📚 How to Master Financial Accounting & Reporting (FAR)
Study Strategies for the 2025 CPA Exam
Financial Accounting & Reporting (FAR) is often called the "encyclopedia of accounting" due to its extensive breadth and depth.
It covers everything from basic accounting principles to advanced financial reporting topics.
Expect a large volume of calculation-heavy questions, as well as theory questions requiring deep understanding.
FAR is known as one of the most challenging CPA exam sections, with lower pass rates compared to others.
However, a strong grasp of FAR concepts is essential, especially because it forms the foundation for subjects like AUD and BAR.
🔹 Note: After the 2025 CPA exam changes, some detailed topics on government and nonprofit accounting have shifted to BAR. However, FAR still heavily focuses on GAAP for business enterprises.
🧠 Study Strategies for FAR
1. Systematic Categorization
Due to the vast coverage, organizing topics systematically is critical.
Divide your study plan into logical categories like:
- Assets
- Liabilities
- Equity
- Revenues and Expenses
- Special Transactions
Within each chapter, practice journal entries step-by-step.
Example: When studying property, plant, and equipment (PPE), practice entries from acquisition, depreciation, to disposal to internalize the principles.
2. Reviewing Basic Accounting Principles
Even accounting majors may have forgotten the basics.
At the beginning of your FAR study, review key fundamentals:
- Accounting equation
- Double-entry bookkeeping
- Basic financial terminology
If you’re a non-accounting major, spend extra time on this foundation phase before diving into complex FAR topics.
📌 Strong basics = Easier progress later.
3. Focus on High-Yield Topics
Instead of studying all topics equally, prioritize high-weight and cross-sectional topics like:
- Revenue Recognition (ASC 606)
- Leases (ASC 842)
- Financial Instruments (Investments)
- Consolidation and Business Combinations
Create your own examples and analyze how these topics affect financial statements.
Deep understanding of these areas also benefits BAR preparation.
4. Combine Practice and Memorization
FAR heavily tests application skills.
Therefore, practice problems immediately after studying each topic.
- Solve previous exam questions.
- When you get a question wrong, revisit the related standard, read it carefully, and memorize the key definitions.
📌 Tip: Memorizing official phrasing from standards helps you tackle application-type questions more accurately.
5. Practice Financial Statement Preparation
Some TBS tasks will require you to complete financial statements with missing entries or make adjusting journal entries.
Therefore, practice preparing key financial statements like:
- Balance Sheets
- Income Statements
- Cash Flow Statements (both direct and indirect methods)
Master the steps for preparing the cash flow statement and practice tracking transaction flows using multiple journal entries.
👨🎓 Tips for Accounting Majors vs. Non-Majors
For Accounting Majors:
- Revisit intermediate and advanced accounting textbooks you used in school.
- They provide deeper explanations that are useful for challenging topics.
For Non-Accounting Majors:
- Avoid starting with overly complex topics (e.g., derivatives).
- Begin with familiar topics like cash, accounts receivable, and inventory to build momentum.
- Try simple accounting software to see how journal entries affect financial reports.
✨ Final Thoughts
Mastering FAR requires strategic planning:
- Build strong fundamentals.
- Focus on high-yield topics.
- Balance theory learning with intense problem practice.
- Simulate real financial statement preparation.
With the right strategy, even the vast ocean of FAR can be conquered!
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