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Are you planning to pursue a career as a licensed Certified Public Accountant (CPA)? Individuals who enjoy working with financial information, are good at keeping records, and are looking to earn a great income often find careers as CPA professionals fulfilling. Because most industries require financial oversight, whether they are for-profit or not-for-profit entities, those who practice in this field often find employment easily and are well compensated. Becoming a certified public accountant (CPA) does, however, require a significant period time and dedication to gain education through graduate-level courses and other experience and eventually pass the CPA exam. You'll also have the option to take CPA exam review courses such as the Gleim CPA review, Surgent CPA review, and a myriad of other CPA review courses that are available as a digital product or mobile format as videos with instructors or a free resource. Check out the many popular offers, including premium options, but also be aware that some are available for free. You can choose a final review of whatever you need to know for easy CPA study that will help test takers pass each exam section.

The specific job responsibilities of CPAs vary, but many complete tasks to safeguard the fiscal success, financial statements or financial instruments, and the efficiency of their clients personal financial planning. Most are tasked with assessing a company or organization’s financial operation needs, as well as research, preparing, and examining financial records. They also ensure taxes are prepared accurately and paid on time, while also being able to be an advocate in front of the IRS for clients or companies. Additionally, CPAs may provide recommendations and advice to board officials with the intent of reducing money spent in order to save, improving profitability, and boosting financial returns. Each section of the CPA exam covers some of these topics and you can use one of the best CPA review courses to help you prepare for the CPA exam.

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What is the CPA Exam?

In order to become a CPA, you will need to complete the licensing process in the state where you plan to practice, which always means you will need to have passed the Uniform CPA Exam, but also may include other requirements. You will need to research the specific certified public accountant (CPA) license requirements from individual state boards of accountancy websites before proceeding. While licensing rules vary, many application guidelines include similar expectations, and most states provide resources and info about their requirements and policies online, on their sites, for those undertaking this journey, including some that you can use to help pass the CPA exam. Check out your state's' requirements for the exam today!

Some typical requirements include:

Every state requires that candidates successfully pass the Uniform CPA Exam. This consists of four CPA exam sections: Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR), and Regulation (REG). The CPA exam uses multiple-choice questions, task based simulations, adaptive testing, and other methods to gauge if test takers really know their stuff when they sit for the CPA exam. CPA candidates must pass every section of the CPA exam within an 18-month time period in order to qualify for licensure, but you'll be discouraged from applying for multiple sections simultaneously. Each section of the exam is four hours long, must be taken at a test center approved by the American Institute of CPAs (AICPA), and most states require a minimum score of 75 to pass. The national pass rates of the CPA exam sit at around 50%.

CPA Exam Requirements & Eligibility

Eligibility to sit for the Uniform CPA Exam varies depending on your state’s specific rules. You'll want to search for these on your state's board of accountancy website and state boards of accountancy may update them at any time.

In most cases, candidates seeking approval to take the certified public accountant (CPA) exam must:

  • Be 18 years of age or over
  • Be a United States citizen, intend to become a United States citizen, or a citizen of a foreign jurisdiction which extends like or similar privileges to be examined
  • Demonstrate good moral character
  • Meet state educational requirements

  • Minimum of a Bachelor of Science in Accounting diploma, in some states you may only need a minor in accounting

Every state requires CPA candidates to have, at minimum, an undergraduate degree in a similar field or accounting. A standard baccalaureate degree consists of 120 credit hours earned as a student, but most states require CPAs to complete 150 total credit hours of coursework before applying for the CPA exam and certification, in order for them to better serve the public interest and prove that they are able to fully learn and master the subjects. Some colleges and universities offer five-year programs to prepare students for the CPA exam or an MBA specifically designed to fulfill the 150 credit hour requirement, though their availability may be limited.

Students may apply to sit for the Uniform CPA Exam before all the education requirements are complete. Assuming you can provide proof of your bachelor's degree by the time you take the first section of the CPA exam, you can begin the testing process early.

