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The CPA Exam: What You Need to Know

So you’ve definite you want to become a certified public accountant. If you’ve taken all the undergraduate and graduate-level classes in accounting, business law, and general mull overs that your state requires, and have logged some work experienced (as required in all but a few states), you’re ready to necessitate the Uniform CPA Examination. This is a substantial undertaking. Let’s review what’s involved.

CPA Exam Structure

The CPA exam has 324 multiple-choice queries, 20 task-based simulation questions, and three writing portions. These are divided into four main detachments: Auditing and Attestation (AUD), Financial Accounting and Reporting (FAR), Regulation (REG), and Business Environment and Concepts (BEC). Each part is taken apart, and candidates can choose the order in which they take them. Once a candidate passes his or her first exam section, the unconsumed three must be passed within 18 months.

The American Institute of CPAs (AICPA) administers and scores the check up on, grading each part on a scale of zero to 99. You must score at least 75 to pass each branch. Multiple-choice questions count for 70% of the total score, simulations are 20% and written communication is 10% of the final record. Each question is weighted based on difficulty, so acing the multiple choice questions and flunking the simulations and written parts discretion result in a failing score. The total time for the test is 14 hours.

The exam sections employ multi-stage testlets. The from the word go testlet is always of medium difficulty. Candidates who do well on that part are sent to a harder follow-up testlet. Applicants who don’t do as well are sent to another medium-difficult testlet.

Let’s look at what each section covers.

Financial Accounting and Reporting

The FAR part tests knowledge and understanding of the financial reporting framework used by business enterprises, not-for-profit organizations, and government beings. It includes 90 multiple-choice questions as well as seven task-based simulations that use real-life work situations to try out your skill.

This section deals with standards for financial statements, what needs to be included in statements, and how to account and check up on for government agencies, non-profits, and other types of organizations. Test takers are expected to prepare financial statements, cataloguing balance sheets, income statements, statements of retained earnings, equity, comprehensive income, and cash flows. They also essential review source documents and enter data into subsidiary and general ledgers.

Test takers must outshine they understand the process by which accounting standards are set and the roles of various governmental and industry groups such as the U.S. Guaranties and Exchange Commission (SEC), the Financial Accounting Standards Board (FASB), the International Accounting Standards Board (IASB), and the Governmental Accounting Touchstones Board (GASB).

For most people, FAR is the toughest section of the overall CPA exam. You have up to four fours to take it.

Auditing and Attestation

The other four-hour divide, AUD, is a bit easier, especially so if you’ve tackled FAR first. It too has 90 multiple-choice questions and seven task-based simulations. It covers the planning and rehashing of engagements, internal controls, obtaining and documenting information, and communications preparation.

As with FAR, test-takers need to demonstrate consciousness of international accounting standards, in particular, the difference between International Standards on Auditing (ISAs) and U.S. auditing standards. They be obliged identify situations that might be unethical or a violation of professional standards and determine the appropriate action to these cases. In addition, they must identify key risks in a financial information technology environment.

AUD also covers standards for forging reports on audited financial statements, government auditing standards, compliance with laws, regulations, and internal conduct, along with other communication standards accountants must know. This section will also prove your knowledge of the ethics and independence required by the AICPA, the Sarbanes-Oxley Act of 2002, the Government Accountability Office, and the Department of Labor.


You’re allowed up to three hours to take REG. It covers ethics and professional responsibility, business law, tax procedures and accounting, and federal taxation for separates, entities, and property transactions. This section has 72 multiple-choice questions and six task-based simulations.

Test-takers must accord that they understand the professional and legal responsibilities of certified public accountants, as well as the legal implications of function transactions as they relate to accounting, auditing, and financial reporting. This section deals with federal and generally adopted state laws. You must show you understand the rights, duties, and liabilities of debtors, creditors, and guarantors as closely as the audit and appeals process employed by the Internal Revenue Service (IRS). This section also covers the alternative lowest tax and both estate and gift taxation.

Business Environment and Concepts

BEC is arguably the easiest section, and most candidates superseded it on their first attempt. The BEC section has 72 multiple-choice questions and three written communication elements, wherein assess takers must respond in a letter or memo format to a work scenario. This is used to assess candidates’ handwriting skills as well as their organization, clarity, and conciseness.

This three-hour section addresses business structures, productive concepts, financial management, and information technology. You must show you understand corporate governance, financial risk guidance, financial management processes, strategic planning, and

The Bottom Line

Even without the required schooling and work sense, CPA test takers have their work cut out for them. But the reward is a respected professional designation that most frequently comes with a significantly higher rate of pay.

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