PracticeVideosBlogFlashcards
All Practice Exams

Free Practice Questions for CPA FAR

Exam-style questions and explanations by OpenExamPrep.

✓ No registration✓ No credit card
Exam pass rate: ~42%
121+ Questions
100% Free

Loading practice questions...

Same family resources

Explore More CPA Exam

Continue into nearby exams from the same family. Each card keeps practice questions, study guides, flashcards, videos, and articles in one place.

CPA Certified Public Accountant

Practice Questions200 questionsStudy Guide143 topicsCheat Sheet118 factsFlashcards50 cardsGames20 termsFeedVideos2 videosBlogs2 blogs2 Job WikiFree CE

CPA ISC Information Systems & Controls (Discipline)

Practice Questions120 questionsStudy Guide46 topicsFeed1 Job WikiFree CE

CPA REG Regulation

Practice Questions118 questionsStudy Guide59 topicsFeed2 Job WikiFree CE

CPA AUD Auditing & Attestation

Practice Questions105 questionsStudy Guide65 topicsFeed2 Job WikiFree CE

CPA BAR Business Analysis & Reporting (Discipline)

Practice Questions105 questionsFeed1 Job WikiFree CE

CPA TCP Tax Compliance & Planning (Discipline)

Practice Questions100 questionsFeed1 Job WikiFree CE

More From This Family

Videos and articles for deeper review.

VideoCPA FAR Financial Accounting and Reporting Exam Guide 2026This examVideoEA vs CPA in 2026: Current Costs, Scope, Salary Data & Career FitVideoFREE CPA Exam Study Guide 2026: 16-Week PlanArticleCPA FAR Financial Accounting and Reporting Exam Guide 202610 min readArticleFREE CPA Exam Study Guide 2026: 16-Week Plan16 min readArticleEA vs CPA in 2026: Current Costs, Scope, Salary Data & Career Fit14 min read
Exam Review

Key Facts: CPA FAR Exam

~42%

Pass Rate

AICPA 2024-2025 cumulative (lowest of CPA cores)

4 hours

Exam Length

AICPA FAR Blueprint

50 MCQ + 7 TBS

Question Format

AICPA (50/50 score weighting)

75/99

Passing Score

AICPA scaled scoring

$268.59

Section Fee

NASBA exam fee as of July 4, 2026

30 months

Credit Window

Most boards (NASBA model rule, up from 18)

FAR has the lowest pass rate (~42%) of the CPA core sections. The 4-hour exam mixes 50 multiple-choice questions and 7 task-based simulations weighted 50/50. The exam fee is $268.59 per section as of July 4, 2026, plus jurisdiction application fees. Most boards now give 30 months of section credit, up from 18. Most candidates need 100-150 hours to prepare, with heavy focus on ASC 606, ASC 842, and consolidations.

Sample CPA FAR Practice Questions

Try these sample questions to review concepts for the CPA FAR exam. Each question includes a detailed explanation. Start the interactive quiz above for the full 121+ question experience with AI tutoring.

