The FAR CPA exam section is always my answer when asked, “Which of the CPA exam sections should I take first?” It’s the CPA beast, and once you tackle this, you’ll be riding a wave of confidence that will allow you to conquer all of the others.
But what exactly is FAR, and what does this CPA exam section include?
I’ve combed through the new FAR CPA exam blueprints released by the Association of International Certified Professional Accountants (AICPA) and outlined them for you below. I’ve also included some first-hand accounts from those who have taken the new version of the FAR CPA exam.
Let’s jump in!
Key Takeaways
- Broad Scope: The FAR section rigorously tests on financial accounting and reporting across entities, emphasizing GAAP and standards by FASB and GASB, including a specific focus on governmental and non-profit accounting.
- New Blueprint Breakdown: It organizes exam content into Financial Reporting, Select Balance Sheet Accounts, and Select Transactions, advising where to focus study efforts.
- Exam Composition: The FAR format combines multiple-choice questions and simulations, stressing application (45-55%) and analysis (35-45%), with less emphasis on memorization (5-15%).
- Effective Preparation: Achieving success in FAR demands strategic studying with CPA prep courses, prioritizing financial reporting, engaging with practice simulations, and honing time management for the exam’s rigorous format.
FAR CPA Exam Section: What’s New?
Historically seen as a formidable challenge, the FAR section assesses the breadth of knowledge and skills CPA candidates must master in financial accounting and reporting. This includes the frameworks used by a wide spectrum of entities, from your neighborhood non-profit to massive public corporations.
The FAR CPA Exam section serves as a comprehensive test of one’s ability to prepare, review, and analyze financial statements and understand the accounting for various entities, including governmental entities and not-for-profit entities. It also covers the application of Generally Accepted Accounting Principles (GAAP) and other technical financial accounting standards issued by authoritative bodies like the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB).
FAR includes everything from governmental entity financial statements related to state and local governments to annual comprehensive financial report information.
The 2024 blueprint for the FAR section breaks down content into digestible parts, ensuring CPA candidates are well-versed in:
- Financial Reporting: This area, making up 30-40% of the exam, dives deep into financial statements for both for-profit and not-for-profit entities, including the nuances of government-wide financial statements and the Comprehensive Annual Financial Report (CAFR).
- Select Balance Sheet Accounts: Also representing 30-40% of the FAR content, this focuses on crucial accounts like cash equivalents, financial liabilities, and trade receivables, among others.
- Select Transactions: Covering 25-35% of the exam, this section tests knowledge on revenue recognition, income taxes, foreign currency transactions, and more.
“I used Becker. I think it prepared me very well, but I do think I could’ve done better with more time invested in F6. I didn’t think there’d be so much on the actual exam.”
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Understanding the FAR section of the CPA exam format is key to exam-day success. The exam consists of multiple-choice questions (MCQs) and task-based simulations (TBSs) designed to assess a candidate’s ability to apply knowledge in practical scenarios. Notably, FAR exam questions are known for their depth, requiring a solid understanding of both journal entries and reconciliation requirements.
“I found the Becker sims were fairly good prep, but my sims had a lot more exhibits to work with than Becker’s did. If you’re good with reading comprehension and scanning for info in emails, memos, invoices, etc then the Becker prep should be fine. If that’s not a strong suit for you then you may run into trouble making sense of all the info thrown at you.”
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How are Skills Allocated?
- Analysis (35-45%): This high weighting underscores the importance of being able to examine and dissect financial information to identify patterns, anomalies, or interpretations. Candidates should be prepared to analyze financial data, understand complex scenarios, and apply their knowledge to new situations.
- Application (45-55%): This is the most heavily weighted skill and involves using knowledge in practical situations. For the FAR CPA Exam, this means applying accounting principles and standards to real-world financial reporting and problem-solving.
- Remembering and Understanding (5-15%): Although this has the lowest weight, it’s foundational. Without a solid grasp of key concepts, principles, and standards, candidates will struggle with higher-level skills like application and analysis.
Study Strategies for the FAR CPA Exam
Tackling the FAR CPA exam section demands a strategic approach to studying if you want to get a passing score on the CPA exam. Here are a few tips to guide CPA candidates:
- Drill Down on Financial Reporting: Given its weight, a strong grasp of financial statement accounts, including consolidated financial statements and segment reporting, is crucial.
- Practice, Practice, Practice: Engaging with practice quizzes and simulations can demystify CPA exam questions and the actual exam format.
- Focus on Task-Based Simulations: TBSs often intimidate candidates. Practice these thoroughly, as they’re significant in both scoring and practically applying theoretical knowledge.
- Brush Up on Governmental and Non-Profit Accounting: These areas are unique to FAR and require special attention to master the accounting and reporting FAR nuances.
You’ll also want to focus on time management.
“…The SIMS I practiced on Becker actually felt harder than what I encountered today. There were a ton of exhibits and moving parts today, but they felt fair for the most part. I’d suggest working on time management for the SIMS since they can be time-consuming. I was a little rushed on two of them and didn’t get to complete one fully, but still felt good about what I had answered on it.”
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Final Thoughts
The FAR CPA exam section, with its latest blueprint, stands as a formidable yet navigable challenge for CPA candidates, embodying the essential breadth and depth of financial accounting and reporting knowledge required in today’s diverse and complex financial landscape. From the intricacies of GAAP and specialized accounting standards to the practical application and analysis of financial data across various entity types, the FAR section is designed to prepare candidates for the real-world demands of accounting professionalism.
Effective preparation, leveraging resources like Becker, and focusing on areas of significant weight, such as Financial Reporting and Select Transactions, is key. Moreover, understanding the exam’s format and honing in on skills like application and analysis will equip candidates to not only pass the FAR section but also build a solid foundation for the remainder of the CPA examination journey.
FAQ
The FAR section tests your knowledge of financial accounting and reporting, including GAAP, FASB, and GASB standards for various entities like public corporations, governmental, and not-for-profit organizations.
It consists of multiple-choice questions (MCQs) and task-based simulations (TBSs), focusing on application (45-55%), analysis (35-45%), and foundational knowledge (5-15%).
Aim for 150-200 hours of study time, focusing on financial reporting, balance sheet accounts, and select transactions while practicing simulations and MCQs.
Analytical skills to dissect financial information and practical application of accounting principles in real-world scenarios are crucial, alongside foundational accounting knowledge.
Yes, prioritize understanding financial reporting and select transactions, practice extensively with simulations and quizzes, and develop efficient time management skills for the exam’s rigorous format.
