CPA Exam

How to Study for the CPA Exam

Posted by Lou Haverty, Financial Analyst Insider on February 4, 2019 8:00:00 AM CST

CPA student studyingSigning up to sit for the CPA exam is a major milestone in your career.  The long-term career benefits for earning a CPA license are clear. The Journal of Accountancy reports that newly minted CPA’s earn a $66,000 average salary and more experienced CPAs with 20 years of experience can earn up to $152,000.

However, earning the CPA license is a major commitment.  Earning the license requires you to pass four separate tests within 18 months.  Each test is four hours long.  In 2018, cumulative AICPA pass rates for all four sections of the CPA exam had an average pass rate of just 52%. 

With such low pass rates, it becomes even more important for students to create the right study plan based on their personal learning style if you want to give yourself the best chance of passing the exam. 

This article will take you through the most important elements of the exam and provide a step by step plan for how to study for the CPA exam.

Using the Test Structure to Your Advantage

Even though you have an 18-month time window to complete the exam, the clock doesn’t start ticking until you pass your first exam section.  This means that you can select which order to take the individual tests based on your preferences.

Let’s take a closer look at the pass rates for each section.  The 2018 AICPA pass rate by section was as follows:

  • Auditing and Attestation (AUD): 50.97%
  • Business Environment and Concepts (BEC): 59.35%
  • Financial Accounting and Reporting (FAR): 46.22%
  • Regulation (REG): 53.16%

Most people find the BEC section to require the least amount of study time.  The Financial Accounting and Reporting is typically the hardest exam section.  This is also reflected in the pass rates.  BEC has the highest pass rate at 59% and FAR has the lowest pass rate at 46%.

Which Section to Take First?

Many students benefit from taking the hardest section first.  For most people this would be the Financial Accounting and Reporting section. The reason is simple. In the event you don’t pass this section on your first try, you can keep re-taking this section without worrying about triggering the 18-month time clock.

The 18-month testing window won’t start until you pass the hardest section of the exam.  The momentum of knowing the other three tests are easier to pass will give you the energy and endurance to keep studying for the next exams. 

 In the worst-case scenario, you pass the easiest section first, but run out of time before you can pass the hardest section of the exam within the 18-month testing window.  In this scenario, you would have to re-take all 4 sections of the exam again to earn the CPA license.  A setback like this can really test your will power to continue.

Alternative Test Order Options

Because you get such a major time advantage by passing the hardest test first, I recommend that approach for most students.  There are however, a few situations in which you might want to consider an alternative test order. 

The first scenario would be the nature of your job responsibilities.  If you happen to be working in an auditing function and you're very familiar with that material, you might want to start with a test section that happens to be most fresh in your mind.

The same thing would apply if you're recently out of school and your last semester focused more heavily on a particular section of the CPA exam. By taking that section first, you might be able to spend much less time studying than if you waited to take that section at a later testing window.

Understand the Question Types

Each section of the exam includes two general question types: multiple choice and task based simulations.  The Business Environment and Concepts section also includes three written communication questions.

 Multiple choice questions include a question stem with multiple answer choices related to the question stem.  The key with these questions is to rapidly exclude wrong answer choices and narrow your selection.

The other main question type is task based simulations.  These question types are more challenging because they apply a broad accounting concept to a specific scenario.  The nature of these questions tends to center on whether the work performed in a scenario is appropriate and whether you make any accounting adjustments in the scenario. 

The final question type is a written communication question which is really an essay question based around a BEC test topic.  The key with these questions is to create an initial outline of the answer.  Then systematically answer each bullet point in an essay form. 

CPA Exam Question Weights

The 2019 AICPA Blueprint outlines the weighting of each question type.  The multiple-choice questions represent 50% of your score and the task based / written communication questions represent the other 50% of your score.  This means that you must make sure you spend time practicing the task based simulation questions as frequently as the multiple-choice questions. 

The AICPA measures the question difficulty based on four distinct skill levels:

  • Remembering & Understanding: easiest questions
  • Application: medium questions
  • Analysis: more challenging questions
  • Evaluation: most challenging questions

 The AICPA’s blueprint includes a breakout of question difficulty by CPA exam section.

Not surprisingly, the BEC section has the highest percentage of Remembering & Understanding and Application question types on the exam (65% to 85%).  On the other side of the coin, FAR and REG have the highest percentage of Application and Analysis questions on the exam (75% to 95%). 

AUD is right in the middle with the highest percentage of the very easy Remembering and Understanding question types (30% to 40%).  However, AUD also is the only exam section with the Evaluation question type (5% to 15%), which is the hardest question skill level on the exam.

Matching your Learning Style to a CPA Study Plan

During college, we all generally follow the same study program.  We go to class, listen to a lecture, get assigned textbook readings, and have to study for a test.  That uniform study structure doesn’t really accommodate the variations in different learning styles.

