FAR CPA Exam Tips

Financial Accounting and Reporting (FAR) is among the four Certified Public Accountant (CPA) Exam sections that you must qualify for CPA licensure. It assesses your understanding of different accounting standards used by government, not-for-profit, and business entities. Being one of the most demanding sections of the CPA Exam, FAR requires the right preparation tips and strategies to pass it in the first go.  

This section incorporates standards and regulations issued by the following entities:

• Financial Accounting Standards Board (FASB)
• International Accounting Standard Board (IASB)
• US Securities and Exchange Commission (US SEC)
• American Institute of Certified Public Accountants (AICPA)
• Governmental Accounting Standards Board (GASB)

Please note that AICPA conducts the CPA Exam jointly with the National Association of State Boards of Accountancy (NASBA) and the 55 US jurisdictions.

Now, let’s take a look at the details of the FAR CPA Exam Section. 

FAR is often considered the most comprehensive exam section due to the vast range of the testable topics. It requires you to be well-versed in numerous technical topics containing formulas and calculations. Candidates usually dread taking it due to the extensive syllabus and memorization required.

It is advisable to keep the format in mind and use reliable preparatory tools to nail this section. From designing an effective study plan to mastering the time management skill, we discuss the top ten FAR CPA Exam tips. 

AICPA offers several CPA Exam sample tests so that you can get a preview of the real exam experience. You can also access the CPA Exam tutorials to get more information on the functions and features of the CPA exam software. 

Kindly watch these tutorials before taking the exam to get familiar with the tools, resources, and navigation. Also, avail practice exams and quizzes that effectively mimick TBS and MCQ testlets. This will ensure you become comfortable with the format of the exam before taking it.

Always start and end your study schedule with a sample test. Mark the questions you don’t understand and review them after answering the other ones. This will help you ace the time management skill and know when to move on from questions. Also, pay attention to keywords while reading the questions. 

This is one of the most important tips for anyone preparing for the FAR CPA exam. With a wide range of diverse topics in this section, candidates usually focus on preparing some topics very well while overlooking others. However, such an approach will surely backfire. Remember that an overwhelming number of details are tested in this section.

So, whether you choose self-study or prep course material, ensure to cover everything. You don’t need to cram every topic but try to comprehend it well. Make it a point to learn something from every single topic. This way, you can stay assured to not miss out on anything. 

Segregate the number of topics as per the days, weeks, or even months in your FAR exam prep schedule. Allocate 1-2 topics per day. Don’t go overboard and take it one day at a time. Also, don’t skip a difficult concept just because it is time-consuming. Instead, keep it aside for weekends and gain a detailed understanding. 

Journal entries are the foundation on which the financial integrity of an entity rests. Every correct entry ensures that the financial records reflect the real financial picture of an entity to its stakeholders.  Hence, the importance of journal entries cannot be overstated.

AICPA has allocated 50%-60% weightage to the application tasks. These application tasks mainly involve preparing journal entries and financial statements. You may also be required to use your comprehension of accounting standards and concepts to calculate, recognize, or correct entries in financial statements. 

Therefore, practice journal entries beforehand to be well-prepared for the final exam. Gain a basic understanding of recording all kinds of transactions. You can also practice making journal entries for the following topics:

• Trade receivables
• Property, plant, and equipment
• Inventory
• Investments
• Intangible assets
• Payables and accrued liabilities
• Long-term debt
• Equity

This universal tip is especially relevant to the FAR CPA Exam section. The only way to cover the extensive FAR material is by making a plan and sticking to it. So, design a study schedule that works the best for you. Keep your lifestyle, work timings, and study goals in mind. 

Also, stay focused and keep track of your daily learning activities. Take frequent breaks to rejuvenate yourself and restart with a fresh mind. Keep revising concepts periodically. For instance, reserve Sunday to revise all the concepts you studied within a week. 

Keep one month or at least two weeks for a final review. Go through the weak areas during this period and solve as many sample tests as possible. 

AICPA-designed FAR CPA Exam Blueprints detail the minimal level of skills and knowledge required to pass this section. In addition, it includes sample task statements and content categorized by area, group, and topic. 

