Section 2: 30–40%2B
Trade Receivables
Derivatives are lightly tested but guaranteed to appear in at least one MCQ. The AICPA almost always asks about fair value hedges vs. cash flow hedges — specifically where the gain/loss goes. Fair value hedge: both the derivative AND the hedged item are marked to market through net income. Cash flow hedge: the effective portion goes to OCI, not income. Mix those up and you'll get it wrong every time.
What AICPA Wants You to Know
- 1Compute bad debt expense and the allowance using the income statement and balance sheet approaches
- 2Apply the CECL model (ASC 326) for estimating expected credit losses
- 3Distinguish factoring without recourse from factoring with recourse
- 4Explain assignment and pledging of receivables and proper accounting treatment
- 5Calculate net realizable value of accounts receivable