CPA Practice Exam
This is a free 15-question sampler across the three core sections of the CPA Exam, written by the StudyPDF team. It pulls from FAR, AUD and REG, mixing multiple choice, select all that apply and fill in the blank. Answer all 15 questions, then check your score and read the explanation for every question. Nothing on this page is tax, accounting or legal advice.
Under the FASB conceptual framework, what are the two fundamental qualitative characteristics of useful financial information?
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Prefer to read before you play? Every question in the sampler is listed below. Answers and explanations stay collapsed until you open them.
1. Under the FASB conceptual framework, what are the two fundamental qualitative characteristics of useful financial information?
- A. Comparability and consistency
- B. Timeliness and verifiability
- C. Relevance and faithful representation
- D. Understandability and materiality
Show answer and explanation
Answer: C. Relevance and faithful representation
The framework splits usefulness into fundamental characteristics, which information must have, and enhancing characteristics, which make already useful information better. Relevance covers predictive value and confirmatory value, and faithful representation means complete, neutral and free from error. Comparability, verifiability, timeliness and understandability are the four enhancing characteristics. Materiality is not a separate characteristic at all, it is an entity specific aspect of relevance.
2. A company finished a consulting engagement in December and will not send the invoice until January. Under accrual accounting, the December 31 financial statements should show:
- A. Revenue in December and a receivable on the December 31 balance sheet
- B. No revenue and no receivable until the cash arrives in January
- C. Revenue in December and deferred revenue on the December 31 balance sheet
- D. No revenue in December, but a receivable on the December 31 balance sheet
Show answer and explanation
Answer: A. Revenue in December and a receivable on the December 31 balance sheet
Accrual accounting records revenue when the performance obligation is satisfied, not when the cash moves, so work completed in December belongs to December. The other half of the entry is an accrued receivable, because the customer already owes for work delivered. Deferred revenue is the mirror image, cash collected before the work is done, and it sits on the balance sheet as a liability.
3. Complete the sentence.
Under the five step revenue model, an entity identifies the contract, identifies the performance obligations, determines the transaction price, allocates that price to the performance obligations, and recognizes revenue when _____.
Options for blank 1: the customer pays the invoice, the contract is signed, the entity satisfies a performance obligation, the entity issues the invoice
Show answer and explanation
Answer: the entity satisfies a performance obligation
Step five ties recognition to the transfer of control of the promised good or service, which is why revenue can be recognized well before or well after cash changes hands. Control can transfer at a point in time or over time, and when it transfers over time the entity measures progress and recognizes revenue as it goes. Signing, invoicing and collecting are cash cycle events, not recognition triggers.
4. Under current US GAAP, what does a lessee report on its balance sheet for a lease with a term of more than twelve months?
- A. Nothing, because operating leases stay off the balance sheet
- B. Only a lease liability, with rent recognized straight line as expense
- C. Only a right of use asset, with no matching liability
- D. Both a right of use asset and a lease liability
Show answer and explanation
Answer: D. Both a right of use asset and a lease liability
The current lease standard puts essentially all leases longer than twelve months onto the lessee's balance sheet, as a right of use asset and a lease liability measured at the present value of the lease payments. The finance versus operating distinction still exists, but it now drives the income statement and cash flow presentation rather than whether the lease appears at all. A finance lease splits into amortization and interest, while an operating lease produces a single straight line lease cost.
5. A parent controls a subsidiary but owns only 80 percent of it. Which of the following are true of the consolidated financial statements?
Select all that apply.
- A. One hundred percent of the subsidiary's assets and liabilities are combined with the parent's
- B. Intercompany receivables, payables and sales between the two are eliminated
- C. The noncontrolling interest is reported inside consolidated equity
- D. Only the parent's 80 percent share of the subsidiary's assets is combined
- E. The noncontrolling interest is reported as a long term liability
- F. Consolidation is required only when the parent owns one hundred percent
Show answer and explanation
Answer: A. One hundred percent of the subsidiary's assets and liabilities are combined with the parent's, B. Intercompany receivables, payables and sales between the two are eliminated, C. The noncontrolling interest is reported inside consolidated equity
Consolidation follows control, not ownership percentage, so the parent brings in all of the subsidiary's assets and liabilities and then shows the 20 percent claim it does not own as noncontrolling interest inside equity. Everything the two entities did with each other is eliminated, because a consolidated group cannot sell to or owe itself. Combining only the parent's share is proportionate consolidation, which is not how US GAAP handles a controlled subsidiary.
6. In a state or local government's fund financial statements, governmental funds use which measurement focus and basis of accounting?
- A. Economic resources measurement focus and full accrual accounting
- B. Current financial resources measurement focus and modified accrual accounting
- C. Cash basis accounting with no measurement focus
- D. Current financial resources measurement focus and full accrual accounting
Show answer and explanation
Answer: B. Current financial resources measurement focus and modified accrual accounting
Governmental funds exist to answer a spending question, so they focus on the current financial resources available to pay near term obligations. Under modified accrual, revenue is recognized when it is measurable and available and expenditures are recognized when the fund liability comes due. Proprietary funds and the government wide statements use the economic resources focus with full accrual instead, which is why the same government reports the same year on two bases and has to reconcile them.