1Under the FASB Conceptual Framework, which of the following is a fundamental qualitative characteristic of useful financial information?
A.Comparability
B.Faithful representation
C.Verifiability
D.Timeliness
Explanation: Per FASB Concepts Statement No. 8, the two FUNDAMENTAL qualitative characteristics are relevance and faithful representation. Comparability, verifiability, timeliness, and understandability are ENHANCING qualitative characteristics that make useful information more useful but cannot make information useful by themselves.
2Which financial statement reports an entity's revenues, expenses, gains, and losses for a period of time?
A.Balance sheet
B.Statement of cash flows
C.Income statement
D.Statement of stockholders' equity
Explanation: The income statement (statement of operations) reports performance over a period of time through revenues, expenses, gains, and losses, ultimately producing net income. The balance sheet is a point-in-time statement, the cash flow statement reports cash inflows/outflows, and the equity statement reconciles equity changes.
3Per ASC 606, the five-step revenue recognition model begins with which step?
A.Identify the performance obligations
B.Determine the transaction price
C.Identify the contract with a customer
D.Allocate the transaction price
Explanation: ASC 606's five steps are: (1) Identify the contract with a customer; (2) Identify performance obligations; (3) Determine the transaction price; (4) Allocate the transaction price to performance obligations; (5) Recognize revenue when (or as) the entity satisfies a performance obligation.
4On January 1, Year 1, Lion Co. entered an operating lease with a 5-year term and annual payments of $10,000 due at year-end. The implicit rate is 6%, and the present value of the lease payments is $42,124. What is the right-of-use (ROU) asset recorded at lease commencement?
A.$42,124
B.$50,000
C.$10,000
D.$45,000
Explanation: Under ASC 842, at commencement the lessee records a lease liability equal to the present value of remaining lease payments ($42,124) and an ROU asset equal to the lease liability adjusted for prepayments, lease incentives, and initial direct costs. With no such adjustments, ROU = $42,124.
5Under ASC 842, a lessee classifies a lease as a finance lease if any of the following criteria are met EXCEPT:
A.The lease transfers ownership of the asset to the lessee
B.The lease grants a purchase option the lessee is reasonably certain to exercise
C.The lease term is for the major part of the asset's remaining economic life
D.The lessee has the option to extend the lease for one additional year
Explanation: ASC 842 finance lease criteria (any one): (1) ownership transfers; (2) purchase option reasonably certain; (3) lease term is major part of economic life (~75%); (4) PV of payments is substantially all (~90%) of fair value; (5) asset is so specialized it has no alternative use. A simple one-year extension option is not a classification criterion.
6Which inventory method is NOT permitted under U.S. GAAP?
A.LIFO (Last-In, First-Out)
B.FIFO (First-In, First-Out)
C.Weighted average
D.Base stock method
Explanation: U.S. GAAP permits FIFO, LIFO, weighted average, and specific identification. The base stock method is NOT permitted under GAAP. Note: LIFO is permitted under GAAP but prohibited under IFRS.
7Tiger Co. uses the LIFO inventory method. At year-end, inventory cost is $100,000 and net realizable value is $95,000. Replacement cost is $92,000 and NRV less normal profit is $88,000. At what value should the inventory be reported?
A.$100,000
B.$95,000
C.$92,000
D.$88,000
Explanation: Under U.S. GAAP, LIFO and retail inventory method use lower of cost or MARKET. Market is replacement cost, but bounded by ceiling (NRV = $95,000) and floor (NRV - normal profit = $88,000). Replacement cost $92,000 falls within the range, so market = $92,000. Compare to cost $100,000; lower is $92,000.
8Bear Co. (a non-LIFO/non-retail entity) has inventory with cost of $50,000 and net realizable value of $45,000. At what value is inventory reported?
A.$50,000
B.$45,000
C.$47,500
D.Cannot be determined
Explanation: For inventory measured under methods OTHER than LIFO or retail (e.g., FIFO, weighted average), ASC 330 requires lower of cost or NET REALIZABLE VALUE (NRV). NRV is estimated selling price less reasonable costs of completion and disposal. NRV ($45,000) < cost ($50,000), so inventory is written down to $45,000.
9Eagle Co. purchased equipment for $100,000 with a 5-year life and $10,000 salvage value. Using the double-declining-balance method, what is depreciation expense in Year 2?
A.$40,000
B.$24,000
C.$36,000
D.$18,000
Explanation: DDB rate = 2/5 = 40%. Year 1: $100,000 × 40% = $40,000 (no salvage in DDB calc). Book value end of Year 1 = $60,000. Year 2: $60,000 × 40% = $24,000. Salvage value is only used as a floor — depreciation stops once book value reaches salvage.
10Under ASC 360, an impairment loss on a long-lived asset held and used is recognized when:
A.Fair value is less than carrying amount
B.Carrying amount exceeds undiscounted future cash flows
C.The asset has not been used in operations for 12 months
D.Replacement cost is less than carrying amount
Explanation: ASC 360 uses a two-step impairment test: (1) Recoverability test — impairment exists only if carrying amount exceeds undiscounted expected future cash flows. (2) Measurement — if step 1 fails, impairment loss = carrying amount minus fair value. Note: under U.S. GAAP, impairments of long-lived assets held and used CANNOT be reversed.

