US Uniform CPA Examination

1. Anatomy of the exam: four sections, five testlets

Learning goal: State the structure of the Uniform CPA Examination and which section differs in format.

The Uniform CPA Examination has three Core sections and one Discipline section. The Core sections are Auditing and Attestation (AUD), Financial Accounting and Reporting (FAR) and Taxation and Regulation (REG). The Discipline choices are Business Analysis and Reporting (BAR), Information Systems and Controls (ISC) and Tax Compliance and Planning (TCP). Each section is four hours, so the whole exam is 16 hours of testing.

Every section has five testlets. The first two contain multiple-choice questions (MCQs). The last three contain task-based simulations (TBSs). The AICPA blueprint lists the counts: AUD 39+39 MCQs and 2+3+2 TBSs; FAR 25+25 and 2+3+2; REG 36+36 and 2+3+3; BAR 25+25 and 2+3+2; ISC 41+41 and 1+3+2; TCP 34+34 and 2+3+2. Add them up for totals of 78/7, 50/7, 72/8, 50/7, 82/6 and 68/7.

Scope of this module: the US Uniform CPA Examination as published by the AICPA and administered through NASBA and state boards. Facts here were checked against the AICPA page and the January 2026 blueprint in October 2026. The AICPA pages also reference a summary of blueprint changes effective January 1, 2027 that was not retrieved, so confirm the version that applies on your test date. Counts and weights are exam design facts; the numbers in the toy examples are original.

Worked example

Check that the TBS total for REG is consistent with its testlets.

1. REG testlets 3, 4 and 5 hold 2, 3 and 3 TBSs per the blueprint.
2. Add 2 + 3 + 3 = 8 TBSs.
3. The MCQ testlets hold 36 + 36 = 72 MCQs.
4. So REG is 72 MCQs and 8 TBSs, matching the design table.

Mental model: Three Core plus one Discipline; four hours each; two MCQ testlets then three TBS testlets.

Common trap: Assuming that all sections share one format. ISC differs.

2. Scores are scaled, not percentages

Learning goal: Explain how MCQ and TBS results combine into a 0-99 score, and compute a weighted combination.

A section score is reported from 0 to 99, and 75 is the minimum to pass. The AICPA states that the score is not a percentage correct and is not curved. The total is a weighted combination of scaled scores from MCQs and TBSs, and scaling takes into account whether answers were right and how difficult each question was.

The weights are 50% MCQ and 50% TBS for AUD, FAR, REG, BAR and TCP, and 60% MCQ and 40% TBS for ISC. If you pass one portion strongly and the other weakly, only the weighted blend matters. A candidate cannot tell from a count of right answers what the scaled result will be.

The numbers in this lesson are invented. They show only the weighted-average step, not the AICPA scaling formulas, which are not published at that level. Do not read the toy MCQ and TBS scores as raw percentages.

Worked example

A non-ISC section has toy scaled scores MCQ 84 and TBS 68. What is the weighted blend?

1. Weights are 50% and 50%.
2. 0.5 x 84 = 42.
3. 0.5 x 68 = 34.
4. Blend = 76, which is at least 75.

Mental model: Scaled score, weighted by item type; 75 passes; never a percent correct.

Common trap: Counting right answers to predict a score.

3. Choosing a Discipline and managing the credit window

Learning goal: Describe the Discipline choice and why the credit window depends on the board that holds your application.

Every candidate passes AUD, FAR and REG plus one Discipline. NASBA states that candidates may pass and retain credit for only one Discipline; a candidate may pick a different Discipline after failing one or if credit for one expires. NASBA also states that the Discipline choice does not restrict later practice, since all candidates reach a full CPA license.

The AICPA says the exam is the same for everyone but other requirements differ by jurisdiction, so check with the Board of Accountancy. In April 2023 NASBA adopted an amendment to its Uniform Accountancy Act Model Rule 5-7: once a candidate passes one section, there is a rolling 30-month period to pass the remaining three, counted from the date scores are released. The rule is a model; each board decides whether to adopt it. Older boards used 18 months.

This module does not state any single board's present rule or the 150-hour education rule, because they depend on the jurisdiction and were not verified for a specific board. The date examples here use invented dates.

