FAR CPA Exam Section: 2019 Ultimate Guide to Financial Accounting and Reporting

To earn the CPA certification, you must pass 4 CPA Exam sections. One of the sections is Financial Accounting and Reporting (FAR). We bring to you all the details about the content, pass rates, questions, format, difficulty, structure, timing, and more that you need to know n order to pass the CPA FAR exam, 

Introduction to the FAR CPA Exam Section

The CPA FAR exam section focuses on knowledge of general accounting principles for business enterprises, non-profit organizations, and governmental entities, and the skills related to the knowledge.

One must have comprehensive and current financial accounting, and reporting knowledge and skills is required to fulfill the Certified Public Accountant position. CPA candidates will be tested for such knowledge and skills in the FAR section. Whether you love financial reporting, financial statements, and transactions, or not, you must make it a point to know all about every component of accounting. 

FAR is the part of the CPA Exam that makes one do the most accounting. Due to this, FAR has earned a reputation for being a little bit of a beast. If you have a hard time with these topics, your plan should be to do everything you can to pass the first time. But if you love accounting, FAR will not be so bad for you. One way or the other, all of the essential exam information about the CPA FAR will come in handy for you. 

FAR CPA Exam Section Content

The FAR CPA Exam Blueprints explain that FAR covers the financial accounting and reporting frameworks, including the regulations and standards that are issued by the:

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

FAR deals with financial accounting. In 4 content areas, FAR primarily addresses transactions, financial reporting, financial statement accounts, and local and state governments. 

The topics for the FAR content areas are 

  • Area I:
    FASB’s FASB’s standard-setting process, Conceptual Framework, and financial reporting topics such as general-purpose financial statements, disclosures specific to public companies, and financial statements prepared under special purpose frameworks.

  • Area II:
    reporting and financial accounting requirements in the FASBS Accounting Standards Codification that apply to financial statement accounts.

  • Area III:
    reporting and financial accounting requirements for select transactions that apply to entities under the FASB Accounting Standards Codification and the IASB standards.

  • Area IV:
    GASB’s conceptual framework, the financial accounting and reporting requirements for local and state governments under the GASB interpretations and standards. 

CPA candidates must be able to:

  • Compile financial statements involving journal entries and data presentation
  • Identify various financial reporting and accounting methods
  • Perform calculations 
  • Understand and analyze the information from financial statements
  • Derive conclusions from financial statements and findings

CPA FAR Exam Pass Rates and Reputation

The recent FAR pass rates have been good. The Q2 2018 pass rate was higher than the pass rate of Q2 2017, which is normal. In 2018, the Q3 pass rate was also higher as compared to 2017. However, the Q3 2018 pass rate was lower than the Q2 2018 pass rate, which messes with the pass rate trends a bit.

Types of FAR CPA Exam Questions

FAR uses two different types of questions: MCQs and task-based simulations. Both of these types of questions contribute 50% of your total score for the FAR CPA Exam section.

Multiple-choice questions (MCQs):

CPA Exam multiple-choice questions look similar to MCQs on other tests but can be more complicated. They have three parts:

  1. Question stem: comprises the question being asked, details required for answering the question, and extra pieces of information
  2. Correct answer choice: one of the four provided answer choices that is the best response to the question
  3. The distractors: the three other answer choices that are there to distract you 

Task-based simulations (TBSs):

Task-based simulations are case studies that require you to apply your knowledge and skills to real work-related scenarios. To complete a TBSs, you must make use of the information found either in the question or in the exhibits provided in order to finish a task like filling in a series of blanks, performing a calculation, or revising a document. A specific type of TBS is the Document Review Simulation (DRS), which requires you to make an assessment of a document after referring to various resources. Another type is the Research task, which wants you to research authoritative literature and cite the appropriate guidance. FAR is one of them. The other 2 are AUD and REG.

FAR CPA Exam Section Format

With a computerized test, each section presents candidates with five testlets containing different types of questions. FAR has two testlets of 66 total MCQs and three testlets of 8 total TBSs.

