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Exam Review

Key Facts: CPA Exam

43-80%

Pass Rate by Section

AICPA 2026 Q1-Q2 (FAR lowest, TCP highest)

670K+

Active CPAs in US

AICPA 2024

222+ Qs

Total Questions

3 core sections; discipline adds 57-88 more

30 mo

Credit Window

NASBA-recommended; set by each board

~$1,560

Total Exam Fees

DC: 4 sections at $364.59 plus $96 evaluation

16 hrs

Total Exam Time

4 sections × 4 hours

Under CPA Evolution (2024+), candidates take 3 core sections — AUD (~49%), FAR (~43%, hardest), REG (~67%) — plus 1 discipline: BAR (~44%), ISC (~67%), or TCP (~80%), using 2026 Q1-Q2 pass rates. Each section is 4 hours; a scaled 75 on a 0-99 scale is required (not a percentage correct). Each board sets the window for passing all 4 sections; NASBA recommends a rolling 30 months, which many states have adopted. ~670,000 active CPAs in the US.

Sample CPA Practice Questions

Try these sample questions to review concepts for the CPA exam. Each question includes a detailed explanation. Start the interactive quiz above for the full 200+ question experience with AI tutoring.

1According to the FASB Conceptual Framework, which of the following is the primary objective of general-purpose financial reporting?
A.To provide information useful to existing and potential investors, lenders, and other creditors in making decisions about providing resources to the entity
B.To determine the taxable income of the reporting entity
C.To provide information exclusively to management for internal decision-making
D.To calculate the liquidation value of the entity
Explanation: SFAC No. 8 (as codified) states that the primary objective of general-purpose financial reporting is to provide financial information about the reporting entity that is useful to existing and potential investors, lenders, and other creditors in making decisions about providing resources to the entity. Tax determination, internal management reporting, and liquidation valuation are not the primary objectives of general-purpose financial statements.
2Under the FASB Conceptual Framework, relevance and faithful representation are the two fundamental qualitative characteristics of useful financial information. Which of the following is an enhancing qualitative characteristic?
A.Materiality
B.Comparability
C.Faithful representation
D.Relevance
Explanation: The four enhancing qualitative characteristics under the FASB Conceptual Framework are comparability, verifiability, timeliness, and understandability. Relevance and faithful representation are the two fundamental qualitative characteristics, not enhancing ones. Materiality is a component of relevance (an entity-specific aspect), not a separate enhancing characteristic.
3The FASB Conceptual Framework defines an asset as which of the following?
A.A present right of an entity to an economic benefit
B.A probable future economic benefit obtained or controlled by an entity as a result of past transactions
C.Any resource owned by an entity with a determinable fair value
D.Cash or items readily convertible to cash within one year
Explanation: Under the updated FASB Conceptual Framework (SFAC No. 8, Chapter 4, effective 2021), an asset is defined as "a present right of an entity to an economic benefit." The older definition referencing "probable future economic benefit" from SFAC No. 6 has been superseded. Assets need not have a determinable fair value, and the one-year conversion criterion describes current assets, not assets in general.
4Which level of the GAAP hierarchy represents the most authoritative source of accounting guidance under FASB ASC Topic 105?
A.FASB Accounting Standards Codification (ASC)
B.AICPA Audit and Accounting Guides
C.FASB Concepts Statements
D.Industry practice widely recognized as generally accepted
Explanation: Under ASC 105, the FASB Accounting Standards Codification is the single source of authoritative U.S. GAAP for nongovernmental entities (other than SEC guidance). AICPA Audit and Accounting Guides, FASB Concepts Statements, and industry practice are considered nonauthoritative guidance that may be consulted when the ASC does not address a particular transaction, but they are not authoritative GAAP.
5Under the FASB Conceptual Framework, faithful representation requires financial information to possess which three characteristics?
A.Completeness, neutrality, and freedom from error
B.Relevance, verifiability, and timeliness
C.Predictive value, confirmatory value, and materiality
D.Comparability, consistency, and understandability
Explanation: Faithful representation, one of the two fundamental qualitative characteristics, requires that financial information be complete (includes all information necessary for a user to understand the phenomenon), neutral (without bias), and free from error (no errors or omissions in the description, though it does not require perfect accuracy). The other options describe enhancing characteristics or components of relevance.