Worked example

A toy first pass is released on March 15, 2027 under a board that adopted the 30-month model rule. Roughly when does the window end?

1. Counting starts at the score release date.
2. 30 months after March 2027 is September 2029.
3. So about September 15, 2029, subject to the board's own wording.
4. Confirm the exact cutoff rule with the board before relying on it.

Mental model: One Discipline; board decides credit window; 30 months is NASBA's model, not automatic.

Common trap: Treating the 30-month figure as universal.

4. Time budgeting across testlets

Learning goal: Build a pacing plan from section time and item counts.

Each section is four hours, or 240 minutes. A pacing plan is a personal tool. The sources used here give the section time and item counts, but they do not say that each testlet has its own separate clock, so treat any per-testlet minute figure below as a self-imposed target.

Start with the section: count MCQs and TBSs, pick a pace for MCQs, set a reserve for review and flagged items, and give what remains to the TBSs. FAR has 50 MCQs and 7 TBSs. If a candidate budgets 1.5 minutes per MCQ, MCQs take 75 minutes. Adding a 15-minute reserve leaves 150 minutes for 7 TBSs.

Pace is not the same as score weight. In FAR the MCQs and TBSs each carry 50%, yet the TBS minutes per item are much larger. The plan only helps if practice shows that your real MCQ pace matches the assumption.

Worked example

FAR toy plan: 1.5 minutes per MCQ and a 15-minute reserve. How many minutes remain per TBS if split evenly?

1. MCQ time: 50 x 1.5 = 75 minutes.
2. Remaining after reserve: 240 - 75 - 15 = 150 minutes.
3. Seven TBSs: 150 / 7 = 21.43 minutes each.
4. Real TBS difficulty varies, so keep this as a starting average only.

Mental model: Section time minus MCQ time minus reserve, then divide among TBSs.

Common trap: Presenting a self-imposed testlet clock as an official rule.

5. Study allocation from the blueprint weights

Learning goal: Convert blueprint area ranges into a study-hour plan and read the skill mix.

The blueprint gives each section content areas with percentage ranges. For AUD the areas are Ethics, Professional Responsibilities and General Principles (15-25%), Assessing Risk and Developing a Planned Response (25-35%), Performing Further Procedures and Obtaining Evidence (30-40%) and Forming Conclusions and Reporting (10-20%). For FAR they are Financial Reporting (30-40%), Select Balance Sheet Accounts (30-40%) and Select Transactions (25-35%).

The blueprint also gives a skill mix. AUD tests Remembering and Understanding 30-40%, Application 30-40%, Analysis 15-25% and Evaluation 5-15%. FAR is Remembering and Understanding 5-15%, Application 45-55% and Analysis 35-45%. A FAR plan built on memorizing alone would miss where most points sit.

A simple method is to take the midpoint of each range as a planning weight. The midpoints here add to 100 for both AUD and FAR. The AICPA also warns that the number of tasks listed for a topic does not show how heavily it is tested, so the midpoint is a planning heuristic, not a prediction. Standards changes become testable on a published schedule, so also check the pronouncement policy.

Worked example

Plan 120 toy study hours for AUD using range midpoints. How many hours go to Area II (25-35%)?

1. The Area II midpoint is 30%.
2. The four midpoints 20, 30, 35 and 15 sum to 100.
3. 120 x 0.30 = 36 hours.
4. Adjust later using your own practice results.

Mental model: Midpoints give a starting plan; blueprint skill levels say how to study.

Common trap: Reading task counts as test weight.

6. Audit risk, risk of material misstatement and detection risk

Learning goal: Use the planning relationship between acceptable audit risk and detection risk.

PCAOB AS 1101 says audit risk is the risk that the auditor expresses an inappropriate opinion when the financial statements are materially misstated, and that it is a function of the risk of material misstatement and detection risk. Detection risk is the risk that the auditor's procedures will not detect a misstatement that could be material. The risk of material misstatement at the assertion level has inherent risk and control risk components.

A common teaching simplification is audit risk = RMM x detection risk. Solving gives detection risk = audit risk / RMM. The standard says "function of", not that the product is an official formula, so treat the arithmetic as a planning model with toy numbers.

