CPA Exam: what it is and how to prepare for it

For ambitious accountants, becoming a certified public accountant (CPA) is high up the list of career objectives — and for good reason. CPAs enjoy more opportunities for career advancement, higher average salaries, and the chance to specialize in interesting and varied accounting niches. 

Standing in their way is the Uniform CPA Exam — a rigorous set of examinations that test accountants’ skills, knowledge, and professionalism. 

But what does the CPA exam involve? How is it scored? And what do you need to do to pass it? In this article, we’ll answer those questions and more. Read on to explore how to study for the CPA exam, how it’s structured, and the best resources to use. 

What is the CPA exam?

The CPA exam is a comprehensive assessment designed to determine whether an accountant has the knowledge and skills to obtain the prestigious CPA designation. 

The exam is overseen by the American Institute of Certified Public Accountants (AICPA) and administered by AICPA and the National Association of State Boards of Accountancy (NASBA), with help from Prometric, an American test administration company. 

Each year, tens of thousands of accountants study for the CPA exam, with 86,000 people taking it last year. It’s a notoriously rigorous examination process, with a national average pass rate of between 45% and 55%. 

Why take the CPA exam?

Becoming a CPA takes your career to the next level. Here are three key benefits that make all that hard work worthwhile: 

Career opportunities

CPAs go on to work in specialist accounting niches such as audit, consulting, or corporate finance. They are also more likely to climb the corporate ladder, going on to become chief financial officers (CFOs) or partners in accounting firms. For accountants who want to go it alone, being a CPA makes it easier to acquire new clients.

Financial rewards

When you become a CPA, you rip the ceiling off your earning potential. The average salary for a CPA in the US is somewhere between $100,000 and $120,000, depending on what source you look at. Contrast that with the average salary for regular accountants, which is around $65,000, and you can see the difference.

Professional credibility

Becoming a CPA marks a major milestone in an accountant’s professional growth, setting them apart in an industry where trust and credibility are everything. By obtaining the CPA designation, you show potential clients and employers you’ve met the rigorous standards set out by a professional accounting body. 

Exam structure

The CPA exam comprises four sections, each consisting of different groups of questions known as testlets. The first three are Core sections that everyone takes. For the last section, entrants can choose from one of three Discipline sections. 

Core sections

Here are the three core sections and the topics (or testlets) they include: 

Auditing and Attestation (AUD)

• Ethics, Professional Responsibilities, and General Principles
• Assessing Risk and Developing a Planned Response
• Performing Further Procedures and Obtaining Evidence
• Forming Conclusions and Reporting

Financial Accounting and Reporting (FAR)

• Financial Reporting
• Select Balance Sheet Accounts
• Select Transactions

Taxation and Regulation (REG)

• Ethics, Professional Responsibilities, and Federal Tax Procedures
• Business Law
• Federal Taxation of Property Transactions
• Federal Taxation of Individuals
• Federal Taxation of Entities (including tax preparation)

Discipline sections

For the fourth section, entrants can choose from one of the following three Discipline sections: 

Business Analysis and Reporting (BAR)

• Business Analysis
• Technical Accounting and Reporting
• State and Local Government

Information Systems and Control (ISC)

• Information Systems and Data Management
• Security, Confidentiality, and Privacy
• Considerations for System and Organization Controls (SOC) Engagements

Tax Compliance and Planning (TCP)

• Tax Compliance and Planning for Individuals and Personal Financial Planning
• Entity Tax Compliance
• Entity Tax Planning
• Property Transactions (disposition of assets

What types of questions are there?

According to AICPA, the first two testlets of each section consist of multiple-choice questions (MCQs). The remaining ones consist of task-based simulations (TBSs). 

TBSs introduce a scenario, provide you with all the relevant data and information you need, and then ask you to answer a series of questions. TBSs are notoriously tricky, and they make up 50% of your exam score. 

How long does the exam last?