Educators have identified three primary learning styles: auditory, visual, and kinesthetic.  Most people identify more strongly with one style over the others, but we all can utilize a blend of these styles. 

  • Auditory learners: learn new information best when listening to the information.Auditory learners can really benefit from flashcards and even audio lessons they listen to during their commute to work.
  • Visual learners: benefit most strongly from seeing new information demonstrated through visual lectures. Students with this preference benefit from the traditional video based lectures available.
  • Kinesthetic learners: These students associate learning new material with physical activity.This means that sitting in long video based lectures can be counterproductive.  They may do much better with shorter study sessions, mixed in with more frequent breaks.

Selecting the Right CPA Study Material

Picking the right CPA study material might initially seem overwhelming.  Selecting the right material is really a two-step process. The first step is to check with your accounting firm. 

Many public accounting firms have an existing relationship with Becker.  This means your firm will typically pay for your course or reimburse your costs for purchasing the course. 

Becker is probably the most well-known CPA prep course provider; however, they are also the most expensive option.  If you’re lucky enough to work with a firm that reimburses your costs, make sure to take advantage of that benefit. 

Selecting Study Material if You’re Not Being Reimbursed

If you’re not lucky enough to work for a firm that will directly reimburse your study costs, you have a slightly more involved decision.  CPA candidates that have to pay for their own study material may want to consider other options that are less expensive than Becker, but still offer significant value.

 A good starting point is to compare the pricing and options of the best CPA prep courses.  You might also want to consider courses that offer features that most closely align with your preferred learning style.

For instance, auditory learners might prefer flashcards and audio courses.  Becker, Yaeger, Wiley, Roger, and Surgent all offer flashcards, but only Yaeger and Roger offer audio based course material.  Universal will also be launching an audio based cram course as a supplement to its test bank product.

Kinesthetic learners might prefer Wiley’s CPAexcel program which features bite sized lessons designed to condense the most important information into smaller sections to maximize your attention in the most important areas.

Visual learners may enjoy the traditional classroom format found in the Yaeger video lectures or the lively lecture style of Roger’s video lectures.

Before you make a purchase decision, you might also want to take one final look at available discounts for each major CPA review course. 

Creating Your Study Plan

If you are someone that can map out a weekly study plan and follow through with it, then you might do best with a study plan that I followed when I had to study while working full time.   

Let’s start from the beginning and walk through what a plan like this might look like.

On average, the CPA exam requires 400 hours of total study time.  That’s approx. 100 hours per section.  Plus or minus 10 to 15 hours if it’s an easy or harder section. 

Each month, I would plan to spend at least 1 to 2 hours Monday through Thursday and 2 to 3 hours on Saturday and Sunday.  Roughly between 35 to 40 hours per month. 

My preference is to start with the hardest section first, so that would be Financial Accounting and Reporting.  If I just graduated and I was eligible to sit for the exam, I would schedule my first section after finishing my first busy season. 

That means if I finished busy season in April, I would plan to study in May, June, and July for an early August testing window.  If I didn’t pass on the first try, I could still re-take that same section in the final testing window in the 4thquarter of the year. 

By passing the hardest section first, it would keep me motivated for the last three sections. 

Applying My Learning Style

I happen to be more of an auditory learner.  That means, I’ve just never really benefited as much from listening to classroom lectures. I’m much more inclined to study on my own in a quiet place outside of the classroom.

The two things I use most extensively are hard copy textbooks and test bank practice questions. I also heavily rely on flashcards for things like remembering LIFO and FIFO and other formulas or concepts. Since I take the subway to work, I would also use audio lectures during my commute instead of watching video lectures. 

Putting it All Together

I would start by taking an initial practice test assessment of my strengths and weaknesses for that exam section.  After going through the results, I would create a list with my weakest sections first and my strongest sections last. 

My objective would be to start reading my weakest sections first and then practicing test questions to reinforce those concepts.  The practice test questions represent the most important part of my study plan. The more questions, I can do, the easier to retain the material.

Most test bank software also provides highly detailed statistics, so you can see your progress over time and by section.  That way you can immediately tell whether you have appropriately addressed your weaker subject areas.

Over the final month, I would re-read my weakest areas, take practice test questions, and take full length mock exams to simulate the actual time settings.  It's best to view the three months like a marathon and not a sprint. 

You want to build up your endurance for the first two months and increase your intensity in the last month so that you hit your peak performance in that last month before the testing window date.

Wrap Up

The most important thing to remember is not give up.  Many people fail multiple sections and still make it to the finish line before the 18-month testing window closes!  The CPA license is valuable in the job market because of its difficulty.

This article was written by Lou Haverty, CFA.  Lou is the Founder of Financial Analyst Insider which is dedicated to helping young professionals advance their careers.