7. An auditor raises the assessed risk of material misstatement for a client's inventory balance. To keep audit risk at the same acceptably low level, the auditor should:
- A. Increase the acceptable level of detection risk
- B. Leave the planned procedures unchanged, because the risk of material misstatement belongs to the client
- C. Decrease the acceptable level of detection risk and perform more substantive work
- D. Decrease inherent risk by expanding the sample size
Show answer and explanation
Answer: C. Decrease the acceptable level of detection risk and perform more substantive work
Audit risk is a function of the risk of material misstatement, which the auditor assesses but cannot change, and detection risk, which the auditor controls directly. When the risk of material misstatement goes up, the acceptable detection risk has to come down, and the auditor lowers it by testing more, testing closer to year end, or assigning more experienced staff. Inherent risk is a feature of the client's business and no audit procedure reduces it.
8. Which of the following are assertions the auditor tests about account balances at the period end?
Select all that apply.
- A. Existence
- B. Completeness
- C. Materiality
- D. Rights and obligations
- E. Independence
- F. Professional skepticism
Show answer and explanation
Answer: A. Existence, B. Completeness, D. Rights and obligations
The balance assertions are existence, rights and obligations, completeness, and accuracy, valuation and allocation, and each one drives testing in a different direction. Existence starts from the recorded number and looks for supporting evidence, while completeness starts from source documents and looks for them in the records, which is why the search for unrecorded liabilities tests completeness rather than existence. Materiality, independence and professional skepticism are real audit concepts, but they describe the auditor, not a claim management is making about the numbers.
9. In a financial statement audit of a nonissuer, when must the auditor obtain an understanding of the entity's internal control?
- A. On every audit, whether or not the auditor plans to rely on controls
- B. Only when the auditor plans to rely on controls to reduce substantive testing
- C. Only when management engages the auditor to report on internal control
- D. Only in the first year of the engagement
Show answer and explanation
Answer: A. On every audit, whether or not the auditor plans to rely on controls
Obtaining an understanding of internal control relevant to the audit is part of risk assessment, so it is required on every audit and it shapes the auditor's judgment about where misstatements are likely to arise. Testing the operating effectiveness of controls is a separate decision, and for a nonissuer it is optional, done when the auditor intends to rely on those controls or when substantive procedures alone cannot supply sufficient evidence. Understanding controls and testing controls are not the same step.
10. Complete the sentence.
When misstatements are material but not pervasive to the financial statements, the auditor issues a _____ opinion. When they are both material and pervasive, the auditor issues an _____ opinion.
Options for blank 1: qualified, disclaimer of, adverse, unmodified
Options for blank 2: unmodified, adverse, emphasis of matter, qualified
Show answer and explanation
Answer: qualified, adverse
Two questions decide the report: is the problem material, and does it spread through the statements as a whole. A scope limitation follows the same logic on the other axis, giving a qualified opinion when the auditor cannot obtain sufficient evidence about something material but not pervasive, and a disclaimer of opinion when the limitation is pervasive. An emphasis of matter paragraph is not a modification of the opinion at all, it simply directs the reader to something already disclosed.
11. Under the AICPA Code of Professional Conduct, which of the following impairs a covered member's independence with respect to an audit client?
- A. Having audited the same client in an earlier year
- B. Holding an immaterial indirect interest through a diversified mutual fund the member cannot influence
- C. Issuing the audit report in the firm's standard format
- D. Holding any direct financial interest in the client, however small
Show answer and explanation
Answer: D. Holding any direct financial interest in the client, however small
A direct financial interest impairs independence regardless of size, because the rule looks at the nature of the interest rather than the dollar amount. An indirect financial interest, such as a small stake held through a fund the member cannot influence, impairs independence only when it is material to the member. Public company audits are governed by SEC and PCAOB independence rules, which are stricter in several places, so confirm which framework applies before you reason from the AICPA rule alone.
12. Which of the following are generally excluded from an individual's gross income for federal income tax purposes?
Select all that apply.
- A. Wages reported on a Form W-2
- B. Interest on a state or local government bond
- C. The value of property received as a gift
- D. Unemployment compensation
- E. Life insurance proceeds received by a beneficiary because of the insured's death
- F. Interest on a corporate bond
Show answer and explanation
Answer: B. Interest on a state or local government bond, C. The value of property received as a gift, E. Life insurance proceeds received by a beneficiary because of the insured's death
Gross income starts from everything received, and an item leaves it only because a statute says so, which is why the exclusions are worth learning as a closed list. Municipal bond interest, gifts and inheritances, and life insurance death benefits are the classic exclusions, while wages, unemployment compensation and corporate bond interest are all included. The exclusion for a gift applies to the person receiving it, and any income the gifted property later produces is taxable to that person. This is a concept question, not tax advice.
