100+ Free CPA BAR Practice Questions

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Question 1

Score: 0/0

A company has current assets of $400,000, inventory of $150,000, prepaid expenses of $20,000, and current liabilities of $200,000. What is the quick (acid-test) ratio?

1.15

1.50

2.00

1.25

to track

2026 Statistics

Key Facts: CPA BAR Exam

75 / 99

Passing Score

AICPA scaled score

4 hours

Total Exam Time

AICPA

50 MCQ + 7 TBS

Question Format

AICPA (50/50 score weighting)

Quarterly only

Testing Windows

Jan / Apr / Jul / Oct

~42%

2025 Cumulative Pass Rate

AICPA section data

~$262

Section Fee

NASBA (varies by state)

BAR is a 4-hour CPA Discipline section with 50 MCQs and 7 TBSs (50/50 score weighting). The passing score is 75 (scaled). BAR is offered ONLY in quarterly testing windows (Jan, Apr, Jul, Oct) — unlike Core sections (AUD, FAR, REG), which run continuously. The exam fee is ~$262 per section. BAR is one of the harder CPA sections — 2025 cumulative pass rate was ~42%.

Sample CPA BAR Practice Questions

Try these sample questions to test your CPA BAR exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1A company has current assets of $400,000, inventory of $150,000, prepaid expenses of $20,000, and current liabilities of $200,000. What is the quick (acid-test) ratio?

A.1.15

B.1.50

C.2.00

D.1.25

Explanation: Quick ratio = (Current Assets − Inventory − Prepaid Expenses) ÷ Current Liabilities = ($400,000 − $150,000 − $20,000) ÷ $200,000 = $230,000 ÷ $200,000 = 1.15. The quick ratio strips out the least-liquid current assets (inventory and prepaids) to test immediate solvency.

2Using the three-step DuPont identity, ROE equals which combination?

A.Net Profit Margin × Asset Turnover × Equity Multiplier

B.Gross Margin × Asset Turnover × Debt Ratio

C.Net Income ÷ (Sales + Equity)

D.Operating Margin × Inventory Turnover × Leverage

Explanation: The classic three-step DuPont decomposes ROE into Net Profit Margin (Net Income/Sales), Asset Turnover (Sales/Total Assets), and the Equity Multiplier (Total Assets/Total Equity). It isolates whether returns come from operating efficiency, asset productivity, or financial leverage.

3A firm has fixed costs of $300,000, sells units at $50, and has variable cost of $30 per unit. Break-even units equal:

A.10,000

B.6,000

C.15,000

D.12,000

Explanation: Break-even units = Fixed Costs ÷ Contribution Margin per Unit = $300,000 ÷ ($50 − $30) = $300,000 ÷ $20 = 15,000 units. The contribution margin per unit ($20) covers fixed costs first, then any further sales become operating profit.

4A project requires $500,000 today and returns a single cash flow of $750,000 in 4 years. At a 10% discount rate, what is the NPV (rounded)?

A.$12,287

B.$250,000

C.$(38,775)

D.$60,000

Explanation: PV of $750,000 at 10% for 4 years = $750,000 ÷ (1.10)^4 = $750,000 ÷ 1.4641 ≈ $512,287. NPV = $512,287 − $500,000 = $12,287. Because NPV is positive, the project earns more than the 10% required return and should be accepted.

5Internal Rate of Return (IRR) is best defined as the discount rate at which:

A.NPV equals zero

B.Payback period is minimized

C.Profitability index equals 1.0 plus the cost of capital

D.Accounting rate of return equals the hurdle rate

Explanation: IRR is the rate that makes the present value of expected cash inflows equal to the present value of cash outflows — i.e., where NPV = 0. A project is accepted under IRR when IRR exceeds the required rate (cost of capital).

6A company's payback period for a $200,000 project with annual cash inflows of $50,000 is:

A.2 years

B.4 years

C.5 years

D.2.5 years

Explanation: Payback Period (with even cash flows) = Initial Investment ÷ Annual Cash Inflow = $200,000 ÷ $50,000 = 4 years. Payback ignores the time value of money and any cash flows after the recovery point — a key limitation versus NPV/IRR.