About the CPA FAR Exam

FAR (Financial Accounting & Reporting) is the most content-heavy core section of the CPA Exam under the CPA Evolution model. The 4-hour exam tests US GAAP financial accounting and reporting in three areas: Area I — Financial Reporting (30-40%), covering for-profit and not-for-profit financial statements (including consolidated statements with wholly-owned subsidiaries and noncontrolling interests), public company reporting such as EPS and SEC filings, special purpose frameworks, state and local government concepts, and ratios; Area II — Select Balance Sheet Accounts (30-40%), covering cash, receivables (CECL), inventory, PP&E, investments, finite-lived intangibles, payables, debt and equity transactions; Area III — Select Transactions (25-35%), covering accounting changes and error corrections, contingencies, revenue recognition (ASC 606 and NFP contributions), income taxes (ASC 740), fair value (ASC 820), lessee accounting (ASC 842) and subsequent events.

Exam sponsor: AICPA / NASBA / Prometric. The requirements and fees below concern the certification or admission exam, separate from our free practice resources.

Questions

57 questions

Time Limit

4 hours

Passing Score

75 (scaled 0-99)

Exam / Certification Fees

$268.59 per section

Exam sponsor website

Reported exam pass rate: ~42%. AICPA 2024-2025 cumulative — lowest pass rate of the three CPA core sections This describes exam candidates, not OpenExamPrep users or results from using our resources. Exam sponsor website

Fees, eligibility, and exam policies can change. Confirm them with the exam sponsor before applying or paying.

Our practice resources: topics covered

We aim to reflect publicly available exam outlines and topic information in our study resources. Coverage, format, and difficulty may differ from the actual exam, and we cannot guarantee that every detail is accurate or current. Confirm exam requirements, fees, and policies with the official exam sponsor.

30-40%

Area I: Financial Reporting

For-profit financial statements (balance sheet, income statement with discontinued operations, comprehensive income, changes in equity, cash flows ASC 230, consolidated statements of wholly-owned subsidiaries and noncontrolling interests, notes), not-for-profit statements (ASC 958), state and local government concepts (measurement focus, basis of accounting, purpose of funds), public company reporting (Forms 10-Q, 10-K, 8-K; EPS), special purpose frameworks, and ratios and performance metrics

30-40%

Area II: Select Balance Sheet Accounts

Cash and cash equivalents, trade receivables (CECL ASC 326 allowances), inventory (LCNRV for FIFO/average cost; LCM for LIFO/retail), property, plant and equipment (depreciation, impairment), investments (fair value, amortized cost, equity method ASC 323), finite-lived intangible assets, payables and accrued liabilities, notes and bonds payable with debt covenant calculations, and equity transactions (issuance, stock dividends, stock splits, treasury stock)

25-35%

Area III: Select Transactions

Accounting changes and error corrections (ASC 250), contingencies and commitments (ASC 450), revenue recognition (ASC 606 five-step model, principal-versus-agent, not-for-profit contributions), income taxes (ASC 740), fair value measurement and hierarchy (ASC 820), lessee accounting (ASC 842), and subsequent events (ASC 855)

Preparing for the CPA FAR Exam

What You Need to Know

  • Passing score: 75 (scaled 0-99)
  • Exam length: 57 questions
  • Time limit: 4 hours
  • Exam / certification fees: $268.59 per section Official sources

