Exam FAR Topic 1 Question 18 Discussion
Actual exam question for AICPA's FAR exam
Question #: 18
Topic #: 1
Question #: 18
Topic #: 1
Financial reporting by a development stage enterprise differs from financial reporting for an established
operating enterprise in regard to footnote disclosures:
operating enterprise in regard to footnote disclosures:
Suggested Answer: A Vote an answer
Choice "a" is correct. Financial reporting by a development stage enterprise differs from financial
reporting for an established operating enterprise in regard to (more extensive) footnote disclosures only.
Choices "b", "c", and "d" are incorrect. Revenue and expense recognition principles are the same. Rule:
Development stage enterprises should present financial statements in accordance with GAAP and make
additional disclosures such as: cumulative net losses, cumulative deficit (as part of equity), cumulative
sales and expenses (as part of the income statement), cumulative statement of cash flows and
supplementary "shareholders equity."
reporting for an established operating enterprise in regard to (more extensive) footnote disclosures only.
Choices "b", "c", and "d" are incorrect. Revenue and expense recognition principles are the same. Rule:
Development stage enterprises should present financial statements in accordance with GAAP and make
additional disclosures such as: cumulative net losses, cumulative deficit (as part of equity), cumulative
sales and expenses (as part of the income statement), cumulative statement of cash flows and
supplementary "shareholders equity."
by Victoria at Feb 21, 2026, 02:39 PM
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