The logic is what matters on the exam: if assessed RMM is higher, the auditor needs lower detection risk, which calls for more extensive or better substantive procedures. Scope: PCAOB standards govern audits of issuers; audits of nonissuers follow AICPA standards, which this lesson did not fetch.

Worked example

Toy audit: acceptable audit risk 5%, assessed RMM 50%. What detection risk is implied?

1. Use the planning model DR = AR / RMM.
2. DR = 0.05 / 0.50.
3. DR = 0.10, or 10%.
4. Check: 0.50 x 0.10 = 0.05.

Mental model: Higher RMM means lower detection risk and more substantive work.

Common trap: Treating the toy product as the standard's formula.

7. Substantive analytical procedures: expectation and threshold

Learning goal: Develop an expectation and decide when a difference needs investigation.

PCAOB AS 2305 says analytical procedures compare recorded amounts or ratios to expectations the auditor develops from plausible relationships. The expectation should be precise enough that differences that may be material misstatements would be identified for investigation. When planning, the auditor considers the amount of difference from the expectation that can be accepted without further investigation, influenced primarily by materiality.

A simple expectation multiplies the prior balance by independent drivers. If revenue is 2,000,000, volume rises 5% and price rises 3%, the expectation is 2,000,000 x 1.05 x 1.03 = 2,163,000. A recorded amount of 2,310,000 differs by 147,000. If the threshold is 100,000, the excess to explain is 47,000.

Management explanations should ordinarily be corroborated with other evidence. A difference under the threshold does not prove accuracy; it only means the planned procedure does not require more work for that difference. Toy numbers only.

Worked example

Prior revenue 2,000,000; volume +5%; price +3%; recorded 2,310,000; threshold 100,000. How much does the difference exceed the threshold?

1. Expectation: 2,000,000 x 1.05 = 2,100,000.
2. Then x 1.03 = 2,163,000.
3. Difference: 2,310,000 - 2,163,000 = 147,000.
4. Excess over threshold: 147,000 - 100,000 = 47,000.

Mental model: Expectation, compare, apply threshold, investigate the excess, corroborate answers.

Common trap: Accepting a management explanation without corroboration.

8. Projecting sample misstatements to the population

Learning goal: Project a sample misstatement and compare it with tolerable misstatement.

PCAOB AS 2315 says the auditor should project the misstatement results of the sample to the items from which the sample was selected. Its example is every twentieth item (50 items) from 1,000 items; overstatements of $3,000 in the sample project to $60,000 by dividing the sample misstatement by the fraction of the population included. The projection is added to misstatements found in items examined 100 percent.

The same logic extends to any sampling fraction. If 80 items are drawn from 1,600, the fraction is 1/20 and a 2,150 sample overstatement projects to 43,000. A projection near or above tolerable misstatement is a warning sign.

AS 2315 also says qualitative aspects count, such as nature and cause. Projected misstatements and known misstatements are considered in the aggregate. Numbers are toy; PCAOB scope applies to issuers.

Worked example

Toy: 50 of 1,000 items sampled, overstatement 3,000. What is the projection?

1. Fraction sampled is 50/1,000 = 1/20.
2. Projection = 3,000 / (1/20).
3. = 3,000 x 20.
4. = 60,000.

Mental model: Divide the sample misstatement by the sampling fraction, then compare with tolerable misstatement.

Common trap: Stopping at the sample error.

9. Allocating transaction price by relative standalone selling price

Learning goal: Allocate a contract price to performance obligations.

FASB ASU 2014-09 (Topic 606) says that for a contract with more than one performance obligation, an entity allocates the transaction price to each obligation in an amount that depicts the consideration it expects to be entitled to. The entity determines the standalone selling price at contract inception and would typically allocate on a relative standalone selling price basis. If it is not observable, the entity estimates it.

Relative allocation is arithmetic. Each obligation gets price x (its standalone price / total standalone price). Toy: a 9,000 bundle with standalone prices of 6,000 and 4,000 totals 10,000, so the first gets 5,400 and the second 3,600.

The ASU also covers situations where a discount or variable consideration relates entirely to one obligation. This lesson covers only the typical proportional case, with toy numbers. The timing of recognition is a separate question.

Worked example

Toy bundle price 9,000; standalone prices 6,000 and 4,000. Allocate to the first item.

