The FAR section of the CPA Exam covers the financial accounting and reporting standards used across business, government, and not-for-profit entities. It is known for its depth and volume of content, but it becomes much more approachable when you understand what the exam tests and how to study with purpose.
This FAR CPA exam study guide uses a comprehensive, professional structure combined with clear, accessible language. It keeps explanations straightforward, breaks down complex ideas, and provides a study approach aligned with the exam’s design. If you need support, working with an experienced online CPA tutor can speed up your progress and remove guesswork.
What Is The FAR CPA Exam
The FAR exam evaluates whether you understand and can apply financial reporting standards. This includes frameworks such as:
- GAAP
- FASB standards
- SEC reporting rules
- AICPA professional guidance
- GASB requirements
You are tested on the preparation, review, and analysis of financial statements. FAR also examines your ability to evaluate data, verify completeness, and determine the proper accounting treatment in different scenarios.
In short, FAR measures whether you can think like a professional accountant who understands how financial information should be presented and interpreted.
How CPA Evolution Has Changed FAR
The CPA Evolution model introduced in 2024 reshaped the exam into:
- Three Core sections (AUD, FAR, REG)
- Three Discipline sections (BAR, ISC, TCP)
Because BAR builds on FAR, some complex FAR topics were moved into BAR. Examples include:
- Advanced governmental accounting
- Advanced not-for-profit reporting
- Consolidations beyond the basics
- Certain derivative and hedge accounting topics
This shift has made FAR more focused. You still need a strong foundation, but the exam no longer tests the highest-level reporting topics that once made it overwhelming.
A newer addition is data and technology concepts. These appear in small doses and test whether you understand how information systems support financial reporting accuracy.
FAR CPA Exam Format
The exam lasts four hours and includes:
- 50 Multiple-Choice Questions
- 7 Task-Based Simulations
These are divided across five testlets:
- Testlet 1: 25 MCQs
- Testlet 2: 25 MCQs
- Testlet 3: 2 simulations
- Optional 15-minute break
- Testlet 4: 3 simulations
- Testlet 5: 2 simulations
A useful point to remember is that MCQs and simulations contribute equally to your score. Many candidates focus too heavily on MCQs and underestimate the importance of simulations. Strong simulation performance can significantly increase your score, and partial credit is available even when your answer is not perfect.
How FAR Is Scored
FAR uses a 0 to 99 scale and requires 75 to pass.
Your score is split:
- MCQs: 50 percent
- Simulations: 50 percent
Scoring is not curved. Instead, the exam uses difficulty-based weighting. Harder questions are worth more than easier questions, which means two candidates who answer a different number of questions correctly may still receive similar scores.
The exam evaluates three skill levels:
- Remembering and Understanding
- Application
- Analysis
Most of FAR focuses on application and analysis. This is why practice questions and simulations are essential. Memorizing rules is not enough. You have to apply them.
FAR Content Areas Explained
FAR covers three main content groups based on the AICPA blueprint.
Financial Reporting
This includes financial statements, disclosures, ratios, and the foundational ideas behind government reporting. You should understand how to structure statements, how to interpret performance metrics, and how public companies must report information.
Select Balance Sheet Accounts
You will review accounting rules for:
- Cash and receivables
- Inventory
- Property, plant, and equipment
- Investments
- Intangibles
- Payables and liabilities
- Equity transactions
These appear in both MCQs and simulations because they represent core financial reporting concepts.
Select Transactions
This portion of the exam often contains detailed scenarios. Topics include:
- Revenue recognition
- Leases
- Income taxes
- Contingencies
- Error corrections
- Fair value measurement
- Subsequent events
Unless a question states otherwise, assume you are working with a for-profit entity following US GAAP.
Is The FAR CPA Exam Hard
FAR is challenging because it covers more material than other Core sections, not because the concepts are impossible. Candidates often find it difficult to manage the volume. The good news is that the exam becomes manageable once you organize your study approach.
Most students struggle with the same areas:
- Leases
- Bonds
- Deferred taxes
- Governmental accounting
- Not-for-profit accounting
Once you spend focused time on these topics, FAR starts to feel far more predictable.
How Long You Should Study For FAR
A typical recommendation is 80 to 100 hours of study time. This range works for many candidates, but the true measure of readiness is your performance on practice questions.
If your scores trend above 70 on MCQs and you can complete simulations with reasonable accuracy, you are usually close to ready. If your scores stay between 60 and 70 for too long, that is a sign that you should adjust your study strategy or seek coaching.
Consistency matters much more than the total number of hours.
When You Should Take FAR
Many candidates take FAR early because:
- The material supports success in AUD
- Core financial reporting concepts appear across the CPA journey
- BAR becomes easier if taken after FAR
However, you should take FAR only when you feel prepared based on practice performance.
Practical Strategies To Study For FAR Effectively
Here are strategies that help candidates improve quickly without feeling overwhelmed.
Learn Governmental and NFP Accounting Early
These topics feel unfamiliar, which can make them intimidating. However, once you learn the basic ideas behind fund types, measurement bases, and government-wide vs fund statements, these questions become some of the easiest points on the exam.
Short daily review makes a big difference.
Become Comfortable With Calculations
FAR includes more calculations than AUD or REG. Focus on:
- Bond amortization
- Lease schedules
- Deferred tax reconciliations
- Converting statements to cash flows
At first these may feel time consuming, but with repeated practice they become routine.
Use Practice Tests to Identify Weaknesses
A strong FAR study plan focuses on closing gaps rather than repeating familiar topics. If you regularly miss questions on revenue or contingencies, pause and revisit those sections.
Improvement comes from eliminating weaknesses.
Practice Simulations Consistently
Simulations prepare you for the most challenging part of the exam. Start with simple ones and build up to complex multi-page scenarios. Early exposure removes fear and builds familiarity.
You do not need perfect simulation performance. You need consistency and reasonable accuracy.
Manage Your Time
Time pressure affects many candidates. To build confidence, practice:
- MCQs in sets of 25 within 45 to 50 minutes
- Simulations in 15 to 20 minutes each
This helps you build natural pacing for exam day.
Final Exam Week Checklist
Here is a simple plan for the last week of preparation:
- Redo all incorrect MCQs and understand why each answer is right or wrong
- Complete several multi-step simulations under timed conditions
- Review governmental and not-for-profit summaries
- Refresh concepts for revenue, leases, deferred taxes, bonds, and cash flows
- Take one timed practice session to build stamina
The final week is about sharpening your accuracy and pacing.
Frequently Asked Questions About The FAR CPA Exam
Is FAR the hardest CPA section
Many consider it the hardest because of its size. However, strong practice habits make it manageable.
How many hours should I study for FAR
Most candidates study between 80 and 100 hours, but readiness depends on practice scores, not total hours.
Should I take FAR before AUD
Many do, because financial reporting knowledge helps with auditing. But the best order depends on your comfort level.
What topics are most tested
Revenue recognition, leases, financial instruments, deferred taxes, cash flows, and governmental reporting appear frequently.
How many simulations are on FAR
There are seven simulations and they make up half of your score.
Can I pass FAR without a tutor
Yes, but if your practice scores are not improving, working with an online CPA tutor can be the fastest way to break through plateaus.
Conclusion
FAR is a challenging but entirely passable exam section. With the right structure, consistent practice, and a clear understanding of the exam blueprint, you can build confidence and improve your performance steadily. Focus on understanding over memorization, use practice tests to guide your study sessions, and refine your pacing in the final week.
If you want personalized support designed around your specific weak areas, an experienced online CPA tutor can help you prepare with clarity and direction.