10 key tips to pass the CPA exam successfully

You already know the benefits of becoming a Certified Public Accountant (CPA): more employment opportunities, more money, more prestige. Now, it’s time to earn those benefits by passing the notoriously difficult CPA exam.

There is no denying it, the CPA exam is a beast. Passing all 4 parts can take anywhere from 4 to 18 months, and usually requires about 400 hours of preparation. To maximize your chances of passing, a good strategy is essential. “Develop a plan, get your study materials, and create a schedule,” says Steven L. Harris, CPA, CGMA, and a managing partner at Rubin Brown. “It is crucial to plan out the exam experience beforehand. This is true regardless of whether you are coming right out of school or you’ve been working for a few years.”

What is the CPA exam?

The CPA, or Uniform Certified Public Accountant Examination, is the qualifying exam for becoming a Certified Public Accountant in the United States. It is administered by the American Institute of Certified Public Accountants (AICPA) and the National Association of State Boards of Accountancy (NASBA). While other criteria for becoming a CPA vary somewhat between jurisdictions, all aspiring CPAs take the same exam (though the exam itself is updated and modified each year).

CPA exam structure

The CPA exam is composed of 4 main parts, which are commonly referred to by their 3-letter codes, AUD, BEC, FAR, and REG.

• Auditing and Attestation (AUD)
  The AUD section of the CPA exam tests knowledge and skills in performing audits, attestation, and accounting and review services.
• Business Environment and Concepts (BEC)
  The BEC portion of the CPA exam focuses on the skills involved in performing audits, attestations, and other accounting and review services in the context of key business areas, including risk management, financial management, IT, and operations management.
• Financial Accounting and Reporting (FAR)
  FAR tests key skills involved in financial accounting and reporting frameworks used in business, government, and the nonprofit sector in light of accounting standards and regulations.
• Regulation (REG)
  REG tests knowledge and application of federal taxation regulations, as well as business law, and ethics and professional responsibilities.

These 4 sections of the CPA can be thought of as individual exams. Each takes 4 hours to complete, and most candidates space out sitting for the parts over several weeks or months. It is also possible to take the 4 sections in short succession – for example, 2 on one day and 2 the following, for a total of 16 hours over 2 days – but this is an unorthodox strategy and is not likely to work for most people.

All states stipulate that you compete all sections within 18 months, but vary somewhat in how they calculate that 18-month window, so it’s important to check details with your state board of accountancy.

There are 3 types of questions on the CPA exam:

• multiple-choice questions (MCQs)
• task-based simulations (TBSs)
• written communication tasks

All 4 parts are composed of about 50% MCQs. Task-based simulations make up the other 50% of AUD, FAR, and REG, while BEC includes both simulations (35%) and written communication tasks (15%). Each of the 4 sections of the CPA exam is additionally broken up into 5 ‘testlets’. Passing the CPA exam means earning at least 75 points on each section (out of a maximum of 99 points).

AICPA regularly update their CPA exam blueprints, which lay out in great detail the structure of the CPA exam.

» Read: How accountants combat fraud

Which CPA exam to take first

The popular CPA exam prep company, Becker, recommend the following order:

1. FAR
2. AUD
3. REG
4. BEC

Though the matter is hotly debated online, as is the closely related question of which part of the CPA exam is the most difficult, there is some consensus around taking Financial Accounting and Reporting (FAR) first, for the following reasons:

• It covers the broadest range of topics
  FAR is the most comprehensive of the 4 CPA exam sections and consequently, covers the most ground. For comparison – the Becker FAR textbook has 10 sections while the others all have 6.
• It appears to be the most difficult of the 4 to pass
  While none of the exams are easy and personal qualities and preferences will affect how difficult you find each section, the pass rate for FAR is around 44%, compared to 46% for AUD, 57% for BEC, and 60% for REG.
• It may save you time
  In many jurisdictions, your 18-month CPA exam time limit begins from the point you take the first exam. That means the study period in preparation for your first exam does not factor into those 18 month, so it may be a good idea to prepare for FAR – which is likely to take you the longest – first.
• It is good preparation for the other sections
  Since it covers the most foundational knowledge, studying for FAR is also preparation for the other sections, particularly AUD, with which there is a lot of topical overlap.

When to take the CPA exam

Part of the decision as to when to take the CPA exam will depend on the regulations in your jurisdiction – first, whether or not you can take it before graduation, and if not, whether you can take it with 120 credit hours, or only once you have earned the full 150.

Most sources advise taking the CPA exam as soon as you are eligible, although there are certain advantages to gaining some professional experience first. “I think the ideal arrangement is to work part-time while preparing to take the exam,” says Harris. “That gives you a little bit of practical experience but also time to study. You can do it through an internship or employment – what matters is getting some time in the trenches so you are prepared with more than just book learning.”

