What do the different sections of the CPA exam involve?
If you want to become a certified public accountant, you have your work cut out for you. Before you can take the CPA exam, you must have completed university courses in areas like accounting and business law, and have completed some work experience. You can then study a CPA review course to learn the information required to pass the CPA exam. The examination consists of four sections. Read on to find out what these sections involve.
Select the Right CPA Review Course for You
You have the option of selecting from various CPA review courses to help you pass the CPA exam. Each programme offers different study materials. It is, therefore, essential to compare multiple courses to find one that best suits your learning style and budget. Get started by analysing the best-rated CPA review courses. Before you select a course and take the CPA exam, you should also be aware of the CPA licensing requirements. In addition to passing the CPA exam, you may need to have a Bachelor’s degree or higher qualification, and one or two years of accounting experience under the supervision of a qualified CPA before you can receive a CPA license.
The Business Environment and Concepts Section
Most test-takers find this section the easiest part of the CPA exam to pass. The Business Environment and Concepts section involves answering 72 multiple-choice questions and three written communication parts in which you must respond to a real-life work scenario by responding in a letter or memo format. You will face an assessment on your writing skills, organisation, clarity and conciseness. This section of the CPA exam addresses economic concepts, business structures, information technology and financial management. You will need to demonstrate you are knowledgeable of financial risk management, financial management processes, corporate governance, strategic planning, operations management, and information systems. You also need to show you understand the economic concepts of global business and how those concepts impact companies’ business strategies.
The Regulation Section
This section of the CPA exam includes several task-based simulations and 72 multiple-choice questions. You must demonstrate your knowledge and understanding of business law, tax procedures, professional responsibility, ethics, and taxation for entities, individuals and property transactions. You must also show you have a thorough knowledge of the duties, liabilities and rights of creditors, debtors and guarantors.
The Financial Accounting and Reporting Section
For most people, the Financial Accounting and Reporting section of the CPA exam is the most challenging. It tests your knowledge of the financial reporting framework used for business enterprises, government entities, and non-profit organisations. You must demonstrate you understand the accounting standards for financial statements, what you have to include in those statements, and how to account and report to the organisations using those statements. The exam section involves preparing financial statements, such as statements of retained earnings, comprehensive income, cash flows, and equity. You will also need to review source documents and enter information into general and subsidiary ledgers. As well as several task-based simulations, this part of the CPA exam involves answering 90 multiple-choice questions.
The Auditing and Attestation Section
Like the Financial Accounting and Reporting section, this element of the CPA exam involves 90 multiple-choice questions and several task-based simulations. You must demonstrate your knowledge and understanding of planning and reviewing engagements and internal controls, and obtain and document data. You must identify situations that could be unethical or a violation of accounting professional standards, and then determine the appropriate course of action to take. The Auditing and Attestation section also involves the rules for preparing reports on government auditing standards, audited financial statements, internal control measures and compliance with regulations and laws.