1. Total standalone prices: 6,000 + 4,000 = 10,000.
2. Share of first item: 6,000 / 10,000 = 0.6.
3. Allocation: 9,000 x 0.6 = 5,400.
4. Second item gets 3,600.

Mental model: Allocate price by SSP share; estimate SSP when not observable.

Common trap: Splitting the price equally.

10. Adjusted basis and recognized gain (REG)

Learning goal: Compute adjusted basis and gain, then apply a toy rate.

IRS Topic 703 says basis is generally what you paid for the asset and is used to figure depreciation, casualty losses and any gain or loss on sale. Certain events increase or decrease basis, so you must determine adjusted basis before figuring gain or loss. IRS Publication 551 says that deductions for depreciation or casualty losses reduce basis, and that a section 179 deduction decreases basis by the deduction.

Gain is the amount realized minus adjusted basis. Toy: cost 80,000, depreciation 30,000, sale for 70,000. Adjusted basis is 50,000 and gain is 20,000.

On the exam the character of the gain, rates and special rules matter, and they come from the Code and regulations, not from this toy example. This lesson uses an invented flat rate of 30% only to practice a multi-step calculation. Tax law changes become testable on a schedule set by the AICPA policy.

Worked example

Toy: cost 80,000; depreciation 30,000; sold for 70,000. Find the gain.

1. Adjusted basis: 80,000 - 30,000 = 50,000.
2. Amount realized: 70,000.
3. Gain: 70,000 - 50,000 = 20,000.
4. Real tax treatment needs the Code; do not assume a rate.

Mental model: Adjusted basis first, then gain; reduce for depreciation.

Common trap: Using original cost as basis after depreciation.

11. Bank reconciliation separates bank-side and book-side timing

Learning goal: Reconcile to one adjusted balance before deciding which items need journal entries.

A bank reconciliation compares a bank statement with the entity cash records. Timing differences and unrecorded book items are not the same. In a simplified model, a deposit recorded in the books but not yet on the bank statement is added to the bank-side balance. An outstanding check is subtracted on that side. A bank fee not recorded in the books reduces the book-side balance.

Original case: bank balance 1000, deposit in transit 200, outstanding checks 150. Adjusted bank balance is 1050. Book balance 1080 with an unrecorded bank fee 30 also adjusts to 1050. Both sides agree after their own adjustments. Applying every adjustment to both sides double-counts some items and hides the reconciliation logic.

An entity generally needs entries for items missing from its books, not for a timing difference already recorded correctly there. This lesson grants the simplified item classifications and does not resolve a real account. The AICPA blueprint includes reconciliations and relevant control tasks. Any unexplained difference still needs investigation rather than a forced plug.

Practice set: bank 2000, deposit 300, outstanding checks 100 gives 2200. Books 2240 and fee 40 also give 2200. Now add a bank-side error of 50 credited incorrectly: subtract it from the bank side and investigate whether the book balance needs a separate correction based on evidence. Do not automatically assume every error belongs in both ledgers. Document the sign, side and reason before preparing a journal entry.

Source alignment: [AICPA 2026 blueprint: FAR/AUD/BAR]. All numerical data and practice questions here are original teaching examples, not official exam questions or observed results.

Worked example

Bank 1000,deposit in transit 200,outstanding checks 150. Find adjusted bank balance.

1. Start with bank 1000.
2. Add transit deposit 200.
3. Subtract outstanding checks 150.
4. Adjusted bank balance 1050.

Mental model: Reconcile to one adjusted balance before deciding which items need journal entries.

Common trap: Apply all reconciling items to both sides.

12. Straight-line depreciation allocates a depreciable base

Learning goal: Separate expense allocation from cash payment and market value.

Straight-line depreciation in the stated simplified model allocates cost less residual value evenly over useful life. It does not describe a new cash payment each period or claim to predict market value. Define acquisition cost, estimated residual value and life before calculating. The model is financial-accounting practice aligned to FAR scope, not a tax depreciation instruction.

Original asset cost 12000, residual 2000, useful life five years. Depreciable base 10000 and annual expense 2000. After two full years, accumulated depreciation 4000 and carrying amount 8000, assuming no impairment or other changes. Subtracting annual expense from residual value is not the same calculation. Keep cost, accumulated depreciation and carrying amount separate.

