CPA Exam Questions - Financial Accounting and Reporting

Becoming a Certified Public Accountant is an exciting and challenging process. It involves applying for the license with the State in which you would like to practice, earning the requisite number of college credits, passing all four exams and then finally, the ethics exam.

This article will discuss the details of the Financial Accounting and Reporting exam.

The Financial Accounting and Reporting exam, commonly known as FAR, is one of the more challenging sections. It is four hours long and is comprised of three multiple choice tests and seven task-based simulations.

The single biggest change in the CPA exam is the inclusion of international accounting and standards questions.

The FAR exam covers financial statements, item and transactions within financial statements and accounting practices for governmental and not-for-profit organizations.

This is one of the exams for the CPA exam that covers a wide array of material.  This is extremely important information and must be fully understood for the candidate to be successful.

There are five major topics included with FAR exam. The areas of focus and the detailed topics within each area are listed below.

A short video is provided for a few of the topics so the candidate understands the type of material that will be covered with that focus area.

The first major topics are:

1. Conceptual Framework

2. Standards

3. Standard Setting and Presentation of Financial Statements

4. International Financial Reporting Standards

These topics will account for approximately 20% of the FAR Exam.

This area of emphasis focuses on Financial Statement Accounts:

1. Recognition

2. Measurement

3. Valuation

4. Calculation

5. Presentation

6. Disclosures

These topics account for approximately 30% of the overall FAR exam.

This area includes questions on Events and Disclosures:

1. Recognition

2. Measurement

3. Valuation

4. Calculation

5. Presentation

6. Disclosures

These topics will comprise approximately 30% of the FAR exam.

This area questions your knowledge on Governmental Accounting and Reporting.

This includes both federal and state level accounting.

These questions will make up approximately 10% of the FAR exam.

The last area of emphasis concerns Not-For-Profit Accounting and Reporting.

Approximately 10% of the FAR exam will discuss these topics.

The United States is a global player in international finance. Most major companies have significant international interests, but there has never been a common "language" of financial statements. The U.S. had different rules in GAAP than other countries maintained.

That has led to disparity in financial reporting and makes it difficult for investors to read and understand the statements and analyze the health of an international organization.  It is like comparing apples to oranges.

The United States is beginning to phase in IFRS in an attempt to align local accounting standards with the International Accounting Standards Board.

As such, IFRS questions will be included on the CPA exam.

As most Certified Public Accountant applicants know, the best way to prepare for the CPA exam is to use a professional review course and practice as many questions as possible.

Most review courses come with practice questions, but there are numerous websites that maintain practice CPA exam questions as well.

Take advantage of all the sample questions that are available. The more you work at them, the better your chances will be to pass the CPA exam on the first try!