Financial Accounting and Reporting (FAR) is often considered one of the most challenging subjects in the CPA board exam. With 70 multiple-choice questions covering the entire PFRS/PAS framework, proper preparation is essential. This guide will help you develop a winning strategy.
Understanding FAR's Weight and Coverage
Per BOA Resolution No. 30, Series of 2022, FAR is administered on Day 3 (Morning Session) of the CPALE with the following structure:
- Questions: 70 MCQs
- Duration: 3 hours (approximately 2.6 minutes per question)
- Distribution: 30% Theory, 70% Problem-Solving
Topics Covered
FAR covers the Philippine Financial Reporting Standards (PFRS) and Philippine Accounting Standards (PAS):
- Conceptual Framework and Accounting Process
- Financial statement preparation and presentation
- Revenue recognition (PFRS 15)
- Leases (PFRS 16)
- Financial instruments (PFRS 9)
- Property, Plant and Equipment
- Employee Benefits (PAS 19)
Official Topic Distribution (BOA Table of Specifications)
| Topic Area | Weight | Items |
|---|---|---|
| Development of Financial Reporting Framework | 5.71% | 4 |
| Conceptual Framework & Accounting Process | 12.86% | 9 |
| Cash and Other Financial Assets | 14.29% | 10 |
| Non-financial Assets (PPE, Intangibles, etc.) | 20.00% | 14 |
| Financial Liabilities | 5.71% | 4 |
| Non-financial Liabilities, Provisions & Contingencies | 5.71% | 4 |
| Shareholders' Equity | 14.29% | 10 |
| Other Topics (Revenue, Leases, Employee Benefits) | 14.29% | 10 |
| Other Reporting Frameworks (PFRS for SMEs) | 7.14% | 5 |
Source: BOA Table of Specifications, effective October 2022
Proven Study Strategies
1. Master the Conceptual Framework First
Before diving into specific standards, ensure you understand:
- The objective of financial reporting
- Qualitative characteristics (relevance, faithful representation)
- Recognition and measurement concepts
- The elements of financial statements
This foundation (12.86% of the exam) makes learning individual standards much easier.
2. Focus on High-Yield Topics
Based on the official Table of Specifications, prioritize these areas:
- Non-financial Assets (20%) - PPE, Investment Property, Intangibles, Impairment
- Cash and Financial Assets (14.29%) - PFRS 9 classification and measurement
- Shareholders' Equity (14.29%) - Share issuance, dividends, retained earnings
- Other Topics (14.29%) - Revenue (PFRS 15), Leases (PFRS 16), Employee Benefits (PAS 19)
3. Practice Journal Entries
With 70% of FAR being problem-solving, you must be able to:
- Record initial recognition
- Make subsequent measurements
- Handle derecognition
- Process period-end adjustments
Write out journal entries by hand - this reinforces memory better than just reading.
4. Memorize Key Formulas
Essential formulas to know:
Effective Interest Rate Method:
Interest Revenue = Carrying Amount × Effective Rate
Percentage of Completion (PFRS 15):
Revenue = (Costs to Date / Total Est. Costs) × Total Contract Price
Depreciation (Straight-line):
Annual Depreciation = (Cost - Residual Value) / Useful Life
Right-of-Use Asset (PFRS 16):
Initial ROU = Lease Liability + Initial Direct Costs + Prepaid Lease Payments
Common Mistakes to Avoid
- Confusing cost model vs. revaluation model - Know when each applies under PAS 16 and PAS 38
- Forgetting to adjust for time value of money - Especially for long-term receivables and lease liabilities
- Misclassifying financial assets - PFRS 9 categories (amortized cost, FVOCI, FVTPL) matter
- Ignoring disclosure requirements - Some questions test presentation knowledge
30-Day FAR Intensive Review Schedule
Note: This schedule is designed as an intensive final review for candidates who have already covered FAR during their academic study or a comprehensive review program. Fresh graduates should allow 2-3 months for FAR alone.
| Week | Focus Area |
|---|---|
| Week 1 | Conceptual Framework, Financial Statements, Cash, Receivables |
| Week 2 | Inventories, PPE, Investment Property, Intangibles |
| Week 3 | Financial Instruments, Revenue, Leases, Employee Benefits |
| Week 4 | Review weak areas + Full practice exams (timed) |
Exam Day Tips for FAR
- Time management: 70 questions in 3 hours = ~2.6 minutes per question
- Don't get stuck: Mark difficult questions and return later
- Read carefully: Many wrong answers come from misreading the question
- Check your math: Use a PRC-approved calculator, double-check computations
- Use No. 2 pencils: For shading answers (not ballpoint pen)
Passing Requirements
Per RA 9298 (Philippine Accountancy Act of 2004):
- General weighted average: 75% or higher
- Per subject: No grade below 65%
- Conditional status: If you pass 4+ subjects with 75%+ but fail overall, you have 2 years to retake failed subjects
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Sources
- BOA Resolution No. 30, Series of 2022 - Official CPALE syllabi and Table of Specifications
- RA 9298 - Philippine Accountancy Act of 2004 - Passing requirements
- Philippine Financial and Sustainability Reporting Standards Council (PFSRSC) - Current PFRS/PAS standards
- PRC Allowable Calculators - Approved calculator list
Last updated: January 2026. Content aligned with BOA Resolution No. 30, Series of 2022 and current PFRS/PAS standards.