CFA Level 2: Financial Reporting 1 - Recommendations

  • Spend five to six hours reading Study Session 5 of the Level II CFA Program Curriculum © taking notes.

  • Spend two hours creating flash cards from this study sheet and the official material.

    • Flash cards do not need to be limited to pure formulas.  For example, some Financial Reporting flash cards may walk through the steps of a complicated accounting method or financial statement revision process.
  • Spend five hours taking practice questions.

    • On the practice questions, the exam taker is recommended to study as many item sets as possible.
    • There may be problems which require multiple steps (for example adjusting a financial statement and then recalculating a financial ratio based on the adjusted date).
    • Repetition can tremendously help a student become comfortable with more difficult financial reporting questions.
    • There is no need to begin practicing under pressure.  Start by doing practice problems open note or open book.  As one develops confidence through practice, then he or she can transition to doing these problems without help.
  • Dedicate small parts of future weeks to staying refreshed on Financial Reporting.  This subject is simply too important to study in January or February and then put down until completing the rest of the material in late April or early May.

This series gets into the first leg of Financial Reporting and this is premium material for the Level II exam.  Scoring above 70% on Financial Reporting goes a long way towards achieving a pass.  Alternatively, scoring below 50% on Financial Reporting puts a lot of pressure on the candidate to score very high in other sections.

In the first leg of Financial Reporting, we looked at accounting for inventories, accounting for long-lived assets, and accounting for leases.  While each of these topics could easily cover an entire item set, a reasonable expectation is that two or all three of these subjects will appear over the course of one or two item sets.  Many students consider leases to be the most challenging of the three topics and unfortunately, a test taker should expect to see some test questions on the subject.

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