7A standard direct-materials variance shows: actual quantity 12,000 lbs, standard quantity for output 10,000 lbs, standard price $5/lb. The materials usage (quantity) variance is:

A.$10,000 unfavorable

B.$10,000 favorable

C.$2,000 unfavorable

D.$50,000 unfavorable

Explanation: Materials Usage Variance = (AQ − SQ) × SP = (12,000 − 10,000) × $5 = $10,000 unfavorable. Using more materials than standard for the actual output produced is unfavorable because it increased cost.

8In transfer pricing, when no external market exists and the selling division has excess capacity, the appropriate minimum transfer price equals:

A.Variable cost per unit

B.Full absorption cost per unit

C.Market price

D.Variable cost plus normal markup

Explanation: With excess capacity and no external sales lost, the seller's minimum acceptable transfer price equals incremental (variable) cost per unit because no opportunity cost exists. If capacity were constrained, the floor would rise to variable cost plus the contribution margin forgone on lost outside sales.

9A company sells 10,000 units at $40 with variable costs of $25 and fixed costs of $100,000. The contribution margin ratio is:

A.37.5%

B.62.5%

C.25%

D.40%

Explanation: Contribution Margin Ratio = (Price − Variable Cost) ÷ Price = ($40 − $25) ÷ $40 = $15/$40 = 37.5%. This means 37.5 cents of every revenue dollar covers fixed costs and contributes to profit.

10The degree of operating leverage (DOL) at a given output level equals:

A.Contribution Margin ÷ Operating Income

B.Operating Income ÷ Net Income

C.Sales ÷ Variable Costs

D.Fixed Costs ÷ Total Costs

Explanation: DOL = Contribution Margin ÷ Operating Income (EBIT). It measures the percentage change in EBIT for a 1% change in sales — higher DOL means more fixed costs and greater profit sensitivity to sales volume.

About the CPA BAR Exam

The Business Analysis and Reporting (BAR) section is one of three Discipline section choices in the CPA Evolution model — chosen instead of ISC (Information Systems & Controls) or TCP (Tax Compliance & Planning). BAR tests advanced topics in business analysis (financial statement analysis, ratios, DuPont, CVP, variance analysis, transfer pricing, capital budgeting), advanced GAAP (ASC 606 multi-element revenue, ASC 805 business combinations and step acquisitions, ASC 810 consolidations and VIEs, ASC 715 pensions, ASC 718 stock compensation, ASC 815 derivatives and hedging, ASC 830 foreign currency, ASC 842 leases, SEC reporting), and state and local government accounting (GASB 34, fund accounting, modified accrual, GASB 68/75/87/96).

Questions

57 scored questions

Time Limit

4 hours

Passing Score

75 on a scale of 0-99 (scaled, not a raw percent)

Exam Fee

~$262 per section (AICPA & NASBA (delivered at Prometric test centers))

CPA BAR Exam Content Outline

40-50%

Area I — Business Analysis

Financial statement analysis (ratios — liquidity, solvency, profitability, activity; horizontal/vertical/trend; DuPont decomposition); prospective analysis (forecasting, scenario, sensitivity); KPIs (NRR, CLV, EVA); managerial accounting (CVP, contribution margin, break-even, margin of safety, operating leverage; standard costing and variance analysis; transfer pricing; ABC; flexible budgets); capital budgeting (NPV, IRR, profitability index, payback, discounted payback); cost of capital and WACC; working capital management (cash, receivables, inventory, payables, EOQ); risk management and COSO ERM (2017); Porter's Five Forces and process/economic analysis

35-45%

Area II — Technical Accounting and Reporting

Advanced GAAP beyond FAR: ASC 606 revenue recognition (multi-element, principal vs agent, variable consideration, contract modifications, contract assets/liabilities); ASC 805 business combinations (acquisition method, step acquisitions, NCI fair value, contingent consideration); ASC 350 goodwill impairment (post-ASU 2017-04 simplified test); ASC 810 consolidations and VIE primary-beneficiary analysis; ASC 715 pensions and OPEB; ASC 718 stock-based compensation (Black-Scholes / lattice; service vs performance conditions); ASC 815 derivatives and hedging (cash flow, fair value, net investment hedges); ASC 830 foreign currency translation vs remeasurement; ASC 842 leases (lessee finance vs operating); ASC 740 deferred taxes and valuation allowance; ASC 326 CECL; ASC 280 segment reporting; ASC 270 interim reporting; SEC reporting (Form 10-K, 10-Q, 8-K, XBRL)