Using Our Practice Resources

  • Work through all 121 available questions
  • Review every answer and explanation
  • Track weak areas and revisit them
  • Use our AI tutor for tough concepts

CPA FAR: Suggested Study Strategy

1Master ASC 606's five-step revenue model — identify contract, identify performance obligations, determine transaction price, allocate to obligations, recognize when satisfied
2Drill ASC 842 lease classification: 5 lessee criteria (ownership transfer, purchase option, major part of life ~75%, substantially all FV ~90%, specialized asset)
3Learn deferred tax mechanics cold: temporary differences create DTAs/DTLs; permanent differences only affect ETR; valuation allowance applies if MLTN unrealizable
4Practice EPS calculations: basic = (NI − preferred div) / WA shares; treasury stock method for options; if-converted for convertibles; remember anti-dilution test
5Memorize CECL (ASC 326) — lifetime expected losses for amortized cost; AFS debt uses an allowance limited to FV vs. amortized cost gap that CAN be reversed
6Know GASB 34 government-wide vs. fund accounting: governmental funds use modified accrual + current financial resources; government-wide uses accrual + economic resources
7Study GASB 54's five fund balance categories: Nonspendable, Restricted, Committed, Assigned, Unassigned — only General Fund can have positive Unassigned
8For not-for-profits: net assets are 'with donor restrictions' or 'without donor restrictions' (post-ASU 2016-14); expenses must be reported by function AND nature

Frequently Asked Questions

What is the pass rate on the CPA FAR exam?

FAR has the LOWEST pass rate of the three CPA core sections — approximately 42% (AICPA 2024-2025 cumulative). It is widely considered the most content-heavy section. Compare to AUD ~48% and REG ~63%. Many candidates take FAR first to maximize the 30-month rolling credit window in case of a retake.

How is the FAR exam structured?

FAR is 4 hours long with 50 multiple-choice questions delivered in two MCQ testlets and 7 task-based simulations (TBS) delivered in three TBS testlets. The MCQ and TBS portions are weighted 50/50 toward your final scaled score (0-99, with 75 required to pass).

How much does the FAR section cost?

As of July 4, 2026, the CPA exam fee paid to NASBA is $268.59 per section. Add jurisdiction-specific application/registration fees ($100-$200 typical) and any re-examination fees if you need a retake. Many candidates also invest $1,500-$3,000 in a CPA review course (Becker, Roger, Wiley, Gleim, Surgent).

What are the major 2024-2026 FAR updates I should know?

Key recent updates: ASU 2023-09 (Income Taxes — disaggregated rate reconciliation and income taxes paid by jurisdiction); the 30-month rolling credit window most boards adopted from NASBA's 2023 model rule (up from 18 months); continued embedding of CPA Evolution model topics; CECL (ASC 326) fully phased in for all entities. Segment reporting, including ASU 2023-07, is tested in the BAR discipline section rather than FAR.

Which FAR areas should I prioritize?

Prioritize Area III: Select Transactions — ASC 606 revenue recognition, ASC 842 leases, and consolidations are heavily tested with both MCQ and TBS. Master deferred taxes (ASC 740) and EPS calculations early as they appear repeatedly. Don't neglect governmental accounting (GASB 34/54) and NFP (ASC 958) — these can swing your score and many candidates underprepare.

How long should I study for FAR?

Plan 100-150 hours of focused study. Most candidates spend 8-12 weeks on FAR alone. Build a study schedule with daily practice MCQs (aim for 80%+ accuracy before sitting), drill TBS regularly (they count for half your score), and complete at least one full-length 4-hour mock exam under timed conditions before your Prometric appointment.

Should I take FAR first or last?

Most CPA review providers recommend taking FAR FIRST. It has the most content, lowest pass rate, and provides a foundation for AUD (which uses FAR concepts). Passing FAR first also maximizes your 30-month testing window in case other sections take longer. Some candidates prefer to start with REG or AUD if they have stronger background in those areas.