Additionally, most states will require you to submit payment for all application and examination costs, as well as provide the requested official college transcripts, reference letters, and supporting legal documents before sitting for the Uniform CPA Exam. Once approved, a notice to schedule (NTS) and information regarding how to set your exam date within a reasonable window of time will be provided.

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How to Register

Once you have completed your state’s application process to sit for the Uniform CPA Exam and submitted all necessary information and payments, most states will send you an email confirming your eligibility. State boards of accountancy will also notify the National Association of State Boards of Accountancy (NASBA) that you have been approved and may take the exam after processing your information. NASBA will then send you a Notice to Schedule (NTS). This notice will provide instructions on how to access the site to schedule your exam date through Prometric, a technology-enabled testing and assessment provider approved by the American Institute of CPAs (AICPA) and the proctor for the CPA exam. Any personal, special accommodations for testing previously approved by any state boards of accountancy must be provided at the time of scheduling and all appointments with a test center must be confirmed 24 hours prior to when you plan to take the exam for every candidate according to their policy.

When to Take It

The Uniform CPA Examination is offered four times per year during the following testing windows:

  • January 1 – March 10
  • April 1 – June 10
  • July 1 – September 10
  • October 1 – December 10

Prometric generally sends exam data files to the American Institute of Certified Public Accountants (AICPA) for assessment within 24 hours of testing. The tabulation of your private score is treated with a high level of importance and may take weeks to complete. Collective target score release dates are available for reference. Candidates taking the Business Environment and Concepts (BEC) exam section should expect the process to take at least one week longer due to additional analysis.

Why Take the CPA Exam

All accountants are not required to become CPAs, but there are many benefits and rewards associated with obtaining this license (and very little risk outside of loss of payments for testing). Due to extensive training and education, certified public accountants are legally able to provide a wider range of services to their clients or industry team. One example of this is tax preparation. While any accountant can prepare and submit taxes, only certified public accountants can represent their clients before the IRS when their filing is in question or any time previous tax filings need to be updated.

Additionally, CPAs typically enjoy a higher income. In fact, it is not uncommon for certified public accountants to earn as much as 10 to 15% more per year than unlicensed accountants. According to PayScale, the average CPA salary is $65,032, while the average accountant salary is only $50,737. It is also worth noting that certified public accountants are generally better regarded than those without certification. This means they are more likely to gain and retain clients over time.

How Much Does the CPA Exam Cost?

The fees associated with sitting for the Uniform CPA Exam depend upon the jurisdiction where you intend to become a licensed certified public accountant (CPA). Most states require an exam application or administrative fee, which may be standardized or vary depending upon the number of exam sections you apply for at a time. There may also be registration charges associated with the process.

In most cases, you can expect to pay $208.40 for each individual CPA exam section. There are no group discounts and you are told not to sign up for multiple exams at a time, due to the way this cuts into the time for CPA exam prep. It is also important to realize that there is no provision for withdrawing from the CPA exam or requesting an extension. As a result, application and exam payments are final and rarely refundable, so don't assume you will get those back if you run into an emergency.

CPA Exam Structure

You will have a maximum of four and a half hours to complete your chosen CPA exam section, which is broken down into five smaller sections called testlets.

The schedule on the day of your exam will be as follows:

  • Welcome / Enter Launch Code – 5 minutes
  • Confidentiality / Section Information – 5 minutes
  • Testing – 4 hours
  • Break (after third testlet) – 15 minutes
  • Survey – 5 minutes

Financial Accounting and Reporting (FAR)

The financial accounting and reporting, or FAR, section of the Uniform CPA Exam is designed to test the knowledge and skills a worker must demonstrate in the financial reporting frameworks utilized by public and private businesses, state and local governments, and non-profit entities.

