CPA Exam Tips and Common Pitfalls

Strategies for Success

CPA FAR questions often test the distinction between donor restrictions and donor conditions, the classification of net assets, and recognition of contribution revenue. Understanding terminology differences between business entities, governmental entities, and not-for-profit organizations is essential.

• Know the two net asset classifications.
• Separate restrictions from conditions.
• Recognize unconditional promises immediately.
• Remember that released restrictions are reclassified, not recognized as new revenue.
• Understand functional expense classifications.
• Know the required financial statements.

The most common CPA mistake is confusing a donor restriction with a donor condition.