CPA Exam: REG vs FAR

Each CPA exam overlaps the other on certain topics, which can be helpful depending on when you take the exams. Sometimes there is a large overlap, like journal entries, and sometimes the overlap is much smaller.

In the broad sense, FAR and REG cover very similar topics. They both look at the accounting of entities and individuals. But what sets them apart is REG focuses on tax accounting and FAR focuses on corporate accounting, which are two vastly different fields.


REG vs FAR: What’s Different?

FAR is going to cover everything that has to do with the financial statements. You’ll need to know how to set up a balance sheet, income statement, cash flow statement, and statement of shareholder’s equity. Knowing how to set up journal entries for certain transactions is a must, and knowing the deep intricacies of the balance sheet, such as the different assets and liabilities and what they cover, is essential.

Also, FAR transactions are regulated by either GAAP or IFRS. These rules dictate how transactions should take place and how they should be represented on the financial statements of the company.

REG on the other hand deals with the tax side of things, which is regulated by the government. You’ll need to know about individual taxation, corporate taxation, gift and estate taxation and how the tax system works.


Is There Any Overlap?

Not much. FAR and REG are the two exams that really don’t go together. There is much more overlap on FAR, AUD and BEC. REG is sort of the odd man out because it looks at the tax aspects of accounting as opposed to the corporate accounting that FAR, BEC and AUD deal with.

However, you will need to know about ethics, professional, and legal responsibility for both exams. Whether you choose to go into tax accounting or corporate accounting, you will have an ethical responsibility to all of your stakeholders (clients, employees, shareholders, suppliers, etc).

You’ll also need to know how to calculate a tax asset or liability for FAR, and prepare the journal entry. Knowing how to calculate taxes based on government regulations and comparing them to the tax basis of an organization will be helpful.

Use the chart below for a quick look at the similarities and differences between REG and FAR:



Exam Timing

If you are planning on taking your exams in order of overlap, I would recommend putting REG and FAR at opposite ends. There is significantly more overlap between AUD, FAR and BEC and lining those exams up in order will be helpful.



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