Relevant frameworks that may be assessed in the financial accounting and reporting (FAR) section include regulations issued by the following organizations:

  • Financial Accounting Standards Board (FASB)
  • United States Securities and Exchange Commission (SEC)
  • American Institute of Certified Public Accountants (AICPA)
  • Governmental Accounting Standards Board (GASB)
  • International Accounting Standards Board (IASB)

Regulation (REG)

The Regulation (REG) section of the Uniform CPA Exam is designed to test

the knowledge and skills someone with this certification must demonstrate with respect to the following:

  • United States federal taxes
  • United States tax practice ethics and responsibilities
  • United States business law

Relevant reference information for the REG section includes current textbooks covering business law, federal taxes, auditing, and ethics, as well as other administrative pronouncements regarding federal taxation. The CPA exam uses multiple-choice questions and task based simulations to gauge test takers knowledge in this section. The Uniform Division of Income for Tax Purposes Act (UDIPTA), Revised Model Business Corporation Act, Securities Exchange Act of 1934, Uniform Commercial Code, and Treasury Department Circular 230 are also viable resources.

Auditing and Attestation (AUD)

The auditing and attestation (AUD) section of the Certified Public Accountant (CPA) Exam is designed to test

the knowledge and skills someone with this certification must demonstrate while performing the following:

  • Audits of issuer and non-issuer entities, including government, non-profit, employee benefit, and federal grant entities
  • Attestation engagements for issuer and non-issuer entities, including examinations, reviews, and agreed-upon procedure engagements
  • Preparation, compilation, and review engagements for non-issuer entities and reviews of interim financial information for issuer entities

The auditing and attestation (AUD) exam section also examines an individual’s ability to demonstrate knowledge and skill related to professional responsibilities such as ethics, independence, and professional skepticism. The CPA exam also uses multiple-choice questions and task based simulations in this exam section.

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Business Environment and Concepts (BEC)

The Business Environment and Concepts (BEC) section of the Uniform CPA Examination is designed to test

the knowledge and skills someone with this certification must demonstrate while performing the following:

  • Audit, attest, record keeping, and review services
  • Financial reporting
  • Tax preparation
  • Other responsibilities as needed

The BEC section breaks tested content into five subject areas: governance, economic concepts and analysis, financial management, information technology, and operations management. The CPA exam uses multiple-choice questions and task based simulations to gauge test takers knowledge. Relevant reference information includes the Committee of Sponsoring Organizations of the Treadway Commission (COCO), Sarbanes-Oxley Act of 2002, current business periodicals, and current textbooks on accounting information systems, budgeting, economics, finance, management, and production operations.

Types of Questions You Can Expect

The Uniform CPA Exam utilizes three primary types of questions:

multiple-choice questions, (MCQ), task-based simulations (TBS), and written communication tasks. The exact number of each will depend on the specific exam section you are taking.

Multiple Choice Questions (MCQs)

Every section includes multiple-choice portions during which test-takers must select the correct answers to questions from a list of options. This question type appears in the first two testlets of each section. The following is a breakdown of how many MCQs you can expect during the four exams.

  • AUD includes 72 MCQs
  • BEC includes 62 MCQs
  • FAR includes 66 MCQs
  • REG includes 76 MCQs

The scoring weight for MCQs in all four sections is 50%.

Task-Based Simulation (TBS) Questions

Every section includes TBS portions during which test-takers must answer questions based on condensed case studies that test financial record keeping knowledge using real life, work-related situations appropriate for entry-level workers. This question type appears in three testlets within the AUD, FAR, and REG sections, but only two testlets in the BEC section. The following is a breakdown of how many TBSs you can expect during the four exams.

  • AUD includes 8 TBSs
  • BEC includes 4 TBSs
  • FAR includes 8 TBSs
  • REG includes 8 TBSs

The scoring weight for TBSs in the AUD, FAR, and REG sections is 50%. The scoring weight for TBSs in the BEC section is 35%.

Written Communication

Only the BEC section includes written communication portions, in which test-takers must read a scenario and then write an appropriate response to it. Instructions regarding document type and focus will be provided. Responses must be correct and written clearly, completely, and professionally. There are three written communication responses that total to a scoring weight of 15% included in the BEC section.

