FAR CPA Exam Section: Full Guide to Format, Structure, & Content

Ultimate Guide to Financial Accounting & Reporting CPA Exam Format, Structure, & Content

far-cpa-exam-sectionThe Financial Accounting and Reporting (FAR) section of the CPA Exam is widely regarded as one of the most challenging components of the certification process. It assesses candidates’ knowledge of financial reporting frameworks, including U.S. Generally Accepted Accounting Principles (GAAP), International Financial Reporting Standards (IFRS), and governmental accounting standards.

Aspiring CPAs must not only master theoretical concepts but also demonstrate their ability to apply these principles in practical scenarios. This guide provides a structured overview of the FAR CPA Exam, including its format, content areas, preparation strategies, and tips for success.


What Is the FAR CPA Exam Section?

The FAR section tests candidates on the principles and practices of financial accounting and reporting used by various entities, including businesses, nonprofits, and government organizations. This section is comprehensive, covering a wide array of topics such as the preparation of financial statements, consolidation, pensions, leases, and more.

FAR demands a thorough understanding of both foundational and advanced accounting topics, as well as the ability to apply these concepts to real-world scenarios.


FAR Exam Format and Structure

The FAR CPA Exam is structured into five testlets and lasts four hours. It includes two main types of questions:

#1 Multiple-Choice Questions (MCQs):

  • Two testlets with 33 MCQs each.
  • These test your understanding and application of accounting principles.

#2 Task-Based Simulations (TBS):

  • Three testlets containing a total of eight TBS.
  • These require candidates to complete case studies and apply knowledge to solve problems.

The exam uses a weighted scoring system:

  • MCQs contribute 50% of the total score.
  • TBS account for the remaining 50%.

To pass the FAR section, candidates must achieve a score of 75 or higher on a scale of 0–99. The scoring reflects performance across all tasks, emphasizing both accuracy and the ability to analyze and apply knowledge effectively.


Content Areas Covered in the FAR Exam

FAR is divided into four primary content areas, as outlined in the AICPA CPA Exam Blueprints:

Conceptual Framework, Standard-Setting, and Financial Reporting

Topics include the conceptual framework, financial statement presentation, and disclosures.

Candidates must understand how accounting standards are developed and applied.

Example: Identifying the purpose of the balance sheet or explaining the impact of new accounting standards.

Select Financial Statement Accounts

This area covers recognition, measurement, valuation, and presentation of specific accounts, such as cash, receivables, inventories, and investments.

Example: Calculating inventory costs using FIFO and LIFO methods or recognizing bad debt expenses.

Select Transactions

Focuses on accounting for transactions like revenue recognition, leases, pensions, income taxes, and consolidations.

Example: Determining the classification of a lease as operating or finance based on specific criteria.

State and Local Governments

Tests knowledge of governmental accounting standards, such as fund accounting and reporting for governmental entities.

Example: Preparing a reconciliation between governmental fund statements and government-wide financial statements.

Each content area has specific skill levels tested, including remembering, understanding, application, and analysis.


FAR Exam Preparation Strategies

Success in the FAR exam requires strategic planning and disciplined preparation. Below are steps to help you prepare effectively:

Study Materials

  • Invest in a reliable CPA review course, such as Becker, Wiley, or Roger CPA Review. These courses provide detailed lectures, practice questions, and simulations aligned with the FAR syllabus.
  • Use flashcards to reinforce key concepts, such as definitions of accounting terms and differences between GAAP and IFRS.
  • Practice extensively with TBS to gain familiarity with real-world scenarios.

Study Plan

Dedicate at least 8–10 weeks to studying for FAR, allocating approximately 20 hours per week. Break down study time into daily goals, focusing on one content area at a time. For example:

Week 1–2: Conceptual framework and financial reporting.

Week 3–5: Financial statement accounts.

Week 6–7: Transactions and government accounting.

Week 8: Comprehensive review and practice exams.

Tips for Success

Prioritize understanding over memorization. Grasping the “why” behind accounting rules enhances retention. Also, simulate exam conditions by practicing under timed settings.


FAR Test Day Tips

On exam day, maintaining composure and managing time effectively are critical. Here are some tips:

#1 What to Bring

Ensure you have a valid ID and your test appointment confirmation.

