Good news: Chances are you took most of this stuff in school so while it’s a lot of information to get through, most of it should be somewhat familiar.
Bad news: As the largest section, FAR covers a lot of ground and a lot of it isn’t very pleasant (like government, pensions, bonds and leases – all fairly heavily tested and all awful to get through when you’re studying) so prepare yourself accordingly and don’t take too much of it in at once.
FAR is a 4 hour exam and you will run out of time. Do not spend more than 1.5 minutes on each MCQ (FAR has 3 testlets of 30 questions each) and be sure to give yourself at least 45 minutes per simulation. If you run out of time towards the end, be sure to at minimum complete the written communication for both sims as only one is tested and you don’t know which one it is. It’s an easy 10 points and you don’t want to blow it.
The AICPA BoE has set the following target weights for skills testing:
Communication (6% – 16%)
Research (11% – 21%)
Analysis (13% – 23%)
Judgment (10% – 20%)
Understanding (35% – 45%)
Based on the Content Specification Outlines, Financial Accounting and Reporting covers the following areas:
Concepts and standards for financial statements (17% – 23%) Financial accounting, consolidated and combined financial statements, balance sheet, income statement, notes to financial statements, financial statement analysis.
Typical items in financial statements (27% – 33%) Typical items: recognition, measurement, valuation and presentation in financial statements according to GAAP. Cash, cash equivalents, and marketable securities, inventory, PP&E, investments, intangibles and other assets, payables, deferred revenue, notes and bonds payable, equity and revenues.
Specific types of transactions and events (27% – 33%) Accounting changes and corrections of errors, business combination, contingent liabilities, discontinued operations, earnings per share, foreign currency transactions and translation, taxes, interest cost, leases, R&D costs, segment reporting, subsequent events.
Accounting and reporting for governmental entities (8% – 12%) Government accounting concepts (fund accounting, budgeting, and notes to financial statements), net assets, capital assets, transfers, financing sources, expenditures, encumbrances, etc etc. And of course governmental non-profit accounting is in this.
Accounting and reporting for nongovernmental (8% – 12%) Accounting and reporting for non-profit organizations, typical items for non-profits.
Studying for FAR should take between 100 – 150 hours regardless of whether or not you took multiple financial accounting classes in school. The key to FAR is taking it in small chunks to prevent being overwhelmed by information so don’t spend more than 3 hours per day studying and break each section into smaller subsections to retain your sanity through the process.
Good luck and see you tomorrow with ethics!