AUD Section Primary Topics

The AUD section includes four primary topics, but the majority of exam questions will likely relate to performing further actions and obtaining evidence. It is made up of MCQs and TBSs, which are both weighted at 50% for scoring purposes. Questions and tasks related to content remembering, understanding, and application are weighted most heavily.

Ethics, Professional Responsibilities, and General Principles

Content Area I, ethics, professional responsibilities, and general principles, makes up approximately 15 to 25 percent of the AUD section exam and focuses on remembering, understanding, and

applying the following topics:

  • Nature and Scope
    • Audit engagements
    • Engagements conducted under Government Accountability Office Government Auditing Standards
    • Non-audit engagements
  • Ethics, Independence, and Professional Conduct
    • AICPA Code of Professional Conduct
    • Requirements of the Securities and the Exchange Commission and the Public Company Accounting Oversight Board
    • Requirements of the Government Accountability Office and the Department of Labor
    • Professional skepticism and judgment
  • Terms of Engagement
    • Preconditions for an engagement
    • Terms of engagement and engagement letter
  • Requirements for Engagement Documentation
  • Communication with Management and Those Charged with Governance
    • Planned scope and timing of an engagement
    • Internal control related matters
    • All other matters
  • Communication with Component and Parties Other than Management and Those Charged with Governance
  • A Firm’s System of Quality Control

Assessing Risk and Developing a Planned Response

Content Area II, assessing risk and developing a planned response, makes up approximately 20 to 30 percent of the AUD section exam and focuses on remembering, understanding, applying, analyzing,

and evaluating the following topics:

  • Planning and Engagement
    • Developing an overall engagement strategy
    • Developing a detailed engagement plan
  • Understanding an Entity and Its Environment
    • External factors, including the applicable financial reporting framework
    • Internal factors, including nature of the entity, ownership and governance structures, and risk strategy
  • Understanding an Entity’s Internal Control
    • Control environment and entity-level controls
    • Flow of transactions and design of internal controls
    • Implications of an entity using a service organization
    • Information Technology (IT) general and application controls
    • Limitations of controls and risk of management override
  • Assessing Risks Due to Fraud
  • Identifying and Assessing the Risk of Material Misstatement
    • Impact of risks at the financial statement level
    • Impact of risks for each relevant assertion at the class of transaction, account balance and disclosure levels
    • Further procedures responsive to identified risks
  • Materiality
    • For the financial statements as a whole
    • Performance materiality and tolerable misstatement
  • Planning for and Using the Work of Others
  • Specific Areas of Engagement Risk
    • An entity’s compliance with laws, including possible illegal acts
    • Estimates, including fair value estimates
    • Related parties and related party transactions

Performing Further Procedures and Obtaining Evidence

Content Area III, ethics, responsibilities, and general principles, makes up approximately 30 to 40 percent of the AUD section exam and focuses on remembering, understanding, applying, analyzing,

and evaluating the following topics:

  • Understanding Sufficient Appropriate Evidence
  • Sampling Techniques
  • Performing Specific Procedures to Obtain Evidence
    • Analytical procedures
    • External confirmations
    • Inquiry of management and others
    • Observation and inspection
    • Recalculation and performance
    • All other procedures
  • Specific Matters that Require Special Consideration
    • Opening balances
    • Investments in securities and derivative instruments
    • Inventory and inventory held by others
    • Litigation, claims, and assessments
    • An entity’s ability to continue as a going concern
    • Estimates, including fair value estimates
  • Misstatements and Internal Control Deficiencies
  • Written Representations
  • Subsequent Events and Subsequently Discovered Facts

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Forming Conclusions and Reporting

Content Area IV, ethics, responsibilities, and general principles, makes up approximately 15 to 25 percent of the AUD section exam and focuses on remembering, understanding,

and applying the following topics:

  • Reports on Auditing Engagements
    • Forming an opinion, including modification of an assessor’s opinion
    • Form and content of the report, including the use of emphasis-of-matter and other-matter (explanatory) paragraphs
    • Audit of internal control integrated and financial statements
  • Reports on Attestation Engagements
    • General standards for attestation reports
    • Agreed-upon procedures reports
    • Reporting on controls at a service organization
  • Accounting and Review Service Engagement
    • Preparation engagements
    • Compilation reports
    • Review reports
  • Reporting on Compliance
  • Other Reporting Considerations
    • Comparative statements and consistency between periods
    • Other information in documents with audited statements
    • Review of interim financial information
    • Supplementary information
    • Single statements
    • Special-purpose and other country frameworks
    • Letters for underwriters and filings with the SEC
    • Alerts that restrict the use of written communication
    • Additional reporting requirements under Government Accountability Office Government Auditing Standards

BEC Section Primary Topics

The BEC section includes five primary topics, but the majority of exam questions will likely relate to economic concepts and analysis and corporate governance. It is made up of MCQs, TBSs, and written communication tasks. For scoring purposes, MCQs are weighted at 50%, TBSs are weighted at 35%, and written communication tasks are weighted at 15%. Questions and tasks related to content application are weighted most heavily.

Corporate Governance

Content Area I, corporate governance, makes up approximately 17 to 27 percent of the BEC section exam and focuses on remembering, understanding,

and applying the following topics:

  • Internal Control Frameworks
    • Purpose and objectives
    • Components and principles
  • Enterprise Risk Management (ERM) Frameworks
    • Purpose and objectives
    • Components and principles
  • Other Regulatory Frameworks and Provisions

Economic Concepts and Analysis

Content Area II, economic concepts and analysis, makes up approximately 17 to 27 percent of the BEC section exam and focuses on remembering, understanding, applying,

and analyzing the following topics:

  • Economic and Business Cycles – Measures and Indicators
  • Market Influence on Business
  • Financial Risk Management
    • Market, interest rate, currency, liquidity, credit, price and other risks
    • Means for mitigating/controlling financial risks

Financial Management

Content Area III, financial management, makes up approximately 11 to 21 percent of the BEC section exam and focuses on remembering, understanding,

and applying the following topics:

  • Capital Structure
  • Working Capital
    • Fundamentals and key metrics of working capital management
    • Strategies for managing working capital
  • Financial Valuation Methods and Decision Models

Information Technology

Content Area IV, information technology, makes up approximately 15 to 25 percent of the BEC section exam and focuses on remembering, understanding, applying,

and analyzing the following topics:

  • Understanding of Information Technology (IT)
    • Organization and governance
    • Systems and processes
    • Data
  • Risk Associated with IT
    • Risk assessment
    • System development and maintenance
    • Processing integrity
    • Security, availability, confidentiality, and privacy
  • Controls that Respond to Risks Associated with IT
    • Application controls
    • General IT controls
    • Logical and physical controls
    • Continuity and recovery plans

Operations Management

Content Area V, operations management, makes up approximately 15 to 25 percent of the BEC section exam and focuses on remembering, understanding, applying,

and analyzing the following topics:

  • Financial and Non-Financial Measures of Performance Management
  • Cost Accounting
    • Cost measurement concepts, methods, and techniques
    • Variance analysis
  • Process Management
    • Approaches, techniques, measures, benefits to process-management driven businesses
    • Management philosophies and techniques for performance improvement
  • Planning Techniques
    • Budgeting and analysis
    • Forecasting and projection

FAR Section Primary Topics

The FAR section includes four primary topics, but the majority of exam questions will likely relate to select financial statement accounts. It is made up of MCQs and TBSs, which are both weighted at 50% for scoring purposes. Questions and tasks related to application are weighted most heavily.