6A company discovers that its financial statements contain an error that is quantitatively small but could influence a user's decision because of its nature. Under the FASB Conceptual Framework, which concept best applies?
A.Conservatism
B.Materiality
C.Prudence
D.Cost constraint
Explanation: Materiality is an entity-specific aspect of relevance. Information is material if omitting or misstating it could influence the decisions of users. Materiality considers both quantitative and qualitative factors, so even a quantitatively small error can be material based on its nature (e.g., related to fraud, regulatory compliance, or trend reversal). Conservatism and prudence are not explicitly recognized as qualitative characteristics under U.S. GAAP. The cost constraint relates to the cost-benefit trade-off of reporting.
7According to the FASB Conceptual Framework, revenue is best defined as:
A.Inflows of assets or settlements of liabilities from delivering goods or rendering services that constitute the entity's ongoing major or central operations
B.Any increase in net assets during a period
C.Cash receipts from customers during the period
D.The total amount billed to customers regardless of collection
Explanation: Under the Conceptual Framework (and consistent with ASC 606), revenues are inflows or other enhancements of assets of an entity, or settlements of its liabilities, from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations. Not all increases in net assets are revenue (some are gains). Cash receipts may not coincide with revenue recognition, and billing does not automatically result in revenue.
8The going concern assumption in accounting means that:
A.The entity will continue to operate for the foreseeable future, at least 12 months beyond the financial statement date
B.The entity has no debts that are currently in default
C.The entity's auditor has issued an unqualified opinion
D.The entity has positive net income for the current period
Explanation: The going concern assumption presumes that the entity will continue its operations for the foreseeable future and will not be forced to liquidate. Under ASC 205-40, management must evaluate whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year (12 months) after the date the financial statements are issued. Having no defaults, receiving an unqualified opinion, or having positive net income do not define the going concern assumption.
9On a multi-step income statement, gross profit is calculated as:
A.Net sales minus cost of goods sold
B.Net sales minus all operating expenses
C.Net income plus income tax expense
D.Total revenues minus total expenses
Explanation: In a multi-step income statement, gross profit (also called gross margin) equals net sales revenue minus cost of goods sold (COGS). Operating income is calculated by subtracting operating expenses from gross profit. Net income is after all expenses, including taxes. Total revenues minus total expenses would be net income in a single-step format.
10Which of the following items is reported in other comprehensive income (OCI) rather than net income?
A.Gain on sale of equipment
B.Unrealized holding gain on available-for-sale debt securities
C.Realized gain on sale of trading securities
D.Impairment loss on goodwill
Explanation: Unrealized holding gains and losses on available-for-sale (AFS) debt securities are reported in other comprehensive income (OCI), not in net income. Under ASC 320, these gains/losses bypass the income statement until the securities are sold or impaired. Gains on sale of equipment, realized gains on trading securities, and goodwill impairment losses are all reported in net income.

About the CPA Exam

The CPA exam uses the CPA Evolution model (2024+). Candidates pass 3 core sections (AUD, FAR, REG) plus 1 discipline (BAR, ISC, or TCP), each 4 hours with MCQs and task-based simulations weighted 50/50 (ISC 60/40). Each board sets the window for passing all 4 sections; NASBA recommends a rolling 30 months.

Exam sponsor: AICPA / NASBA / Prometric. The requirements and fees below concern the certification or admission exam, separate from our free practice resources.

Questions

222 questions

Time Limit

16 hours (4 sections × 4 hrs)

Passing Score

75/99 (scaled, not a percentage correct)

Exam / Certification Fees

~$1,560+

Exam sponsor website

Reported exam pass rate: 43-80%. varies by section (FAR ~43% lowest, TCP ~80% highest in 2026 Q1-Q2); AICPA does not publish a single overall rate This describes exam candidates, not OpenExamPrep users or results from using our resources. Exam sponsor website

Fees, eligibility, and exam policies can change. Confirm them with the exam sponsor before applying or paying.

