How to Build a Foundation for the Certified Public Accountant (CPA) Exam

If you plan to become a Certified Public Accountant (CPA), you'll need to complete an undergraduate degree program in a related field and pass the CPA exam before you can start practicing. Depending on the state where you plan to work, you may also be required to log some relevant work experience.

For many aspiring CPAs, taking the formal CPA exam may seem like a daunting task. However, with a bit of preparation and planning, you can feel confident about taking this exam and taking the next step toward a rewarding career in accounting.

The Importance of the CPA Exam

What is the CPA exam? The Uniform CPA Examination (also known as the CPA exam) is a four-section, 16-hour assessment that candidates must pass to become certified as public accountants in any of the 50 states. Specifically, candidates must receive a minimum score of 75 on each exam section to pass. This examination is an important component of working towards CPA licensure because it tests candidates on their knowledge of essential accounting topics that they will need to use in their everyday work.

Overview of the CPA Exam Structure

There are four sections on the CPA exam:

• Financial Accounting and Reporting (FAR)
• Auditing and Attestation (AUD)
• Regulation (REG)
• Business Environment and Concepts (BEC)

Candidates must complete one section of the exam at a time before moving on to the next section, taking up to four hours per section as needed. This computer-based exam consists of 276 multiple-choice questions and a combination of task-based simulations and written communication tasks.

Candidates receive individual scores on each exam section, ranging from zero (lowest) to 99 (highest). To pass the exam, candidates must score at least 75 on each section. Candidates who don't pass all four sections concurrently can retake individual sections as needed until they pass. However, all four sections must be passed within the same 18-month period. Otherwise, the entire exam needs to be retaken.

Eligibility Criteria for the CPA Exam

The specific eligibility requirements to take the CPA exam can vary from one state to the next, which is why it's always a good idea to check with your state and Board of Accountancy jurisdiction before attempting to register.

Most states require that candidates complete an undergraduate degree program in accounting or a related field (equivalent to at least 150 credit hours) before registering for the CPA exam. When you meet all the requirements to take the exam, you can apply directly through the National Association of State Boards of Accountancy.

Registration and Exam Costs

Registration and costs related to taking the CPA exam also vary depending on the Board of Accountancy jurisdiction where you reside. The initial application fee for the exam is usually around $200. From there, you pay to take each section of the exam, with the total for all four sections and the application fee hovering around $1,000 in most jurisdictions.

In addition to the up-front costs of the exam, you may need to pay extra if you fail and have to retake any sections of the exam. In some cases, you may also need to pay to apply for your CPA license upon passing the exam.

Breakdown of CPA Exam Contents

There are four sections on the CPA exam—and you'll be scored separately on each. Ultimately, passing all sections of the exam will depend on your ability to identify your strengths and weaknesses, focus on areas where you need more practice/study, and prepare for each section as needed.

How to Prepare for Each Section of the CPA Exam

By better understanding what each section of the CPA exam entails, you can better prepare for each and increase your chances of passing the first time. Below, you'll find a list of each CPA exam section and some key topics/concepts typically covered.

• Financial Accounting and Reporting - Preparing financial statements (balance sheets, income statements, cash flows, etc.), entering data into general ledgers and financial reporting framework for different types of businesses.
• Auditing and Attestation - Knowledge of international accounting standards, ethical violations, law compliance, AICPA and Department of Labor standards for auditing.
• Regulation - Knowledge of professional/legal responsibilities of CPAs, legal implications of this type of work, rights/duties of guarantors/creditors/debtors, IRS auditing and appeals processes.
• Business Environment and Concepts - Understanding business structures, financial management, corporate governance, strategic planning and financial risk management.

Study Strategies for CPA Exam Success

Whether you'll be taking the CPA exam soon or are still months out from even applying to take the exam, it's never too early (or too late) to adopt some great study habits.

First and foremost, taking a practice CPA exam is a great way to improve your skills. Plenty of free practice exams online simulate the real experience with an identical format and realistic test questions/scenarios. Taking a practice exam is a great way to get a feel for where you stand, including which areas you already know well and which areas you need to focus on during your studies.

From there, consider finding a CPA study group in your area or even finding a CPA mentor. A study group is a great way to hold yourself accountable while studying with people in your position. These study groups are also helpful for gaining advice and learning new techniques from other students. Meanwhile, working directly with a mentor who has already passed the exam and working in the field can provide expert insight to help you prepare.

If you struggle to find enough time in your busy schedule to study for the CPA exam, try creating a study schedule or timeline. A study plan should be written in your planner and treated like any other important class, appointment, or commitment. Setting aside just 20-30 minutes a few nights per week can make all the difference.

Lastly, start studying for the exam sooner rather than later. Even if you're still finishing your undergraduate degree, it's not too early to start taking practice exams and focusing on your study plan. Getting an earlier start rather than a later one is always better. Stay on top of any changes in the formatting or requirements for the exam itself, as these can change from one year to the next. Staying informed will help you keep your study plan up-to-date and relevant.

Effective Tips to Stay Motivated While Preparing for the CPA Exam

Many people have difficulty staying motivated and engaged while studying for the CPA exam. If you're struggling with this, there are some tips and tricks you can keep in mind to hold yourself accountable and stay focused.

First, be sure to let your friends and family know that you are studying for the exam and the specific date of your exam (if you know it). This will create a sense of accountability; asking a trusted friend or family member to check in and ask about your study progress is helpful. This can give you the added motivation to stick with your study plan.

It can also be helpful to keep your eye on the proverbial prize. Think about all the hard work you have already put in to get where you are. The path to becoming a CPA is long, but if you're nearing your CPA exam date, you're already most of the way there. Don't lose momentum or give up now, as passing the CPA exam is the only major obstacle between you and your licensure.

Embark on Your Journey Today

Preparing for the CPA exam requires a lot of dedication and planning, but with the right plan, you'll be ready for test day. The right undergraduate program can also prepare you for the CPA exam and the everyday challenges of a career as a public accountant. The School of Accountancy at the University of Memphis offers an excellent Bachelor of Business Administration degree with a major in Accounting and a Master of Science in Accounting, so reach out to learn more or apply today.

Sources

https://www.investopedia.com/articles/investing/111214/cpa-exam-what-you-need-know.asp
https://nasba.org/stateboards/
https://cpacentral.nasba.org/
https://cpaexamguy.com/cpa-exam-costs/
https://www.efficientlearning.com/cpa/products/free-trial-practice-exam/