It is developed by the same team drafting the examination, thus enhancing the reliability factor. The Blueprints are published 1-2 times a year. So, ensure to download the latest one and know about score weighting and skills tested in each topic. 

Make your notes as per the given information. This way, you can practice time management with ease and assure excellent results. 

Ask for assistance from a former CPA, learned colleague, or an experienced accounting professional. Besides, you can hire an exam coach and benefit from a one-to-one learning session. 

An industry expert can help you understand even the most challenging topics with ease through real-life examples. Some topics for which you can seek help are:

• Financial statements
• Payables and accrued liabilities
• Revenue recognition
• Income taxes
• Foreign currency transactions and translation

Keep making notes while interacting with the professional. Discuss your doubts and ask them to share some practical tips for dealing with tricky accounting questions in the FAR CPA Exam section. 

Earnings Per Share (EPS) is a crucial measure of the profitability of a business. Hence, its calculation is of primary importance to determine a company's performance in the long run.    

EPS is a commonly tested concept in the FAR exam section. Therefore, learn to calculate basic and diluted EPS correctly. Also, understand the factors affecting EPS. Moreover, study aspects related to the EPS reporting under the FASB Accounting Standards.

Talk to a professional for a better understanding of this concept. Study it as thoroughly as possible. Go through relevant examples and practice using real-life scenarios. Make a note of the formulas and revise them regularly or at least once a week. 

Attempt sample tests to track your knowledge of the topic. Flag every EPS question. Make a list of the recurring questions and the ones you didn’t understand.

With an exhaustive list of testable topics in the FAR CPA Exam section, this tip will ensure that you put your time and effort in the right direction. Preparing with suitable study material can make a world of difference between failing and passing the exam. 

Leverage all the study materials that AICPA and NASBA have to offer. They are the most authentic and useful prep tools for CPA candidates. Furthermore, you can avail a variety of study materials, practice papers, and other learning resources by taking up a CPA Review course.

A review course is especially useful in guiding you through this rather tough exam section, considering the vast amount of syllabus to be covered. You can go through several user-reviewed and rated prep courses and select the most suitable one. 

Buy the study material only after going through the CPA Exam Blueprints. This way, you can stay assured of picking efficient and upgraded study resources. 

With its extensive syllabus and complicated calculations, the FAR Exam section demands an effective time management plan. It ensures that you complete the exam on time and in the best possible way.

Allocate two hours each for both MCQ and TBS testlets. Make sure you don’t waste your time on a difficult question. If you are unable to come up with a response, flag it, and move on to the next. Leave at least 5–10 minutes, in the end, to get back to the flagged questions for a final review. 

Attempt plenty of sample tests. Try to finish them within the time frame of four hours. This practice will help you to get used to the pressure of the actual exam. Stay organized, and don’t lose focus. Keep track of the time, but don’t let the tension overwhelm you. 

FAR has a reputation for being the most difficult CPA Exam section. Hence, schedule it wisely within the 18-month window. This way, you can avoid the stress and guarantee a stellar performance. 

You may take this section first to let the burden off of your shoulders. Or, you can take it at the end and focus only on it. An order like FAR-AUD-BEC-REG or AUD-REG-BEC-FAR is highly recommended. However, you can also place it between two easier sections, i.e., AUD-FAR-BEC-REG or BEC-FAR-AUD-REG.

FAR seems to be a bit more daunting than all the other CPA Exam sections. However, by following these specific FAR exam tips, you can breeze through this relatively difficult CPA section. If possible, interact with former CPAs and learn from their experience. 

Don’t let the examination stress get to you. Refresh yourself through meditation or hanging out with your friends. Lastly, don’t try to cram everything until the day of the exam. Start early and prepare well in advance. Relax and take the exam with a positive mindset. 

This article has been a guide to the FAR CPA Exam Tips. We discuss the top tips on how to pass FAR CPA, including both do’s and don’ts for passing this section. You may also have a look at the below articles to compare CPA with other examinations –

• CPA Exam in India
• CPA Exam Prep
• CPA Exam Sections