How to Pass the FAR Section on the CPA Exam

Starting with the FAR section can help you tackle the whole exam

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The Financial Accounting and Reporting (FAR) section of the Certified Public Accountant exam is taken first more often than any of the other sections, for two main reasons: the content seems the most familiar to the candidate, since it relates closely to so many of the classes necessary to get an accounting degree, and because it is because it is the biggest and most intimidating section.

The American Institute of Certified Public Accountants has this to say about the FAR section: “The Financial Accounting and Reporting section tests knowledge and understanding of the financial reporting framework used by business enterprises, not-for-profit organizations, and governmental entities.”

Based on that description, the section covers everything learned in every financial and cost/managerial accounting class you took in school, as well as the governmental/non-profit accounting class you hopefully took. Governmental/non-profit is a pretty significant portion of the content covered (between 16% and 24%), so even though you probably only took one class on that topic, make sure to give that area the attention that it deserves.

What Does the FAR Section Include?

Topics covered in FAR include: comparisons between GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards), account classification, general ledger (GL) entries, financial calculations, reconciliation of GL to subsidiary ledgers, account reconciliations and analysis, consolidating and eliminating entries, financial statement preparation and analysis, financial ratios, Securities and Exchange Commission reporting, accounting estimates, and application of accounting principles.

The FAR section is four hours long. It consists of three multiple choice testlets (sections), each containing 30 questions, and one testlet with seven tasked-based simulations. The difficulty of the questions in testlets 2 and 3 is based on how well you answered the questions in section 1. Don’t be discouraged by getting tough questions in the second and third testlets since that means you are answering questions correctly.

The tasked-based simulations are just what they sound like — short tasks where the same knowledge is required as in the multiple choice sections but is applied in a practical manner. The simulations may ask you to calculate some figures or complete a reconciliation.

Studying for the CPA Exam

Students choose different methods to study for the CPA exam, and you'll certainly experiment to find the best approach for you.

However, you should make sure to work on multiple practice problems — lots and lots of them. Honestly, you can never do too many practice problems, especially in areas where you're weak. Reviewing your trouble areas, based on the questions you missed, will tell you where to spend more time studying.

FAR Is Intimidating to Many Candidates

Yes, the FAR section often feels big and scary. But it's also the perfect way to evaluate your preparation for the overall exam, and to see if you need to make any adjustments when studying for the other three sections. Also, your motivation and study discipline will be at their highest when you first start studying, so use that to your advantage and tackle the hardest part first.

Because you have 18 months to pass all four sections, if you don’t pass FAR on the first try, you can use what you learned from the experience to make sure you do pass the other three sections.

That leaves you with plenty of time to study some more and take FAR again within the 18-month window. If you pass FAR on the first try, then, you've completed what is considered to be the most difficult section.