FAR · Select balance sheet accounts · 97 practice questions
Cash and cash equivalents: what’s in, what’s out, and why (FAR)
Master two gates: original maturity at acquisition (≤ 3 months) and availability for general use; then the totals fall out fast.
Mixed drill
Questions from every rule below, shuffled. You get the explanation after each one, and at the end, the rules to review.
The rules, one page each
- How to Compute Cash and Cash Equivalents From a ListWorked example
Include unrestricted cash and highly liquid investments convertible to known cash amounts with insignificant value risk and maturities of three months or less at acquisition. Exclude longer-term investments, postdated or NSF checks, and legally restricted balances.
- Restricted cash and compensating balances: include or present separately?Sort it
Amounts restricted by contract or law are not included in the cash and cash equivalents caption. Present restricted cash separately as current or noncurrent based on the related obligation or the expected period of restriction.
- Bank overdrafts, postdated and NSF checks: what stays in cash? what doesn’t?Sort it
Exclude postdated and NSF checks from cash; treat as receivables until settled. Present bank overdrafts as current liabilities unless legal right of setoff exists with positive balances at the same bank; only then net within cash.
Practice FAR like the real exam
The free ChatCPA simulator: real exam layout, timed testlets, starting with a question on cash and cash equivalents. No account needed to start.
Open the free simulator →Questions from the ChatCPA bank of 17,658 CPA exam questions, each with a written reason for every wrong answer. ChatCPA is built by Nicholas Miller, CPA (Oregon #14907). How these pages are made.