FAR Exam Format
Everything you need to know about the Financial Accounting and Reporting (FAR) section of the CPA Exam
FAR Section At-a-Glance
Question Content Breakdown
(plus 15 min break)
(2 MCQ & 3 TBS)
Multiple Choice Questions
Comprehensive Guide to the FAR Section
CPA Exam FAR Section Content
The Financial Accounting and Reporting (FAR) section of the CPA Exam is arguably the most difficult, longest and by far the most comprehensive section of the exam. As laid out in the AICPA Blueprints, FAR requires that CPA candidates have a strong knowledge of US GAAP, including concepts and standards for financial statements, typical items in financial statements, specific types of transactions and events, accounting and reporting for governmental entities, and accounting and reporting for nongovernmental and not-for-profit organizations.
25-35% Conceptual Framework, Standard-Setting and Financial Reporting
- Conceptual framework and standard-setting
- General-purpose financial statements: for-profit business entities
- General-purpose financial statements: nongovernmental, not-for-profit entities
- Public company reporting topics
- Financial statements of employee benefit plans
- Special purpose frameworks
30-40% Select Financial Statement Accounts
- Cash and cash equivalents
- Trade receivables
- Property, plant and equipment
- Intangible assets
- Payables and accrued liabilities
- Long-term debt
- Revenue recognition
- Compensation and benefits
- Income taxes
20-30% Select Transactions
- Accounting changes and error corrections
- Business combinations
- Contingencies and commitments
- Derivatives and hedge accounting
- Foreign currency transactions and translation
- Nonreciprocal transfers
- Research and development costs
- Software costs
- Subsequent events
- Fair value measurements
- Differences between IFRS and U.S. GAAP
5-15% State and Local Governments
- State and local government concepts
- Format and content of the Comprehensive Annual Financial Report (CAFR)
- Deriving government-wide financial statements and reconciliation requirements
- Typical items and specific types of transactions and events in governmental entity financial statements
CPA Exam FAR Structure & Format
The FAR Exam is 4 hours long, though the candidate is not required to use all the allotted time, and consists of 66 Multiple Choice Questions (MCQs) and 8 Task-Based Simulations (TBSs).
Of the 66 MCQs, 54 are operational, meaning they count toward the exam score, while 12 are pretested and do not count toward the exam score. Of the 8 TBSs, 7 are operational and 1 pretested. Other than scoring, there is no functional difference between operational and pretested questions and no sure way for the candidate to tell the difference between an operational and pretested question.
The FAR Exam is organized into five testlets – two 33-question MCQ testlets followed by a 2-question TBS testlet, then an optional 15-minute break that does not count against the 4-hour test time, then two additional TBS testlets of three questions each. Once a testlet has been submitted, it cannot be revisited.
The operational MCQs count 50% toward a candidate’s exam score. The operational TBSs count 50% toward a candidate’s exam score.
By default the first MCQ testlet is of ‘Medium’ difficulty. The difficulty level of the next MCQ testlet depends on the candidate’s performance on the first testlet. The candidate will therefore experience one of the following MCQ testlet difficulty sequences:
- Medium – Difficult (candidate performed well on first testlet)
- Medium – Medium (candidate did not perform well on first testlet)
Characterizing a testlet as ‘medium’ or ‘difficult’ refers to the average difficulty of the questions in an MCQ testlet. There is not a binary ‘medium’ or ‘difficult’ value assigned to each MCQ. Rather, the difficulty level of each question exists on a numeric scale.
Credit awarded for MCQs is weighted by difficulty level, meaning more credit is awarded for getting a more difficult question correct than for getting a less difficult question correct. Therefore, a candidate with a difficult testlet is not penalized for having harder questions, nor is there any advantage in having two Medium testlets.
It is still possible to pass the exam even with a Medium-Medium MCQ testlet sequence. In these cases, good-to-excellent performance on the second MCQ testlet and the TBS testlets is key to passing.
The assigned TBS testlets are pre-selected and have nothing to do with the candidate’s performance on the preceding MCQ testlets, nor do the TBSs within the TBS testlet proceed according to performance on the previous TBS.
While an MCQ is either right or wrong, there appears to be partial credit awarded for non-Research TBSs. Research TBSs are graded as either right or wrong with no partial credit awarded.
Start Now with a Free Trial
The FAR section of the CPA Exam covers the entire auditing process and requires a strong technical knowledge of the auditing process. Want to test your auditing skills? Take a UWorld Roger CPA Review Free Trial for access to real CPA Exam practice questions that map to the AICPA Blueprints.Sign Up Now
FAR Exam Scoring
CPA candidates are given 4 hours to complete the FAR Exam and are required to receive an overall scale score of 75% or higher in order to pass. Download our infographic for an easy guide on how the FAR section of the CPA Exam’s structure and test administration play key factors in how the exam is scored overall.
|Multiple-Choice Questions (MCQs)|
|Task-Based Simulations (TBS)|
FAR Section Study Tips
- The FAR exam is a test of endurance. Commit to putting in the time required to truly understand the material.
- Make a plan and stick to it – our Study Planners can help.
- Consider eliminating distractions during your designated study times – block Internet access, turn off notifications, tell family, friends and colleagues you will be completely unavailable.
- Practice the mnemonics not merely to memorize, but to understand – recite them while explaining, in your own words, what each element means and how it fits into the big picture.
- Practice writing out journal entries and T-accounts.
- Eat well, exercise, and get plenty of rest.
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About the FAR Section Q&A
We estimate approximately 123-164 hours of study are required in order to pass FAR, but each student is unique and has their own time requirements.
The order in which a candidate takes the four sections of the CPA Exam will vary depending on several individual factors, but we generally recommend taking FAR first for a few reasons:
- FAR requires the longest study lead time, which will not count against your 18-month window if it is your first exam
- FAR is the only section with material that overlaps all three other sections
- FAR is arguably the most difficult section, offering a great opportunity to set the tone for your studies of the other three sections