Format of the FAR CPA Exam Section

The total number of questions is inclusive of operational and pretest questions within each CPA Exam section. Operational questions affect your score, while pretest questions don’t. The AICPA accommodates pretest questions within the exam in order to collect candidate performance data to determine if those questions should appear on future iterations of the exam as operational questions or not.

Operational questions and pretest questions are similar. Simply answer all CPA Exam questions to the best of your abilities. In the event of you coming across a particularly difficult or an unfamiliar question, do your best. It may have been a pretest question at best that wouldn’t affect your score.

Difficulty Levels of FAR on the CPA Exam

The CPA Exam is aimed at fulfilling the purpose of confirming that you have the knowledge and skills required to represent the CPA certification well. The AICPA uses four different skill levels to explain the difficulty of each CPA Exam section to ensure that the CPA Exam achieves its goal. 

CPA FAR Exam Skill Levels

According to FAR’s skill level allocation, the FAR exam section tests at the Application level the most. You certainly don’t need to have a deep understanding of most of FAR’s contents to pass.
FAR relies on the skills of remembering and understanding the least. It features a lot of content and many topics that are troublesome.

Testing Process for the CPA FAR Exam

Every CPA Exam sections start with 2 MCQ testlets that will be presented using a multistage adaptive delivery model. The difficulty level of the second testlet will be dictated by your performance in the first MCQ testlet dictates 

Testlet selection

The first MCQ testlet will always be moderately difficult no matter which CPA Exam section you’re sitting for. The second MCQ testlet will be comparatively more difficult if you perform well on this testlet. However, if you don’t perform very well in the first testlet, the second testlet will be moderately difficult again.
The exam awards marks based on difficulty level, so you will get more credit for answering a difficult question than an easier question correctly. Due to this, the exam doesn’t penalize you for receiving a more difficult MCQ testlet or give you an advantage for getting two medium MCQ testlets.

As opposed to the MCQ testlets, the CPA Exam determines the difficulty levels of the TBS testlets in advance; therefore, their difficulty levels don’t differ according to your performance. You can receive credit for your work or non-Research TBSs.

Structure of the CPA FAR Exam

The total testing time for every CPA Exam section, including FAR, is 4 hours (240 minutes). In addition to that, you will have 15 minutes to complete additional testing screens at the beginning and at the end of the exam. You can have a 15-minute break that pauses the exam timer after the third testlet (first TBS testlet).

  • Welcome/enter launch code: 5 minutes
  • Confidentiality/section information: 5 minutes
  • Standardized break: 15 minutes
  • Survey: 5 minutes

Time Management for the FAR CPA Exam Section

Develop, practice, and apply an exam time management system in order to maximize your score and provide yourself with the best chance to pass. Give yourself sufficient time to answer every question in the FAR Exam section of CPA.

FAR CPA Exam Section Testing Windows and Scheduling

All sections of the CPA Exam are only available to take during four yearly testing windows.

  • January 1 – March 10
  • April 1 – June 10
  • July 1 – September 10
  • ???????October 1 – December 10

Additionally, you must pass all 4 CPA Exam sections in a rolling period of 18 months, which begins once you pass your first section. So, that means you have 1 ½ year to pass the remaining three sections.

The credit for the first section that you passed will expire if you don’t pass the remaining sections during this time period. You must then pass the expired section again and the other sections you haven’t yet passed in 18 months from the time you passed your second section. If you don’t pull this off, you’ll also lose credit for your second passed section.

The beginning of your 18-month window continuously moves back to the date of your earliest passed section until you pass all four sections within this time limit.

Recommended Placement of FAR in Your CPA Exam Schedule

FAR requires the most study time.

Start your CPA Exam schedule with FAR. FAR comprises a wide range of content. For that reason, FAR’s content is not always very hard to learn, but it can be very overwhelming. If you take this section first, you can put all of that study time behind you right away.

You have to pass all four sections in 18 months.

You have 18 months from the time you pass your first CPA Exam section to pass the other three sections. If you don’t appear for FAR first, you’ll have to commit a significant portion of your 18 months to prepare for FAR, and you may run out of time.