Each section has a time limit of four hours. That brings the total exam time to a maximum of 16 hours. AICPA stipulates that you must pass all four sections within 30 months. Exactly when the 30-month period starts varies from state to state, so be sure to check with your state board of accountancy.

CPA Exam scoring

The CPA exam is scored on a scale from zero to 99. To pass a section, you must score a minimum of 75. You need to pass each section to pass the overall exam and gain your CPA license. 

The scores you receive for each section aren’t percentage scores. Rather, they are calculated using special formulas that take into account whether a question was answered correctly and how difficult it is considered relative to other questions. 

For all but one section, MCQs and TBSs are weighted at 50% each, with the exception of the ISC section, which is weighted at 60% MCQs and 40% TBSs. 

CPA Exam prep tips

The CPA exam is notoriously difficult to pass. That said, there are some strategies you can implement to increase your likelihood of success. Here are some tips to help you ace the exam:

Understand the exam format and content

Understanding how the exam is structured and scored will help you understand how to best prepare. When you go into each section of the exam, you should have a clear understanding of the topics covered and the types of questions you’ll be asked to answer.

Create a comprehensive study plan

Many people study for the CPA exam alongside a full-time job and other responsibilities. With so much to balance, it can be difficult to carve out time. For this reason, we recommend developing a realistic study schedule that suits your lifestyle and responsibilities. 

Choose the right study materials

The materials you use to study for the CPA exam could make all the difference. There are plenty of CPA review courses, practice exams, and textbooks out there. Do a bit of digging to see what other people have to say, and go for materials that suit your preferred learning style and budget. There are plenty of discussions on forums such as Reddit. Here’s an example from the r/CPA subreddit:

Simulate test conditions

As the exams get nearer, it’s a good idea to do some practice runs to see how you perform under test conditions. Most exam review courses offer realistic mock tests. This will help you get a feel for the duration of the test, the types of questions, and how best to manage your time. 

Understand key concepts

Success in your CPA exam isn’t necessarily about memorizing answers through repetition. It’s about understanding the principles of accounting, audit, and taxation — and then applying them to different scenarios. Focus on building foundational knowledge. 

Stay updated

The accounting world never stands still. In addition to changing tax laws and accounting standards, AICPA occasionally changes the format of the CPA exam to ensure that it best reflects current industry standards. 

Seek support

It’s a good idea to seek support from the accounting community wherever possible. Consider joining a study group or getting a mentor to help guide you in the right direction. You can also seek support and encouragement on online forums such as Reddit. 

Best CPA review courses: a comparative analysis

The best way to prepare for the CPA exam is to use a CPA review course. These are comprehensive packages that offer study materials, hands-on guidance, mock tests, and more. In this section, we’ll highlight five of the best.

1. Becker CPA Review

Becker CPA Review is one of the most popular CPA review courses on the market, with more than two million accountants choosing it to help them make the grade. Becker is also the go-to choice for 2,900 organizations, including the “Big Four” accounting firms. 

Becker has four different pricing plans, each offering different features and resources. 

• Advantage at $2,499
• Premium at $3,099
• Pro at $2,469 (reduced from $3,799 at the time of writing)
• Concierge at $4,999 (reduced from $5,999 at the time of writing)

Advantage offers 24 months of access, while the other packages offer unlimited access.

2. NINJA CPA Review

NINJA CPA started out by offering supplementary resources for CPA exam preparation. In recent years, its offering has expanded to become a comprehensive CPA review course. More than 7,000 candidates chose NINJA CPA last year to supercharge their studies.

NINJA users pay a monthly fee to access resources and materials for different exam sections. Each section is priced at $67 per month. Once you pass a particular section, you can move on to another.

3. UWorld CPA Review

Boasting highly experienced, high-profile instructors, UWorld CPA Review is an interesting option for candidates looking for a hands-on approach. It also claims to have the highest pass rate in the industry at 94%.

