictions.
AUD · High-yield
Risk model & responses
AUD is a story: understand the entity → assess RMM → design responses → gather evidence → conclude/report.
- AR = IR × CR × DR. You only control DR through procedures.
- Higher RMM → lower DR → stronger substantive tests.
- Risk assess at FS level and assertion level.
- Significant risks require special audit consideration (often substantive responses).
- Document linkages: risk → assertion → procedure → evidence.
Exam tip: When stuck between two procedures, pick the one that hits the asserted risk (existence vs completeness).
AUD · High-yield
Opinion decision tree
Materiality + pervasiveness decide qualified vs adverse. Scope limitations decide qualified vs disclaimer.
- Unmodified: fair presentation.
- Qualified (GAAP): material, not pervasive misstatement.
- Adverse: material and pervasive misstatement.
- Qualified (scope): material, not pervasive inability to obtain evidence.
- Disclaimer: pervasive scope limitation (or required disclaimer situations).
- EOM/OM paragraphs draw attention without changing the opinion type by themselves.
Exam tip: Memorize definitions of pervasive — many MCQs hinge on that single word.
AUD · High-yield
Fraud procedures that get tested
Fraud is never fully eliminated; auditors respond to risks, especially revenue and management override.
- Brainstorming required among key team members.
- Presume fraud risk in revenue recognition (rebuttable).
- Address management override: JE testing, bias in estimates, unusual transactions.
- Fraud triangle: incentive, opportunity, rationalization.
- Communication duties escalate with evidence of fraud.
Exam tip: If an answer choice ignores management override, it is probably wrong for fraud risk responses.
REG · High-yield
Basis is the REG battlefield
Gift, inheritance, partnership, and S-corp basis rules decide whether losses are usable and whether distributions are taxable.
- Gift: carryover basis (dual basis for loss property).
- Inheritance: FMV (step-up/down).
- Partnership: contributions + income − distributions − losses ± liabilities.
- S corp: similar flow-through tracking; losses limited to stock/debt basis.
- Always apply basis / at-risk / passive in the right order.
Exam tip: Draw a T-account for basis on every entity distribution/loss question.
REG · High-yield
Property dispositions checklist
Amount realized − adjusted basis = realized gain/loss; then character and deferral provisions decide recognition.
- Compute realized first, recognized second.
- §1231 netting and depreciation recapture change character.
- §1031 (realty), §1033 (involuntary), installment method can defer.
- Wash sales and related-party rules disallow or defer losses.
- Boot triggers gain in deferral transactions.
Exam tip: Character questions: identify asset type + holding period + recapture before picking the rate/treatment.
REG · High-yield
Entity comparison snapshot
C vs S vs partnership questions are won by knowing where tax is paid and how basis/liability rules work.
- C corp: entity tax + dividend double tax risk.
- S corp: flow-through with eligibility and one-class-of-stock rules.
- Partnership: flexible allocations; liabilities increase basis.
- §351/§721 deferral on formation when requirements met.
- Hot assets (§751) can ordinary-ize partnership interest sale gain.
Exam tip: If liabilities are in the facts, you are probably in partnership basis land.
BAR · High-yield
Governmental accounting switchboard
Fund statements and government-wide statements answer different questions — do not mix measurement focuses.
- Governmental funds: current resources + modified accrual.
- Government-wide: economic resources + full accrual.
- Reconciliations connect the two (capital assets, LTD, revenue timing).
- Fiduciary funds excluded from government-wide.
- Encumbrances are budgetary tools, not GAAP expenditures by themselves.
Exam tip: Ask: which statement? Fund or government-wide? Then pick recognition.
BAR · High-yield
Financial analysis toolkit
BAR expects you to interpret ratios and variances, not just compute them.
- Liquidity: current/quick. Solvency: D/E, interest coverage.
- Profitability: margins, ROA/ROE, DuPont decomposition.
- Flexible budgets make volume-adjusted variances meaningful.
- CVP: CM, break-even, margin of safety.
- Watch non-GAAP metrics and one-time items.
Exam tip: Explain directionally: if inventory rises and sales flat, what happens to turnover and cash?
ISC · High-yield
Security vocabulary that prints points
ISC is vocabulary-dense. Definitions win MCQs; mapping controls to risks wins scenarios.
- CIA triad underpins most security questions.
- AAA: authenticate, authorize, account/monitor.
- ITGCs vs application controls — know examples of each.
- Change management SOD is a perennial favorite.
- Encryption, logging, and least privilege are default good controls.
Exam tip: When a control fails, name whether confidentiality, integrity, or availability was hit.
ISC · High-yield
SOC reports without panic
Know which report answers which question: ICFR relevance vs trust services; design vs operating effectiveness.
- SOC 1 → user ICFR. SOC 2 → Trust Services Criteria.
- Type I point-in-time design; Type II period operating effectiveness.
- CUECs are controls the user entity must perform.
- Carve-out vs inclusive methods for subservice orgs.
- User auditors still must evaluate relevance to their audit.
Exam tip: If the question mentions financial reporting controls at a processor, think SOC 1.
TCP · High-yield
Planning instincts that score
TCP rewards lawful timing, character, and entity choices — not aggressive nonsense.
- Avoidance legal; evasion illegal.
- Assignment of income: earner is taxed.
- Timing: accelerate deductions/defer income when rates stable/falling.
- Character: ordinary vs capital changes outcomes.
- Entity choice: wages vs distributions, double tax, loss usability.
Exam tip: For S corp owners, always check reasonable compensation before distribution planning.
TCP · High-yield
Personal financial planning tax hooks
Retirement accounts, basis step-up, and education savings show up as planning tradeoffs.
- Traditional vs Roth = deduct now vs tax-free later.
- RMDs force traditional account taxation eventually.
- Step-up at death can erase unrealized gain for heirs.
- Annual gift exclusion mechanics matter more than memorizing the inflation number.
- 529 qualified withdrawals are federal tax-free on earnings.
Exam tip: If facts span current tax and estate outcomes, list both layers before choosing.