Taking the exam as early as possible is also incentivized by accounting firms, many of which offer salary bonuses for earning your CPA certification – with the sums of bonuses decreasing the longer you wait.

Studying for the CPA exam: 10 key tips

Scheduling study time and sticking to the schedule can be one of the biggest challenges in preparing for the CPA exam, but it is essential. Because the time commitment needed to pass is so high, you will not be able to juggle work, studying, and family/social obligations – and don’t forget sleep! – without a good plan. The following are key tips for creating an effective CPA study plan.

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1. Create a routine

Assume you will need to study about 100 hours per section – and on that basis, create a schedule and daily routine that you can stick to. Schedule your studying hours at the time of day when your mind is most active. For most people this is in the morning, but if you’re a night owl, don’t let anyone stop you from studying in the evenings instead.

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2. Train, don’t study

Your goal is to pass the CPA exam, not to master accounting theory. To that end, you should approach exam preparation as you would training for a sport. You don’t get better at basketball by reading books or watching videos about it, but by actively training one skill at a time.

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3. Study smart, not long

Marathon study sessions are unlikely to be the most efficient way to study, as your attention is sure to wander after a few hours. A better option is to schedule 2-4 hours of focused study at a time, and then take a long break to process, regroup, and attend to the rest of your life before starting again.

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4. Narrow your focus

Around half the questions included in your exam prep software come from the AICPA, meaning they are questions used on previous versions of the exam. So, if you find that there are many questions on a particular narrow topic, it is important! Of course, the CPA exam will also test relatively obscure little corners of accounting, but you shouldn’t worry too much about them. You don’t want to get every question right. You just want to pass.

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5. Find a study partner

“Find yourself an accountability partner, another person who is preparing for the CPA” says Harris. “A study partner can help you both stay on track, and even have some fun with it. You need that balance. If you’re studying seven days a week, all alone, ignoring everything else in your life, you’re going to burn out.”

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6. Take regular practice tests

Your exam prep provider will likely include at least a few practice tests. These are useful for getting a sense of your timing – to know whether you need to get through questions more quickly or to slow down and read more carefully. They are useless, however, for learning the content. By the time you are given the answers at the end of a practice test, you won’t remember what you were thinking when you got a particular question wrong, so you can’t learn from it. Instant feedback is essential for improvement, so you should not take more than 2 or 3 practice tests per section.

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7. Spend no more than 20% of your time on TBSs

Since Task-Based Simulations make up half your score, many people think they should devote half their prep time to simulations. This is a mistake, for several reasons. Because simulations are lengthy and multi-part, they do not provide the crucial instant feedback that multiple-choice questions do. Moreover, when doing a simulation, you spend a lot of time looking for and reading through the exhibits, which does not help you learn the content. Finally, while the multiple-choice questions in your exam prep software’s question bank will closely resemble those on the exam, the same is generally not true of the simulations.

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8. Don’t protract the process

Don’t spread your studying out any more than you have to. If you start studying 4 months before the exam, you give yourself 4 months to forget the material you learned when you started. You should set a realistic schedule that gets to that 100 hours in the shortest time you can manage. If at all possible, try to get it all done within 2 months of the exam. If you need to spread it out more than 2 months, you will probably need to put in more than 100 hours.

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9. Remember that thinking is learning

When you are given a practice question on an unfamiliar topic, don’t just click through it to see the answer. Instead, stop and think about what makes sense to you in the given situation. What would be your way of doing it if you wrote the accounting/tax rules? By thinking about the problem, you will have actively engaged with the question. That way, when you read the explanation and think about why your way of doing it was wrong and why the given answer makes more sense, the explanation is much more likely to stay with you.

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10. Don’t forget about the rest of your life

“You need balance, regardless of what the time commitment is,” says Harris. “Treat it like a job – put in your 6 to 8 hours a day, but then stop and do something else. Spend time with family and friends. Don’t make the mistake of shutting out the world. As a professional with over 20 years of experience, I can tell you that work-life balance is crucial. Taking that same approach when you’re studying for the CPA is going to set you up for success in your career as well.”

Final thoughts

When you’re learning something new, improvement comes faster at the beginning. Since you can’t – and shouldn’t try to – master all the material covered by the exam, it’s best to focus your time on those areas that will deliver the most bang for your buck. So, you should put most of your work into content areas you know the least about, particularly the fundamentals.

Finally, remember that 99 is the highest score you can get on any section of the exam, but 75 is the perfect score. “30 years from now, says Harris, “nobody’s going to remember if you got a 90 on this thing or an 80.” Every point above 75 represents study time you could have spent doing something else.