What You Need To Know Before You Take The CPA Exam

Accounting services are needed by organizations of all sizes, so becoming a Certified Public Accountant (abbreviated as CPA) is one of the more popular career options for young business people. After completing all their courses in business law, accounting, and general studies, most of the students will take up a job for the work experience. They will then begin their CPA test prep and will be looking for accurate and updated information regarding the examination so that they can prepare for the exam accordingly. The exam is fairly comprehensive, and the important details of the exam are discussed below.

On The Exam

The CPA exam can be divided into three categories: the first section has 324 multiple choice questions, next section has 20 task-based simulations, and the last category has three writing portions. The 4 sections in the examination are Financial Accounting combined with Reporting (FAR), Business Environment and Concepts (BEC), Regulation (REG), and Auditing Attestation (abbreviated as AUD).

Questions And Scoring

The candidate can take each particular section of the exam separately, in any order they wish. After answering and passing one section, the student should complete the remaining three sections within eighteen months to be eligible for CPA qualification. The American Institute for CPAs (AICPA) will formulate the exam, and also score the answers provided by the candidate. The score of a candidate can vary between zero and 99, with 75 being the passing score for each section. Typically, 70% of the questions are multiple choice type, 20% are task based, and 10% will be written.

It should be noted that the questions are weighted according to their difficulty, so the candidate may fail if they miss out in one section. In the computer-based test the candidate is first given a test with medium difficulty questions, and based on their score more questions are given. The entire test should be completed in fourteen hours. For this reason, it is important to take many practice exams during your CPA test prep to familiarize yourself with the test format and make the most of your exam options.

Financial Accounting / Reporting

Financial accounting is widely regarded as the toughest section of the exam, since it is testing the understanding of the financial statements and reporting used in businesses of all sizes, government agencies, as well as nonprofit organizations. The knowledge of accounting standards, role of Security and Exchange Commission (SEC), and other bodies in setting standards is also tested. This section should be completed in four hours, and has 90 multiple choice questions with seven simulations.

Auditing Attestation

The AUD section is similar to FAR in terms of questions, simulations, duration, and the student should be aware of the United States, international auditing standards and other related topics.

Regulation

The Regulation section test is shorter compared to the previous two, with a duration of three hours while covering tax procedures, business laws, ethics, professional responsibilities, property transactions, and federal law. It has 72 multiple-choice questions and six simulations.

Business Environment And Concepts

Since most students pass the BEC section in their first attempt, it is considered to be the easiest section for this examination. It covers strategic planning, risk management, financial management and corporate governance. This section has 72 questions and three writing sections to check the candidate’s written communication skills in replying to letters or memos. This section should be completed in three hours.

Due to the importance of this exam as well as how challenging it is, proper CPA test prep is an absolute must. It is vital to give yourself adequate time to study and not to underestimate this exam. The extensive knowledge required to do well on this exam combined with the strict time limit, means you must take your time to study the right way. Don’t be afraid to consult a CPA test prep tutor if you’re at all worried about how best to approach your studies or test prep. Good luck!