Conceptual Framework, Standard-Setting and Financial Reporting

Content Area I, conceptual framework, standard-setting, and financial reporting, makes up approximately 25 to 35 percent of the FAR section exam and focuses on remembering, understanding, applying,

and analyzing the following topics:

  • Conceptual Framework and Standard-Setting for Business and Nonbusiness Entities
    • Conceptual framework
    • Standard-setting process
  • General-Purpose Financial Statements: For-Profit Entities
    • Balance sheet/statement of financial position
    • Income statement/statement of profit or loss
    • Statement of comprehensive income
    • Statement of changes in equity
    • Statement of cash flows
    • Notes to financial statements
    • Consolidated financial statements (including wholly owned subsidiaries and noncontrolling interests)
    • Discontinued operations
    • Going concern
  • General-Purpose Financial Statements: Non-governmental, Non-for-Profit Entities
    • Statement of financial position
    • Statement of activities
    • Statement of cash flows
    • Notes to financial statements
  • Public Company Reporting Topics
  • Financial Statements of Employee Benefits Plans
  • Special Purpose Frameworks

Select Financial Statements Accounts

Content Area II, select financial statement accounts, makes up approximately 30 to 40 percent of the FAR section exam and focuses on remembering, understanding, applying,

and analyzing the following topics:

  • Cash and Cash Equivalents
  • Trade Receivables
  • Inventory
  • Property, Plant, and Equipment
  • Investments
    • Financial assets at fair value
    • Financial assets at amortized cost
    • Equity method investments
  • Intangible Assets – Goodwill and Other
  • Payable and Accrued Liabilities
  • Long-Term Debt
    • Notes and bonds payable
    • Debt covenant compliance
  • Equity
  • Revenue Recognition
  • Compensation and Benefits
    • Compensated absences
    • Retirements benefits
    • Stock compensation (share-based payments)
  • Income Taxes

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Select Transactions

Content Area III, select transactions, makes up approximately 20 to 30 percent of the FAR section exam and focuses on remembering, understanding, applying,

and analyzing the following topics:

  • Accounting Changes and Error Corrections
  • Business Combinations
  • Contingencies and Commitments
  • Derivatives and Hedge Accounting
  • Foreign Currency Transactions and Translation
  • Leases
  • Nonreciprocal Transfers
  • Research and Development Costs
  • Software Costs
  • Subsequent Events
  • Fair Value Measures
  • Differences Between IFRS and U.S. GAAP

State and Local Governments

Content Area IV, state and local governments, makes up approximately 5 to 15 percent of the FAR section exam and focuses on remembering, understanding,

and applying the following topics:

  • State and Local Government Concepts
    • Conceptual framework
    • Measurement focus and basis of financial record keeping
    • Purpose of funds
  • Format and Content of the Financial Section of the Comprehensive Annual Financial Report
    • Government-wide financial statements
    • Governmental funds financial statements
    • Proprietary funds financial statements
    • Fiduciary funds financial statements
    • Notes to financial statements
    • Management’s discussion and analysis
    • Budgetary comparison reporting
    • Required supplementary information (RSI) other than management’s discussion and analysis
    • Financial reporting entity, including blended and discrete component units
  • Deriving Government-Wide Financial Statements and Reconciliation Requirements
  • Typical Items and Specific Types of Transactions and Events: Measurement, Valuation, Calculation, and Presentation in Governmental Entity Financial Statements
    • Net position and components thereof
    • Fund balances and components thereof
    • Capital assets and infrastructure assets
    • General and proprietary long-term liabilities
    • Interfund activity, including transfers
    • Nonexchange revenue transactions
    • Expenditures and expenses
    • Special items
    • Budgetary accounting and encumbrances
    • Other financing sources and uses

REG Section Primary Topics

The REG section includes five primary topics, but the majority of exam questions will likely relate to federal taxing of entities. It is made up of MCQs and TBSs, which are both weighted at 50% for scoring purposes. Questions and tasks related to application are weighted most heavily.

