How to Pass the CPA Exam
To become a CPA, you are required to pass an infamously hard four-part exam known as the “Uniform CPA Examination.” This test is written and administered by the American Institute of Certified Public Accountants, also known as the AICPA.
The four parts that make up the CPA Exam are:
- 1. Financial Accounting and Reporting
- 2. Auditing and Attestation
- 3. Regulation
- 4. Business Environment and Concepts
Here’s a breakdown of each part of the CPA Exam.
Financial Accounting and Reporting
You will be tested on your knowledge of standard accounting principles for different business enterprises, including not-for-profit organizations and the government.
Topics covered:
- -financial statements
- -types of transactions and events
- -governmental accounting and reporting standards
- -nongovernmental and not-for-profit account and reporting standards
Auditing and Attestation (Auditing)
You will be tested on your knowledge of audits, standard auditing, and other standards of engagements and the skills related to them.
Topics covered:
- -engagement planning
- -documenting and obtaining data
- -reviewing and evaluating financial information
- -reporting
Regulation
Your skills and knowledge of federal tax law, ethics, professional and legal responsibilities of a CPA, and business law will be tested.
Topics covered:
- Ethics and professional responsibility
- Business law
- Federal tax procedures and accounting issues
- Federal taxation of property transactions
- Federal taxation – individuals
- Federal taxation – entities
Business Environment and Concepts
This is a test of your general knowledge of business and accounting.
Topics covered:
- -structure of business
- -economics
- -managing money
- -information technology
- -financial planning
Taking (and Passing) the CPA Exam
1. Take The Test Soon
You should take the CPA Exam as quickly as you can once you have completed your accounting classes and fulfilled all other requirements. Once you’ve waited a year or two out of school, you will have to study harder since you’ve probably forgotten some of the material you studied in school.
2. Apply to Take the CPA Exam
To apply to take the CPA Exam, head to the NASBA website and apply to take the test. NASBA will then send you something called a “Notice to Schedule”. This is how you know it is time to schedule your exam. That also means the clock is ticking on your studying time.
3. Schedule the CPA Exam
Go to Prometric’s web site and schedule your CPA Exam. Remember that you can always reschedule without paying any fees as long as your test date is thirty days or more away.
4. Order Study Materials
You’re not going to pass the CPA Exam without studying some sort of test prep material. There are great test review books put out by companies like Becker, Wiley, etc. Pick up a copy of the CPA Study Guide if nothing else. This is a hard test.
5. Create a Study Schedule
Studying is more efficient when you study according to a schedule. This means sitting down and writing out your study goals on a weekly basis. Write down what you want to have covered in private studying by the end of each week. When you don’t accomplish a goal, incorporate it into your next week of study, and don’t be too hard on yourself.
6. Practice Practice Practice
There’s no point at which you should stop working review problems or studying your test prep material. You should be studying hard right up until the night before your CPA Exam. The night before, consider having a quiet evening by yourself or with a close friend, have a glass of wine, and relax a little. You’ll need the rest for your CPA Exam.
7. Budget Your Time
Key to success on the CPA Exam is learning to budget your time while taking the test. The Regulation section of the exam is the most crucial time to budget time — you have only three hours to cover the same amount of material as you had four and a half hours to cover on other parts of the test. Keep an eye on the timer and pace yourself.
If you break down your time by section, it will seem easier to complete successfully. Let’s say you have 180 minutes and five test sections to cover. If you budget yourself thirty-six minutes per test, you’ll finish in time.
When you come across a problem you can’t solve right away, take a guess and move on to the next problem. When you have time left over at the end, you can go back to your quick guesses and try to solve them again. Remember — one wrong answer won’t fail you.
Final Tips on the CPA Exam
Don’t be scared of the CPA Exam. The test is not as difficult as it once was, thanks to the computer format and flexible scheduling.
You must have a positive attitude to pass the CPA Exam. Each test booklet has harder and easier questions — you will most certainly come across difficulties on this test, but there will also be breaks when you know exactly how to work a problem. Don’t be afraid of educated guesses.
If you fail the CPA Exam the first time, you must try to pass again. Don’t let all your studying be for nothing — try the test again in as little as six months. When you get your score report, make sure and keep it for future studying — the score report comes with an analysis of the areas you did well on and where you need improvement.