If the useful life or residual estimate changes, an exercise must state how and when to apply it. This lesson does not invent a rule for every estimate change or tax method. It uses only the supplied full-year straight-line assumptions. A current sale price can differ from the accounting carrying amount, and the expense does not establish sale proceeds.

Practice set: cost 9000, residual 1000, life four years. Annual expense 2000; after three full years carrying amount 3000. Then change residual to zero at the outset with the same cost and life: annual expense 2250. The larger base explains the change. Dates, partial periods and method choices require additional instructions. Before answering a simulation, identify which quantities are given and which accounting policy is stipulated.

Source alignment: [AICPA 2026 blueprint: FAR/AUD/BAR]. All numerical data and practice questions here are original teaching examples, not official exam questions or observed results.

Worked example

Cost 12000,residual 2000,life 5 years. Find annual straight-line expense.

1. Subtract residual from cost.
2. Base 10000.
3. Divide by 5 years.
4. Annual expense 2000.

Mental model: Separate expense allocation from cash payment and market value.

Common trap: Treat expense allocation as a market-value forecast.

13. Inventory flow assumptions use the units actually sold

Learning goal: Track unit layers before assigning cost of goods sold in a stipulated model.

An inventory exercise can stipulate a cost-flow assumption without saying that physical goods moved in the same order. Under the simple FIFO model here, the oldest cost layer is assigned to units sold first. Identify units purchased, unit costs and units sold. Separate cost of goods sold from ending inventory, and check that their total equals the cost available.

Original case: ten units purchased at five each, then ten at seven. Twelve units sold under FIFO use all ten old units costing 50 and two newer units costing 14. Cost of goods sold 64. Eight newer units remain at seven, giving ending inventory 56. Total cost 120 equals 64 plus 56, so the reconciliation works.

The exercise is not a universal choice of accounting policy and does not discuss tax eligibility or every reporting standard. A different stipulated flow method can produce different allocation while leaving total cost available unchanged. Read the problem method before calculating; do not choose FIFO merely because it is familiar.

Practice set: five units at ten then five at twelve, with seven sold under FIFO. Cost of goods sold 50 plus 24 equals 74. Ending inventory 36. Their total 110 matches purchased cost. If only four units were sold, cost of goods sold 40 and ending inventory 70. Record layer quantity and cost in a small table; then use the total-cost check to catch a missing or duplicated unit.

Source alignment: [AICPA 2026 blueprint: FAR/AUD/BAR]. All numerical data and practice questions here are original teaching examples, not official exam questions or observed results.

Worked example

10 units@5 then 10@7;12 sold FIFO. Find COGS.

1. Use oldest layer first.
2. 10×5=50.
3. Next 2×7=14.
4. COGS 64.

Mental model: Track unit layers before assigning cost of goods sold in a stipulated model.

Common trap: Assign the same unit to both sales and ending inventory.

14. Contribution margin connects volume to fixed cost

Learning goal: Use a stipulated cost-volume model without confusing revenue with contribution.

Contribution margin equals sales less variable cost in the simplified cost-volume model. Per-unit contribution margin is selling price minus variable cost per unit. It is the amount available to cover fixed cost and then profit. Revenue alone does not show how much of each sale can cover fixed expenses. AICPA BAR content includes cost and managerial analysis; the exercise is not a business forecast.

Original case: selling price twenty, variable cost twelve, fixed cost 800. Contribution per unit eight. Break-even volume is 800/8=100 units. At 120 units, total contribution 960 and modeled operating profit 160. Break-even means profit zero in this defined model, not cash flow zero under every real-world circumstance.

The model assumes the stated price and variable cost stay constant over the analyzed volume and fixed costs stay at 800. Capacity constraints, step costs or a changing product mix would need another model. If an answer gives a fraction of a unit for a product sold only in whole units, round upward when the task asks the minimum volume to cover cost.

Practice set: price thirty, variable cost eighteen, fixed cost 1200. Unit contribution 12 and break-even 100. For target profit 600, required contribution 1800 and volume 150. If variable cost rises to twenty while price stays thirty, unit contribution 10 and break-even 120. Explain which assumption changed. Keep the calculation conditional rather than present it as an assured result.