Ethics, Professional Responsibilities, and Federal Tax Procedures

Content Area I, ethics, responsibilities, and federal tax procedures, makes up approximately 10 to 20 percent of the REG section exam and focuses on remembering, understanding,

and applying the following topics:

  • Ethics and Responsibilities in Tax Practice
    • Regulations governing practice before the Internal Revenue Service
    • Internal Revenue Code related to tax return preparers
  • Licensing and Disciplinary Systems
  • Federal Tax Procedures
    • Internal Revenue Code related to tax return preparers
    • Substantiation and disclosure of tax positions
    • Taxpayer penalties
    • Authoritative hierarchy
  • Legal Duties and Responsibilities
    • Common law duties and liabilities to clients and third parties
    • Privileged communications, confidentiality, and privacy acts

Business Law

Content Area II, business law, makes up approximately 10 to 20 percent of the REG section exam and focuses on remembering, understanding,

and applying the following topics:

  • Agency
    • Authority of agents and principals
    • Duties and liabilities of agents and principals
  • Contracts
    • Formation
    • Performance
    • Discharge, breach, and remedies
  • Debtor-Creditor Relationships
    • Rights, duties, and liabilities of debtors, creditors, and guarantors
    • Bankruptcy and insolvency
    • Secured transactions
  • Government Regulation of Business
    • Federal securities regulation
    • Other federal laws and regulations (e.g., employment tax, qualified health plans, and worker classification)
  • Business Structure
    • Selection and formation of business entity and related operation and termination
    • Rights, duties, legal obligations, and authority of owners and management

Federal Tax on Property Transactions

Content Area III, federal tax on property transactions, makes up approximately 12 to 22% of the REG section exam and focuses on remembering, understanding, applying,

and analyzing the following topics:

  • Acquisition and Disposition of Assets
    • Basis and holding period of assets
    • Taxable and nontaxable dispositions
    • Amount and character of gains and losses, and netting process (including installment sales)
    • Related party transactions (including imputed interest)
  • Cost Recovery
  • Estate and Gift Taxation
    • Transfers subject to gift tax
    • Gift tax annual exclusion and gift tax deductions
    • Determination of taxable estate

Federal Taxing of Individuals

Content Area IV, federal taxing of individuals, makes up approximately 15 to 25 percent of the REG section exam and focuses on remembering, understanding, applying,

and analyzing the following topics:

  • Gross Income
  • Reporting of Items from Pass-Through Entities
  • Adjustments and Deductions to Arrive at Adjusted Gross Income and Taxable Income
  • Passive Activity Losses
  • Loss Limitations
  • Filing Status
  • Computation of Tax and Credits
  • Alternative Minimum Tax

Federal Taxation of Entities

Content Area V, federal taxation of entities, makes up approximately 28 to 38 percent of the REG section exam and focuses on remembering, understanding, applying,

and analyzing the following topics:

  • Tax Treatment of Formation and Liquidation of Business Entities
  • Differences Between Book and Tax Income
  • C Corporations
    • Computations of taxable income, tax liability, and allowable credits
    • Net operating losses and capital loss limitations
    • Entity/owner transactions including contributions, loans, and distributions
    • Consolidated tax returns
    • Multi-jurisdictional tax issues (including consideration of local, state, and international tax issues)
  • S Corporations
    • Eligibility and election
    • Determination of ordinary business income (loss) and separately stated items
    • Basis of shareholder’s interest
    • Entity/owner transactions (including contributions, loans, and distributions)
    • Built-in gains tax
  • Partnerships
    • Determination of ordinary business income (loss) and separately stated items
    • Basis of partner’s interest and basis of assets contributed to the partnership
    • Partnership and partner elections
    • Transactions between a partner and the partnership (including services performed by a partner and loans)
    • Impact of partnership liabilities on a partner’s interest in a partnership
    • Distribution of partnership assets
    • Ownership changes
  • Limited Liability Companies
  • Trusts and Estates
    • Types of trusts
    • Income and deductions
    • Determination of beneficiary’s share of taxable income
  • Tax-Exempt Organizations
    • Types of organizations
    • Obtaining and maintaining tax-exempt status
    • Unrelated business income

Ethics Exam

As previously mentioned, CPA candidates must usually take an ethics exam after passing the Uniform CPA Examination. While some boards create their own exams, most states utilize the AICPA ethics exam, which is a take-home test often completed online. A paper option is available, but this method results in a significantly longer wait for test results. The online exam is tabulated immediately, so you score is provided right after submission. It consists of 40 multiple-choice questions and a textbook is provided for study guidance.

