CPA Exam Tips and Common Pitfalls

Strategies for Success

Most CPA FAR questions focus on selecting the correct accounting approach before performing calculations. Candidates should carefully identify the functional currency, determine whether translation or remeasurement is required, and know where resulting gains or adjustments are reported.

• Identify the functional currency first.
• Use the transaction-date spot rate for initial recognition.
• Recognize transaction exchange gains and losses in net income.
• Remember that translation adjustments usually go to OCI.
• Remember that remeasurement gains and losses generally go to net income.
• Distinguish monetary from nonmonetary items.

The most important CPA question is not 'Which exchange rate applies?' but 'Which accounting model applies?'