On the other hand, if you take on FAR first, you can study for it as long as you want prior to your 18-month window opening. You can even afford to fail FAR a few times before the clock on your section credit starts to tick. Passing FAR first puts you in a very convenient position and gives you one less thing to worry about.

You can pass FAR the first time.

The pass rates are low, but that could have a lot to do with the amount of content FAR covers than how difficult that content is. A lot of candidates don’t give themselves enough time to study for FAR.

If you find enough time to study and you don’t find FAR’s topics to be challenging, you can clear it the first time. If you appear for FAR first and pass it on your first attempt, then you commence the CPA Exam process with confidence. 

Passing Score 

The minimum score you require to pass for all 4 CPA Exam sections is 75, which is a scaled score and not the percentage of questions you answered right.

FAR CPA Exam Section Study Time

Generally, the more comfortable you are with the FAR syllabus, the less time you will need to study, making it faster for you to pass. You’ll find the groups, content areas, and topics of FAR in the FAR CPA Exam Blueprints.

You can finish your review in six to eight weeks if you study for 20 hours a week, so .

If you can’t fit that much time into your routine, try studying for 15 hours a week. This will prepare you in 8-11 weeks.

Study Tips for the CPA FAR Exam

FAR has a history of being the toughest section, but you can prepare for it effectively and pass easily if you put in the necessary time and effort. Using these study tips, brace yourself for this beast of a CPA Exam section so you can overcome it, and move on. Schedule your FAR study time carefully

Many candidates fail to clear FAR because they don’t study enough. This situation is understandable, considering there is a lot you must know to pass the exam. Plan well in advance and maintain a rigid study time-table, so you don’t run out of time. 

Make use of the last month for your final review. Make use of this time to focus on any remaining areas you are weak at. Try to achieve high quiz scores in all content areas. 

Don’t skip the difficult concepts 

Everyone has their particular blind spots, so you must spare yourself some buffer time in order to ensure that you can acquire deep comprehension in your weak areas. You also never know what content will be on your version of the exam. Unless you don’t mind taking the CPA FAR exam again, do not risk skipping any part of your study materials.

Make sure you understand journal entries

The foundation of financial accounting is the ability to perform journal entries. You’ll have to put additional effort into this area to prepare for FAR if you are not a major of accounting or if you haven’t been in touch with journal entries for a long time. However, two resources that can really help you master journal entries are this page on principles of accounting illustrative entries and this page on fund-based vs. government-wide entries.

Don’t rush yourself

Rest assured, if you have ample time to study for the CPA FAR exam, you can definitely pass. The questions and answers will be computational and clear-cut; that is, you either get it, or you don’t. If you are comfortable with GAAP and the calculations, FAR is a section you can pass confidently.

However, if you’re worried that you’ll not get through all of your reviews in time, you might as well postpone the scheduling of the CPA FAR exam for you. You don’t need to take FAR if you’re not ready for it. But in doing so, there is a risk of your preferred Prometric testing center being filled up on your ideal exam dates. 

One of the best things about the test being computerized is the fact that you can schedule your exam date whenever you want. So, take advantage of it.

With a lot of material to cover, preparing for the CPA FAR exam might not be an easy task. But with the right CPA review course, you can still pass it. This above article gives you details about the FAR section of the CPA exam. Hope this article is helpful to you. If you have any queries, feel free to comment in the section below. Happy Learning!

Simandhar Education:
Simandhar is the official partner of Becker and AICPA - Largest Training provider for USA CPA, USA CMA, IFRS and EA courses in India with offices in Bangalore, Hyderabad, Delhi, Ahmedabad, Gurgaon, Kerala, Cochin (Kochi), Trivandrum, Kottayam, Kozhikode, Malappuram, Chennai, and Mumbai.
Learn how to use CPA, from first basics to advanced techniques, with online video tutorials taught by Industry Experts. Simandhar Education provides the best leading online training provider for CPA in India. Contact us at +919390785925.


Course Enquiry


  1. Shubham Manapure

    Very inspiring story.

Add Comment

Live chat simandhar