Preparing for the CPA Exam

CPAs must have a clear understanding of the widely varying and potentially complex financial issues their clients may face. Additionally, they must be able to identify the optimal solution to those problems quickly and efficiently. Because the Uniform CPA Examination seeks to test a candidate’s ability to successfully complete these tasks, rote memorization of facts and figures will not suffice. To best prepare, you will need to focus on accounting concepts and skills, as well as financial regulations. To this end, there are a variety of products and resources that can help you study: try a CPA review course, video review courses, flashcards, live study sessions with people in your community, databases and spreadsheet resources that help you track subjects and learning, and even practice tests and other publications.

Start your preparation process by identifying which educational methods or program will help you retain information best – visual learning, hands-on learning, or other. Prioritize finding and utilizing study materials and tools that fit your unique needs for exam review. In addition to reading printed information, consider solutions such as traditional classes, online courses, podcasts, audio books, and interactive experiences.

There are a wide variety of study materials available for free and for purchase to help prepare candidates for the Uniform CPA Examination. AICPA and NASBA are great resources that offer information regarding exam content, scoring, and testing accommodations, as well as sample tests.

AICPA also provides CPA Exam Blueprints. These can function as a helpful study guide in conjunction with other review and preparation materials.

The Blueprints include the following for each exam section:

  • Content and score weighting
  • Sample task statements
  • Skill levels at which tasks are tested
  • Reference materials
  • Number of item types you must complete
  • Score weighting for each item

Study Tips

While everyone approaches the Uniform CPA Examination differently, there are some tips that nearly all CPA candidates find helpful. Keep the following advice in mind as you prepare for the exam.

  • Identify and Take the Most Beneficial Section First
    Identify which section is most likely to benefit you throughout the examination process. Tackling the most difficult section first ensures future sections are less intimidating, while opting for the easiest section makes the testing environment more familiar and provides a boost of confidence.

  • Study Ahead of Time
    It is impossible to cram for any section of the Uniform CPA Examination. Your success depends on continual and repetitive exposure to the exam materials over time.

  • Break Study Materials Down
    Establish a weekly study schedule by breaking the materials into smaller, more manageable sections. Consider working through one chapter and one set of review questions a week.

  • Complete Test Review before Your Test Day
    Take time to complete all your test review work at least a week before your test day. It is recommended to focus solely on practice tests as your exam date approaches.

  • Utilize Free Resources
    Take advantage of the various free preview tests, tutorials, and literature available online. These items are often successfully paired with purchased materials.

  • Take Regular Breaks
    Your mental health is important. Make sure to schedule short breaks periodically and avoid establishing a routine that requires more than three hours of study at a time. This will help you retain information better.

  • Eliminate Distractions if Necessary
    In some cases, it may be wise to eliminate unnecessary distractions to promote more productive study sessions. Consider canceling your cable subscription or packing other reading materials away until after the exam.

Things to Remember

  • Take Work Experience into Account
    Work experience does not always translate well to preparation for the Uniform CPA Examination, but it may make some exam sections more approachable. If, for example, you work with taxes and have a firm grasp on tax law and filing methods, you may not need to spend as much time studying for the REG exam as you do the others. Conversely, as you study less familiar materials, make an effort to apply what you have learned to work-related tasks. This can help you retain more information over time.

  • Study Up to 100 Hours per Section
    In general, it is recommended that CPA candidates spend at approximately 300 to 400 hours studying for the Uniform CPA Examination. This roughly equates to roughly 100 hours for each exam section. While this standard is helpful, it is important to realize your specific study needs may deviate. You may need to spend more time working through topics you are unfamiliar with and less time reviewing information you regularly utilize. Study as much as is appropriate for your knowledge base.

  • Track Time before Exam
    It is important to remember that your NTS will expire 18 months after you receive it. Most states also require you to successfully pass all four sections of the exam before granting your license. Waiting too long to begin the process can have unfortunate consequences. The best course of action is to track your time from the beginning. Make a 12-month plan and use the remaining six months as a buffer for unexpected issues.

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