UWorld offers the following three pricing tiers:

• Premier at $1,999, with 18-month access
• Elite-Unlimited at $2,199, with unlimited access
• Elite-Unlimited+ at $2,899, with unlimited access + a $250 refund for each exam section you fail to pass

It’s worth noting, however, that these prices are part of a time-limited deal in effect at the time of writing. The non-sale prices are considerably higher, ranging between $3,490 and $4,099.

4. Yaeger CPA Review

Designed and led by experienced CPA and MBA Phil Yaeger, Yaeger CPA Review offers candidates a range of products and resources, including a full-course package with proprietary software. 

Yaeger prices its CPA review on a per-section basis. Each section costs $337 and is available for four months, with the option to extend by one year for $99 if needed. 

5. Gleim CPA Review

Gleim has been around for half a century, making it one of the most established packages available. During that time it has helped more than one million accountants pass the CPA exam. You can choose from three different packages:

• Traditional at $2,499, with 18-month access
• Premium at $2,999, with unlimited access
• Premium Pro at $3,499, with unlimited access + unlimited assistance from accounting experts

How TaxDome can support your CPA journey

Balancing accounting work and CPA exam preparation can be challenging at the best of times. To maximize your chances of success, you need to ensure your accounting work is running like clockwork. This is where TaxDome can help.

TaxDome is a complete practice management platform designed to simplify your workflows, enhance client management, and boost team collaboration. With powerful tools such as workflow automation, you can spend less time on administrative tasks and more on growing your career. 

FAQs

How long does it take to study for the CPA exam?

Candidates spend an average of 300-400 hours preparing for all four sections of the CPA exam. This roughly translates to about 80-100 hours per section.

How do you register for the CPA Exam?

First, apply to your state’s board of accountancy to determine your eligibility. Once approved, you’ll receive your Notice to Schedule (NTS), which allows you to register for your desired exam sections through Prometric's website.

How much does the CPA exam cost?

The total cost varies from state to state but typically includes:

• Application fee: $50-$200
• Exam fees: Around $200-$250 per section (there are four sections in total)
• Registration fee: $50-$300 

You’ll also need to factor in the costs associated with exam preparation. For example, CPA review courses often cost thousands of dollars. 

How do I choose a CPA review course?

Take some time to research what each CPA review course offers and how they differ. Look at online reviews and discussions about them. You should also consider your learning style and choose a course that aligns best with your preferences. 

What if I fail the CPA exam?

First of all, don’t be discouraged. Roughly half of CPA exam entrants fail. Use it as a learning opportunity and book yourself in to retake the section(s) you failed. Pay close attention to your score report to identify areas you need to work on. 

How many times can I take each section?

You can retake a section as many times as needed. That said, you must pass all four sections within a 30-month rolling window to maintain your passing scores.

What is the hardest section of the CPA exam?

Financial Accounting and Reporting (FAR) is generally considered the most difficult Core section, with an average pass rate of just over 40%. Of the Discipline sections, Business Analysis and Reporting (BAR) has the lowest pass rate at about 43%.

How long do I have to complete the CPA exam?

You have a 30-month rolling window to pass all four sections, starting from the date you pass your first section. If you don’t complete all sections within this timeframe, your scores from the first module you passed will be considered invalid.

To sum up

The CPA exam is the gateway to a world of new professional opportunities, but it’s also notoriously difficult. If you’ve been wondering how to prepare for the CPA exam, the tips and resources in this article are a great place to start. 

But remember — successful exam preparation is all about organization. That applies to both your studies and your work. By taking control of the latter, you’ll have more time to focus on the former. This is where TaxDome can make all the difference. 

With all the tools you need to run a highly efficient, organized, and automated accounting practice, TaxDome saves firms up to 40 hours per employee per week. Those 40 hours could be the difference between exam success and failure. 

To see how TaxDome can help drive your accounting career to new heights, request a demo today.