How To Pass The CPA Exam: The IPassTheCPAExam.com Guide for International Candidates

CHAPTER 11

Financial Accounting and Reporting (FAR)

There is no question that the majority of CPA candidates find Financial Accounting and Reporting (FAR) the toughest section. It is probably not the most difficult, but the sheer volume of material overwhelms even the experienced accountants. Are you ready?

What Does FAR Cover?

Here is the examination specification released by the American Institute of Certified Public Accountants (AICPA):

• Conceptual framework, standards, standard setting, and presentation of financial statements (17 to 23 percent).
• Financial statement accounts: recognition, measurement, valuation, calculation, presentation, and disclosures (27 to 33 percent).
• Specific transactions, events, and disclosures: recognition, measurement, valuation, calculation, presentation, and disclosures (27 to 33 percent).
• Governmental accounting and reporting (8 to 12 percent).
• Not-for-profit (nongovernmental) accounting and reporting (8 to 12 percent).

Similar to AUD, this is a four-hour examination, with three testlets each containing 30 multiple-choice questions, and one testlet containing seven task-based simulation questions. The multiple-choice questions are adaptive but the simulation questions are not.

Passing Rate History and Trend

Although there has been marked improvement since 2005, the 2012 passing rate is still lower than 50 percent level at 48.0 percent (Figure 11.1). Within 2012, the passing rates fluctuate considerably from 43.8 percent to in the first quarter ...