How should I study for the financial accounting part? I went over the book, still there is too much differences between GAAP and IFRS. Also some stuff are hard to understand like the tax part. How should I study for it? I memorized all the ratio’s, and know how to set up the direct and indirect cash flow statements, lifo vs fifo, depreciation, income statement, balance sheet, and standardization (Everything on the schweser cheat sheet); however, there is a lot of small stuff that is too confusing. How should I tackle this part?
CFA lv1 Financial reporting and analysis
- Thread starter HOlim
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daharmattan1
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- Jun 18, 2026
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Honestly, if you can swing it check out John Harris’ class. They are for L1 and L2 and only cover financial statement analysis.
I didn’t take him for L1 and it was a slog to get through. I did take it for L2 and it was a life saver. Not just the class (3 day bootcamp), but the material he provided allowed for really effective time-saving review after.
No, I get zero incentive to recommend him, he was just truly worth the $
His site is here http://www.accountingworkshops.com/Pages/default.aspx
I didn’t take him for L1 and it was a slog to get through. I did take it for L2 and it was a life saver. Not just the class (3 day bootcamp), but the material he provided allowed for really effective time-saving review after.
No, I get zero incentive to recommend him, he was just truly worth the $
His site is here http://www.accountingworkshops.com/Pages/default.aspx
You need to know most of the ratios and how to come to them. When you start doing mocks you will see how the questions are asked. They typically dont ask you directly they will indirectly ask you i.e. “What is the most likely reason receivables turnover is higher?” and list out several reasons.
You need to 1. Know the formula for receivables turnover and 2. know how the given choices will interact with BS/IS items effecting the formula.
As for GAAP IFRS, there are charts around that you should reference that are great showing the differences. Many times you can deduce it though as under IFRS there is a bit more leeway than under US GAAP. US GAAP is all about the Balance Sheet, and the IS will be “good enough” from there. Whereas IFRS is all about the IS, and the BS comes together from there.
I didn’t spend TOO much time on the whole direct & indirect CF, just know the basics of it and you’ll probably be fine. The most important parts of FRA are the susequent readings on Inventories, Long Lived Assets, Contracts etc. Keep plugging away on deferred tax and stuff, they are not intuitive concepts but once you understand them they are easy points.
You need to 1. Know the formula for receivables turnover and 2. know how the given choices will interact with BS/IS items effecting the formula.
As for GAAP IFRS, there are charts around that you should reference that are great showing the differences. Many times you can deduce it though as under IFRS there is a bit more leeway than under US GAAP. US GAAP is all about the Balance Sheet, and the IS will be “good enough” from there. Whereas IFRS is all about the IS, and the BS comes together from there.
I didn’t spend TOO much time on the whole direct & indirect CF, just know the basics of it and you’ll probably be fine. The most important parts of FRA are the susequent readings on Inventories, Long Lived Assets, Contracts etc. Keep plugging away on deferred tax and stuff, they are not intuitive concepts but once you understand them they are easy points.
Indirect method
Assets Increase - Cash Decrease
Assets Decrease - Cash Increase
Liablities Increase - Cash Increase
Liabilities Decrease - Cash Decrease
USGAAP and IFRS are getting more simillar as global GAAPs have become harmonized.
The key difference are about:
- Fixed assets revaluation which is not permitted under USGAAP,
- IFRS - LIFO inventory method is not permitted,
- Impairment - 2 step approach in USGAAP vs 1 step approach in IFRS,
- Construction contracts and cost recognizing (different treatment)
- Borrowings cost capitalization - different approach.
USGAAPs are still bit more conservative than IFRS but, IMO, a step closer to reality.
Assets Increase - Cash Decrease
Assets Decrease - Cash Increase
Liablities Increase - Cash Increase
Liabilities Decrease - Cash Decrease
USGAAP and IFRS are getting more simillar as global GAAPs have become harmonized.
The key difference are about:
- Fixed assets revaluation which is not permitted under USGAAP,
- IFRS - LIFO inventory method is not permitted,
- Impairment - 2 step approach in USGAAP vs 1 step approach in IFRS,
- Construction contracts and cost recognizing (different treatment)
- Borrowings cost capitalization - different approach.
USGAAPs are still bit more conservative than IFRS but, IMO, a step closer to reality.