#2 Time Management

Allocate time for each section:

  • MCQs: 2–2.5 minutes per question.
  • TBS: 15–20 minutes per simulation.

#3 Tackle Simulations Strategically

Start with easier simulations to build confidence, then focus on more complex ones.


Common FAR Challenges and How to Overcome Them

FAR’s extensive syllabus can feel overwhelming, but identifying challenges and addressing them early helps:

Volume of Material: Create summary notes for quick reviews and focus on high-weighted topics.

Government Accounting: Many candidates find this area challenging due to unfamiliarity. Dedicate extra time to fund accounting principles.

Exam Anxiety: Practice relaxation techniques like deep breathing. Simulate the exam environment to build confidence.


Who Is FAR Easiest For?

The FAR CPA exam is often easiest for candidates with strong academic or professional backgrounds in financial accounting. Individuals who have recently completed an accounting degree or taken advanced financial reporting courses are likely to find the material familiar and easier to grasp.

Experience in roles such as financial analyst or auditor also provides an advantage, as these positions require practical application of many FAR concepts, such as preparing financial statements or performing consolidations. Additionally, candidates who are detail-oriented and comfortable working with numbers may excel in FAR’s heavily calculation-based questions.

Familiarity with key accounting standards, such as GAAP and IFRS, further reduces the learning curve for those who encounter these frameworks regularly. A systematic and organized study approach, combined with prior exposure to complex accounting principles, makes FAR more manageable for these individuals. However, consistent effort is still required due to the vastness of the exam’s content.


Who Is FAR Hardest For?

FAR is particularly challenging for candidates without recent exposure to financial accounting or those who lack a solid foundation in the subject. Professionals working in non-accounting roles, such as tax or consulting, may struggle with the breadth and depth of FAR’s syllabus.

Similarly, individuals unfamiliar with advanced accounting topics—such as pensions, derivatives, or governmental accounting—can find it daunting to master these areas within a limited study timeline. The exam’s emphasis on detailed calculations and the application of accounting standards can be overwhelming for those who are not comfortable with numerical problem-solving.

Candidates who tend to memorize rather than understand the underlying principles may also face difficulties, as FAR requires a practical understanding of concepts. Lastly, the sheer volume of material covered, combined with the time constraints of the exam, makes it harder for candidates who are not disciplined or who struggle with time management.


How Is the FAR CPA Exam Scored?

The FAR CPA exam uses a weighted scoring system on a scale from 0 to 99, with a passing score set at 75. The exam is divided into two types of questions: multiple-choice questions (MCQs) and task-based simulations (TBS). MCQs are split into two testlets, each contributing to 50% of the total score.

The remaining 50% comes from three testlets containing task-based simulations, which evaluate candidates’ ability to apply accounting concepts in practical scenarios. The exam employs adaptive testing for MCQs, where the difficulty of questions in the second testlet adjusts based on the performance in the first.

Scoring for TBS is more complex, as it involves evaluating responses for accuracy, completeness, and the application of professional judgment. While the exact scoring methodology is proprietary, it emphasizes performance across all sections, ensuring that candidates demonstrate both theoretical knowledge and practical problem-solving skills.


Resources for the FAR CPA Exam

The following resources can enhance your preparation:

  • AICPA CPA Exam Blueprints: A detailed outline of exam topics.
  • Online Study Communities: Join CPA forums on platforms like Reddit or LinkedIn for peer support and tips.
  • Practice Tests: Use CPA review software to simulate the real exam.

Frequently Asked Questions (FAQs)

How long should I study for FAR?

Most candidates spend 100–120 hours over 8–10 weeks.

What is the passing rate for FAR?

The FAR section typically has one of the lowest pass rates among CPA exam sections, averaging around 45–50%.

How does FAR compare to other CPA Exam sections?

FAR is the most comprehensive and challenging due to its breadth of topics. Success in FAR builds a solid foundation for other sections, such as AUD and REG.


Bottom Line

The FAR CPA Exam section is a challenging yet essential step toward becoming a CPA. Its comprehensive coverage of financial reporting and accounting principles ensures candidates are well-equipped to handle complex accounting tasks in their professional careers.

By understanding the exam’s structure, mastering key content areas, and following a strategic study plan, you can approach FAR with confidence and increase your chances of success. Remember, disciplined preparation and consistent effort are the keys to acing this demanding section.

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