Our practice resources: topics covered

We aim to reflect publicly available exam outlines and topic information in our study resources. Coverage, format, and difficulty may differ from the actual exam, and we cannot guarantee that every detail is accurate or current. Confirm exam requirements, fees, and policies with the official exam sponsor.

25%

FAR: Financial Accounting & Reporting

Financial statements, balance sheet accounts, revenue recognition, leases, income taxes, governmental accounting

25%

AUD: Auditing & Attestation

Risk assessment, audit evidence, audit procedures, professional responsibilities, audit reports

25%

REG: Taxation & Regulation

Individual and entity taxation, business law, contracts, property transactions, tax procedures

25%

Discipline: BAR, ISC or TCP

One section of the candidate's choice: Business Analysis and Reporting, Information Systems and Controls, or Tax Compliance and Planning

Preparing for the CPA Exam

What You Need to Know

  • Passing score: 75/99 (scaled, not a percentage correct)
  • Exam length: 222 questions
  • Time limit: 16 hours (4 sections × 4 hrs)
  • Exam / certification fees: ~$1,560+ Official sources

Using Our Practice Resources

  • Work through all 200 available questions
  • Review every answer and explanation
  • Track weak areas and revisit them
  • Use our AI tutor for tough concepts

CPA: Suggested Study Strategy

1Start with FAR — it has the most content and lowest pass rate, so tackle it first to make the most of your board's credit window
2Master revenue recognition (ASC 606) — the 5-step model appears heavily on FAR and is commonly tested
3For AUD, focus on risk assessment and audit evidence — these two areas make up 55-75% of the exam
4REG: learn individual tax thoroughly (22-32% weight) — know filing status, gross income inclusions/exclusions, and above/below-the-line deductions
5Practice task-based simulations regularly — they count for 50% of your score and test application, not just memorization
6Use the AICPA Blueprints to understand exactly which skill levels (Remembering, Application, Analysis) are tested per topic

Frequently Asked Questions

What is the CPA exam pass rate?

CPA exam pass rates vary by section. Using AICPA's cumulative figures for the first two quarters of 2026: FAR is the hardest at ~43%, AUD is ~49%, and REG is ~67%. For the discipline sections, TCP is highest at ~80%, ISC is ~67%, and BAR is ~44%. AICPA reports rates per section under the CPA Evolution model and does not publish a single overall pass rate.

How did the CPA Evolution change the exam?

Effective January 2024, the CPA exam replaced BEC with three discipline options: BAR (Business Analysis & Reporting), ISC (Information Systems & Controls), and TCP (Tax Compliance & Planning). Candidates choose one discipline to pair with the three core sections (AUD, FAR, REG). Technology skills are now tested across all sections.

What are the CPA exam requirements?

Requirements vary by board. The Uniform Accountancy Act now recognizes three licensure pathways: a master's degree plus one year of experience, a bachelor's degree plus 30 more credits (150 total) plus one year, or a bachelor's degree (120 hours) plus two years of experience, and many states have adopted the 120-hour path. Every pathway requires passing the exam. NASBA recommends a rolling 30-month window to pass all 4 sections, set by each board. In DC each section costs $364.59 ($268.59 exam fee plus a $96 application fee), plus a one-time $96 education evaluation.

Which CPA section should I take first?

Most experts recommend starting with FAR because it has the most content and lowest pass rate (~43% in 2026 Q1-Q2). Getting FAR done first gives you maximum time to pass the remaining sections within your board's credit window (NASBA recommends 30 months). Some prefer starting with AUD (which builds on FAR knowledge) or REG if they have a tax background.

How much do CPAs earn?

According to the BLS, the median annual salary for accountants and auditors is approximately $79,880 (2024). CPAs typically earn 10-15% more than non-certified accountants. Senior CPAs, managers, and partners can earn $100,000-$300,000+. The CPA is considered one of the most valuable professional certifications with approximately 670,000 active holders in the US.