Source alignment: [AICPA 2026 blueprint: FAR/AUD/BAR]. All numerical data and practice questions here are original teaching examples, not official exam questions or observed results.

Worked example

Price 20,variable 12,fixed 800. Find break-even units.

1. Contribution/unit=20-12=8.
2. Fixed cost 800.
3. 800/8=100.
4. Profit zero at 100 under stated assumptions.

Mental model: Use a stipulated cost-volume model without confusing revenue with contribution.

Common trap: Use revenue instead of contribution to cover fixed costs.

15. Segregation of duties is a control question

Learning goal: Identify incompatible functions and evaluate the evidence of an independent check.

Internal controls can reduce the opportunity for an error or improper transaction to proceed undetected. Segregation of duties separates functions such as authorization, custody and recording. AICPA AUD tasks explicitly include testing relevant controls and segregation. The principle does not mean every small entity can use the same staffing pattern; a compensating review needs its own design and evidence.

Original case: one employee approves supplier payments, releases the cash and reconciles the bank account alone. These functions create a control concern because the person can execute and obscure a transaction. Adding a genuinely independent review of bank activity and supporting documents may address part of the risk, but a signature alone does not show the review occurred or was effective.

Distinguish control design from implementation and operation. A policy can describe a strong review that nobody performs. A performed review can still lack the information needed to detect the relevant error. Ask what evidence shows who reviewed what, when, and how exceptions were handled. The question is about the stated risk, not a general claim that any extra approval fixes all problems.

Practice set: classify an unsigned review policy, a dated review with documented exceptions, and a review performed by the same person who released the funds. The policy describes design, documented execution supports operation, and lack of independence limits the third control. These are original study cases, not a real audit opinion. Testing conclusions require the actual scope, evidence and applicable standards.

Source alignment: [AICPA 2026 blueprint: FAR/AUD/BAR]. All numerical data and practice questions here are original teaching examples, not official exam questions or observed results.

Worked example

One person approves, releases and reconciles cash payments. Identify control concern.

1. Map authorization,custody and recording.
2. Same person controls all three.
3. An independent check is absent.
4. Segregation design needs evaluation.

Mental model: Identify incompatible functions and evaluate the evidence of an independent check.

Common trap: Treat a written policy as proof of effective execution.

16. Mixed accounting cases reconcile before reporting

Learning goal: Use a short set to test cash, cost allocation and contribution calculations.

A mixed practice set can use the same word cost for several measures. A bank reconciliation adjusts a balance, depreciation allocates a base across periods, and contribution margin deducts variable cost from sales. Write the measure requested before taking numbers from the case. A correct formula used for the wrong measure still gives a wrong answer.

Original set: bank balance 1000 with transit deposit 200 and outstanding checks 150. An asset costs 12000 with residual 2000 and five-year straight-line life. A product sells at twenty with variable cost twelve and fixed cost 800. Find adjusted bank balance, annual expense and break-even units. Work each separately and state assumptions.

The answers are 1050,2000 and 100. Cash adds the deposit and subtracts outstanding checks; depreciation divides 10000 byfive; break-even divides 800 byunit contribution eight. The depreciation result is not an additional bank payment, and the break-even result does not say the business has no working-capital needs. Keep the boundaries of each model visible.

For a new pass, use bank 2000 with deposit 300 and checks 100, asset cost 9000 residual 1000 life four, and product price 30 variable 18 fixed 1200. Results 2200,2000 and 100. Review a wrong answer as side/sign, depreciable base or contribution denominator. These original cases are not official CPA simulations and do not replace jurisdiction requirements, current tax law or the target-year AICPA blueprint. An exam-year change can affect scope even when the arithmetic remains useful.

Source alignment: [AICPA 2026 blueprint: FAR/AUD/BAR]. All numerical data and practice questions here are original teaching examples, not official exam questions or observed results.

Worked example

Price 20,variable 12,fixed 800. Find break-even units.

1. Contribution 20-12=8.
2. Fixed 800 divided by 8.
3. Volume 100.
4. This is the stipulated cost model.

Mental model: Use a short set to test cash, cost allocation and contribution calculations.

Common trap: Mix cash, expense and contribution as one interchangeable quantity.