[Getting a CPA]

What is the most important equation in FAR? What’s the funnest?

For me, I think it’s:

Beginning Inventory + Purchases = Cost of Goods Avail for Sale – Ending Inventory = Cost of Goods Sold

I know that’s an obvious one! I could have gone with Assets = Liabilities + Equity but wanted to feel smart 🙂

What’s yours????

[Anonymous]

I haven't studied FAR yet but i've just prepped for BEC and some equations go hand in hand. My favorite is Breakeven Analysis. Fixed Costs + Profit / Contribution Margin. I love dividing by the contribution margin and seeing the answer correlate with one of the multiple choice choices.

[Anonymous]

not sure about fav… but i hate this equation BASE – urghhhhhh like really? LOL

B – Beg

A- addition

S- subtraction

E – ending

doesnt make any sense!!

[Anonymous]

@Nam

That's actually my favorite equation lol

[gobias]

I'm with you Nam, that equation does nothing for me.

2+2-1=3.

Yeah, I study for the CPA exam in between recess and nap time.

F - 86
R - 90
A - 97
B - 91

[Anonymous]

@Getting a CPA

Another version of your equation (I slightly changed it cause for me this is easier to remember), is:

Beginning Balance + Purchases – COGS = Ending Balance

[Anonymous]

For any balance sheet related account, the BASE equation/mnemonic is indispensable. If it doesn't make sense, I highly recommend getting to a place where it does make sense!

[gobias]

I find the BASE mnemonic worthless because it doesn't help me remember what the additions/subtractions are. That's the difficult part.

I don't need a mnemonic to help me remember to add additions and subtract subtractions.

F - 86
R - 90
A - 97
B - 91

[Anonymous]

It's more of a conceptual mnemonic…if you can compute ending A/P (for ex.) without going through the steps, more power to you…I just think its nice to see on paper the components that go into the calculation, its effect on the P&L, CF statement, etc.

“It's Science….”

[Anonymous]

Also, continuing the example using A/P…obviously the components are additions to the beginning balance (things added to A/P in the current year), less the “deletions” (existing A/P paid during the year), which leaves you with the ending balance.

Boils down to the fact that whatever (BALANCE SHEET ITEM) you’re trying to compute “controls” the additions or deletions component of the equation.

Sorry if I'm totally missing the boat and being too elementary, I just don't see how it isn’t useful in a multitude of scenarios….

[gobias]

Right. I'm not saying I don't use it, because I do. I just think it's intuitive and doesn't necessitate having a mnemonic to remember it by.

F - 86
R - 90
A - 97
B - 91

[Getting a CPA]

I didn't even know there was a mnemonic called BASE? And yes, it seems intuitive. CPAExcel didn't teach that…

[Justinnnn]

75 = Pass

REG 80 2/7/11
FAR 91 10/8/11
AUD 97 11/22/11
BEC 96 2/4/12

CPA 3/15/13

[Anonymous]

This isn't a formula but I've already seen them mentioned so I'll go with Olinto's PUFER mnemonic which has been indespensable and his cheesy P Diddy story to go along with it made it impossible to forget.

[gbeste]

The “PUFER” is the best, feel like I will know that one and “CAR IN BIG” for the rest of my life..

FAR - 84
AUD - 93
REG - 76

[splinter1643]

Well, it's not so much an equation as a mnemonic:

Roger CPA's TT BPO 75 90. even my non-accounting relatives were singing it. That's how catchy it was.

CPA license in progress....

[Author]

Replies