Definition
FAR CPA Exam Tips refer to helpful advice or strategies for tackling the Financial Accounting and Reporting (FAR) section of the Certified Public Accountant (CPA) examination. This section evaluates knowledge and understanding of the financial reporting framework used by businesses. The tips might include study methods, topics to focus on, and ways to manage time and stress during the exam.
Key Takeaways
- The Financial Accounting and Reporting (FAR) section of the CPA exam is considered the most extensive and challenging by many candidates. It offers a comprehensive evaluation of a candidate’s understanding of financial accounting standards.
- Time management is crucial. The FAR section is a 4-hour-long exam with 66 multiple choice questions and eight task-based simulations. Therefore, proper planning and time management are key factors in successfully passing the exam.
- Understanding and implementing the nuances of Generally Accepted Accounting Principles (GAAP) is central to success in this section of the exam. Intensive reading, practice, and understanding of GAAP Financial Statements are recommended for the FAR.
Importance
The term FAR CPA Exam Tips is significantly crucial for those preparing for their CPA (Certified Public Accountant) examination, particularly for the Financial Accounting and Reporting (FAR) section. This examination is known for its toughness and extensive coverage of a wide variety of financial accounting topics.
The FAR CPA Exam Tips provide candidates with targeted advice and strategies to tackle the exam effectively and efficiently. They may include tips on the exam’s structure, the most important topics to focus on, time management strategies, advice on how to solve complex problems, among other crucial examination techniques.
In essence, these tips can greatly enhance a candidate’s likelihood of passing the exam on their first attempt, thus saving them time and effort. Therefore, its importance can’t be overlooked by any candidate wishing to excel in their CPA exam.
Explanation
The Financial Accounting and Reporting (FAR) portion of the Certified Public Accountant (CPA) exam is one of the four primary areas of focus in the exam and is considered the most extensive. The purpose of the FAR portion in the CPA exam is to evaluate your knowledge and competence in the financial accounting principles and practices used in businesses or organizations.
It checks how well you understand generally accepted accounting principles (GAAP) at different levels such as state and local governments, and non-profit organizations, as well as how familiar you are with International Financial Reporting Standards (IFRS).Tips for tackling the FAR CPA exam serve as a guide for candidates to effectively prepare for and manage their time during this rigorous exam. The importance of these tips cannot be overemphasized as they can significantly impact a candidate’s success.
These tips can include practical advice such as familiarizing oneself with multiple financial statement presentations and understanding the differences between GAAP and IRS regulations for accounting procedures. They also often encourage a deep understanding of topics such as non-profit accounting, government accounting, and pensions since these areas traditionally carry significant weight in the FAR section.
Examples of FAR CPA Exam Tips
The FAR (Financial Accounting and Reporting) section of the CPA exam is complex and covers numerous topics in financial accounting and reporting. Here are three real-world examples to illustrate some concepts that frequently appear on the exam:
Depreciation (finance term): An entrepreneur running a small business may purchase equipment to advance their operations. Over time, the value of this equipment decreases due to wear and tear. This decrease is known as depreciation. On the FAR CPA exam, candidates need to understand various methods to calculate depreciation, such as the straight-line method or the double-declining balance method.
Consolidated Financial Statements (finance term): Consider a parent company that owns several subsidiaries. In this scenario, the parent company is required to consolidate the financial data of the parent company and its subsidiaries into one statement. This gives accurate and comprehensive information about the financial health of the whole company group. The FAR CPA exam includes understanding and creating these consolidated financial statements.
Leases (finance term): For example, a company may need a building or equipment for its operations but may not wish to purchase the asset. As a result, the company leases the asset from another. The lease involves regular payments from the lessee (the company leasing the asset) to the lessor (the owner of the asset). In FAR CPA exam, candidates should understand how to account for such leases, depending on whether it’s an operating lease or finance lease.
FAR CPA Exam Tips
What is the best way to prepare for the FAR CPA exam?
The best way to prepare for the FAR CPA exam is through rigorous study of the study materials and practice problems. It’s recommended that you set a study schedule and stick to it. Tackling a few topics each day instead of cramming everything at once can help you better understand the concepts and information.
How long should I study for the FAR CPA exam?
It’s typically suggested that you devote 100 to 120 hours of study time for the FAR CPA exam. This might mean studying 20 hours a week for about 5 to 6 weeks, or adjusting the schedule to suit your needs and lifestyle.
What type of questions can I expect on the FAR CPA exam?
The FAR CPA exam is divided into two types of questions: multiple choice questions (MCQs) and task-based simulations (TBSs). The exam also includes one research task within the TBSs, which requires you to navigate authoritative literature and answer related questions.
Are there certain topics I should focus more on for the FAR CPA exam?
While it’s important to study all topics, some areas have more weight. For instance, the areas of financial statement accounts, state and local governments, non-profit entities, and some other areas are said to comprise a large part of the exam content. However, you should not neglect the other topics as well.
What if I fail the FAR CPA exam on my first attempt?
If you fail the FAR CPA exam on your first attempt, don’t be discouraged. Many candidates do not pass on their first try due to the exam’s breadth and depth of content. Review your score report to identify weak areas and adjust your study plan accordingly for your next attempt.
Related Entrepreneurship Terms
- FAR (Financial Accounting and Reporting) Section Overview
- Financial Statement Analysis
- CPA Exam Review Courses
- GAAP (Generally Accepted Accounting Principles)
- CPA Exam Study Strategies
Sources for More Information
- AICPA (American Institute of CPAs): The AICPA is a professional organization for Certified Public Accountants in the U.S. They are a good source for any information regarding the CPA exam.
- Becker Professional Education: Becker provides online courses and study materials for a variety of professions, including CPAs. They offer excellent tips and resources for the FAR CPA Exam.
- Roger CPA Review: Roger CPA Review offers comprehensive CPA Exam prep. Their blog posts often include tips for passing different sections of the CPA exam, including FAR.
- Another71: Another71 is a blog that provides extensive information about the CPA exam. They frequently post study guides and tips for the FAR CPA Exam.
