A detailed guide to the common types of questions you’ll find on the four different sections of the CPA exam
One of the best ways to prepare for the CPA exam is to prep with commonly seen sample questions. There is a strong correlation between pass rate and number of practice problems worked. These sample questions will help you get a feel for how the problems on your exam will be formatted, provide learning opportunities during review sessions, and condition you for the real thing. We will take a look at what each section covers, and what will make effective subjects for sample questions.
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The exam is a total of 16 hours long across four distinct sections of four hours each. In short, it is a marathon.
The four sections tested are Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR), and Regulation (REG).
AUD Section: Sample CPA Questions
The AUD section of the CPA exam tests your knowledge and understanding of the auditing process from beginning to end. Included within this section, you will also be tested on ethics as it relates to the auditing process.
In order to pass the Auditing and Attestation CPA exam section, you should familiarize yourself with the AICPA Code of Professional Conduct as well as the other AUD topics. You will have four hours to complete the 72 questions.
The AUD section will test concepts related to:
Ethics, Professional Responsibilities, and General Principles
Assessing Risk and Developing a Planned Response
Performing Further Procedures and Obtaining Evidence
Forming Conclusions and Reporting
Sample questions representative of these four sections may look like:
As a result of the Sarbanes-Oxley Act, the PCAOB has been created. Which of the following is false?
The PCAOB is a government agency.
The PCAOB comes under the oversight and enforcement authority of the SEC.
The PCAOB will be funded by fees charged to all registered accounting firms and publicly traded companies.
All accounting firms that participate in the preparation of an audit report for a company that issues securities must register with the PCAOB.
Which of the following acts is generally prohibited by the professional standards?
Withholding an audit report because fees charged to clients are past due and the client has demanded their return.
Withholding an audit report due to outstanding audit issues and the client has demanded their return.
Withholding an incomplete audit report requested by a client.
Retaining client records after an engagement is terminated prior to completion and the client has demanded their return.
Basically, the Business Environment and Concept portion of the CPA reviews the role of a CPA and where they fit into the business environment. The BEC covers many aspects of a business’ overall operating structure, including corporate governance and operations. This section of the CPA exam is broken down into five areas.
The BEC section will test concepts related to:
Economic Concepts and Analysis
A sample question representative of this five topics may look like:
Calculate the required rate of return for a company using the Capital Asset Pricing Model (CAPM). Specifically, the company has a market return of 10 and a beta of 0.50. The risk-free rate is 3 percent.
FAR Section: Sample CPA Questions
The FAR section is said to be the most difficult of all four sections of the CPA exam. I tend to agree with the general consensus.
The FAR section covers a wide range of subjects, including calculating depreciation and which types of financial statements are required for each governmental organization. As such, you may want to consider purchasing a CPA review course from Wiley or Becker to help you prepare for this specific section of the CPA exam.
When you take the CPA exam, you get to choose the order in which to take the four tests. Many people choose the FAR section for their first exam to get it out of the way.
The FAR section will test concepts related to:
Conceptual Framework, Standard-Setting, and Financial Reporting
Select Financial Statement Accounts
State and Local Governments
A sample question representative of these concepts may look like:
What are the required financial statements for voluntary health and welfare organizations?
Statement of Financial Position and Statement of Cash Flows.
Statement of Financial Position, Statement of Cash Flows, and Statement of Functional Expenses.
Statement of Financial Position, Statement of Activities, and Statement of Cash Flows.
Statement of Financial Position, Statement of Activities, Statement of Cash Flows, and Statement of Functional Expenses.
The Regulation section of the CPA exam covers five subjects primarily related to taxation and ethics. According to the AICPA Blueprints, you can expect to see more than 60% of the questions on this section focus on federal taxation.
The REG section will test concepts related to:
Ethics, Professional Responsibilities, and Federal Tax Procedures
Federal Taxation of Property Transactions
Federal Taxation of Individuals
Federal Taxation of Entities
A sample question representative of these sections may look like:
Mr. Lupin has asked a CPA to prepare his tax return for Year 4. In gathering the information for this year, the CPA discovers that Lupin claimed his son as a dependent in Year 3 when the son no longer qualified. What action should the CPA take?
File an amended return to correct the error in Year 3.
Refuse to take the job until the error has been corrected.
Notify Mr. Lupin of the problem and advise that an amended return be filed immediately.
Notify the Internal Revenue Service of the mistake.
Where You Can Find Additional CPA Sample Questions
The thought of taking and passing the four sections of the CPA exam may seem daunting, but there are ways to make getting ready for the test easier and help you stay on track. You only have an 18-month window to pass each section of the test, so it is important that you methodically prepare and proceed through each section of the exam.
When it comes to preparing for the CPA exam, one of the best things you can do to get ready is to take a CPA prep course. A prep course from the likes of Gleim or Becker is an invaluable tool that will provide you with access to thousands of sample questions, study guides, instruction, and sample tests for all four sections of the exam.
In addition to practice tests, CPA review courses offer students a plethora of other study materials as well, including video lessons, flashcards, prep books, and more. For example, if you are a visual learner, Roger CPA is an excellent choice.