10-20%

Area III — State and Local Governments

GASB framework and standard-setting authority; fund accounting (Governmental: GF, SRF, CPF, DSF, Permanent; Proprietary: Enterprise, Internal Service; Fiduciary: Pension, Investment Trust, Private-Purpose Trust, Custodial); measurement focus and basis of accounting (full accrual vs modified accrual; economic resources vs current financial resources); government-wide statements (Statement of Net Position, Statement of Activities); fund-level statements; budgetary accounting and encumbrances; GASB 33 (revenue recognition); GASB 34 reporting model; GASB 54 (fund balance classifications: nonspendable, restricted, committed, assigned, unassigned); GASB 68 (pensions); GASB 75 (OPEB); GASB 84 (fiduciary activities); GASB 87 (leases); GASB 96 (SBITAs); MD&A and Annual Comprehensive Financial Report (ACFR); GASB 9 (proprietary fund cash flow categories)

How to Pass the CPA BAR Exam

What You Need to Know

Passing score: 75 on a scale of 0-99 (scaled, not a raw percent)
Exam length: 57 questions
Time limit: 4 hours
Exam fee: ~$262 per section

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

CPA BAR Study Tips from Top Performers

1Plan your BAR sit date around the quarterly testing windows (Jan, Apr, Jul, Oct) — there are no rolling-availability sit dates like AUD/FAR/REG

2Pass FAR before BAR — most candidates do, because BAR's technical accounting builds on FAR's foundation

3Drill ASC 606 multi-element allocation, principal vs agent, and variable consideration constraint — these recur across MCQs and TBSs

4Master ASC 805 mechanics: acquisition-date FV measurement, step acquisitions (remeasure prior interest), NCI at fair value, full goodwill

5Memorize the GASB 34 dual-perspective model: government-wide (full accrual) vs governmental funds (modified accrual)

6Know fund types cold: Governmental (GF, SRF, CPF, DSF, Permanent) vs Proprietary (Enterprise, ISF) vs Fiduciary (per GASB 84)

7Practice DuPont decomposition (3-step and 5-step) — ratios appear frequently in financial-statement analysis MCQs

8Drill capital budgeting computations: NPV, IRR, payback, discounted payback, profitability index — including ranking under capital rationing

Frequently Asked Questions

When is the BAR exam offered in 2026?

BAR is offered in quarterly testing windows: January 1-31, April 1-30, July 1-31, and October 1-31. Discipline sections (BAR, ISC, TCP) are NOT available year-round like Core sections (AUD, FAR, REG). Score release follows about 6-10 weeks after each window closes (typically mid-March, June, September, and December).

What is the BAR passing score?

75 on a scale of 0 to 99. The score is scaled (not a raw 75% correct) and reflects both question difficulty and the candidate's performance on the 50 MCQs and 7 TBSs. MCQs and TBSs are weighted 50/50 in the total score.

How is BAR different from FAR?

FAR is a required Core section covering foundational GAAP. BAR is one of three Discipline section choices (vs. ISC or TCP) and goes deeper on advanced GAAP topics — ASC 606 multi-element revenue, ASC 805 business combinations, ASC 810 VIE consolidations, ASC 815 derivatives — plus business analysis (ratios, NPV, variance analysis) and state and local government accounting.

Why is BAR considered hard?

The 2025 cumulative pass rate for BAR was ~41.94% — among the lowest of the six CPA Evolution sections, comparable to FAR (~42%). The breadth of advanced technical accounting topics combined with business analysis calculations and governmental accounting make it the most knowledge-dense Discipline section.

How should I study for BAR?

Allocate 120-180 hours over 10-14 weeks. Pass FAR first if you haven't — BAR builds on FAR foundations. Distribute study time roughly 45/40/15 to match blueprint weights (Business Analysis / Technical Accounting / State and Local Government). Practice TBSs heavily; they're 50% of the score. Use a major CPA review (Becker, UWorld, Surgent, Wiley) for full coverage.

What is the 30-month rule?

After your first passed CPA Exam section's score release, you have 30 months to pass the remaining 3 sections. If you don't, the oldest passed section expires and you must retake it. Plan your BAR sit date strategically — quarterly windows mean a missed attempt costs at least 3 months.