13. Complete the sentence.
For federal income tax purposes, property received as a gift generally takes _____, while property acquired from a decedent generally takes a basis equal to _____.
Options for blank 1: the donor's basis, carried over to the donee, its fair market value on the date of the gift, zero, until the property is sold
Options for blank 2: the decedent's original cost, its fair market value at the date of death, the amount of estate tax paid on it
Show answer and explanation
Answer: the donor's basis, carried over to the donee, its fair market value at the date of death
A gift carries the donor's basis across, so the built in gain travels with the property and gets taxed when the donee eventually sells. Property acquired from a decedent instead takes a basis stepped to fair market value, which wipes out the appreciation that built up during the decedent's lifetime. A special rule applies to gifts whose fair market value is below the donor's basis at the date of the gift, where gain and loss are measured from different starting numbers.
14. A purchasing manager has ordered supplies from the same vendor for years with the employer's knowledge. The employer privately tells the manager to stop but tells the vendor nothing, and the manager places one more order. Is the employer bound?
- A. No, because the manager's actual authority was revoked before the order was placed
- B. Yes, because the manager still had apparent authority in the eyes of the vendor
- C. No, because an agent cannot bind a principal to a contract
- D. Yes, but only if the employer later accepts delivery of the goods
Show answer and explanation
Answer: B. Yes, because the manager still had apparent authority in the eyes of the vendor
Apparent authority comes from what the principal has led the third party to believe, so a private instruction the vendor never heard about does not end it. The employer ends apparent authority by giving the vendor notice, and until it does, the vendor may reasonably rely on the established course of dealing. Ratification, meaning accepting the benefit of an unauthorized act, is a separate route to being bound and is not needed when apparent authority already exists.
15. Under Treasury Circular 230, what must a practitioner do on learning that a client made an error or omission on a filed tax return?
- A. Correct the return and refile it without involving the client
- B. Report the error to the Internal Revenue Service
- C. Promptly advise the client of the error and of the consequences under the tax law
- D. Withdraw from the engagement immediately
Show answer and explanation
Answer: C. Promptly advise the client of the error and of the consequences under the tax law
Circular 230 places a duty to inform, not a duty to fix or to report. The practitioner must tell the client about the error or omission and explain the consequences of leaving it uncorrected, and the decision about whether to correct it belongs to the client. A practitioner may choose to withdraw if a client refuses to act, but the rules do not require withdrawal and do not permit disclosing the error to the IRS without the client's consent.
What the CPA Exam actually asks you
Since January 2024 the Uniform CPA Examination has followed the CPA Evolution model. You sit three core sections that everyone takes, Auditing and Attestation, Financial Accounting and Reporting, and Taxation and Regulation, and then one discipline section that you choose yourself from Business Analysis and Reporting, Information Systems and Controls, or Tax Compliance and Planning. Whichever discipline you pick, you get the same CPA license at the end. The discipline is a depth choice, not a specialty stamp on your credential.
Each section runs four hours and mixes multiple choice questions with task-based simulations, which are the case style tasks where you fill in a schedule, research an authoritative source or work through a client scenario. Scores are reported on a scaled range and 75 is the reported passing score, which is not the same thing as answering 75 percent of the questions correctly. Scaled scoring adjusts for how hard your particular set of questions was, so chasing a raw percentage in your review course tells you less than you think.
The rules around the exam are set in two different places, and this catches people out. The exam content comes from the AICPA. Everything else, meaning your eligibility to sit, your education and experience requirements, the ethics exam and how long your passed sections stay valid, comes from the state board of accountancy where you are seeking licensure. NASBA's model rule extended the conditional credit window from 18 months to 30, but each board decides whether and when to adopt it, so the window that applies to you is your board's, not a national one. Check nasba.org and your own state board before you plan a testing order.
How to use this sampler and how to study the material
These 15 questions are spread across the three core sections, roughly six from FAR, five from AUD and four from REG. There are no discipline questions here, because BAR, ISC and TCP pull in different directions and a shared sampler would tell you nothing useful about any of them. Every question tests a concept rather than a number you would look up. That is deliberate for the tax items in particular: brackets, thresholds and standard deduction amounts change every year, so a question built on this year's figure is wrong next year and teaches you the wrong habit anyway.
Take it in one sitting without notes, then read the explanation for every question, including the ones you got right. Guessing correctly and knowing are different states, and only the explanation tells you which one you were in. Treat a wrong answer as a topic rather than a fact. Missing the consolidation question and the governmental funds question is not two gaps, it is one gap in how measurement and reporting entity choices drive the numbers.
Multiple choice practice is only half the exam. Task-based simulations carry a large share of the score in every section and they are a different skill, closer to doing the work than to recognizing the right answer. Build simulation practice into your schedule from the start rather than saving it for the last two weeks. The same goes for audit sampling and for contract law in REG, two areas this sampler only touches in passing, which reward worked problems more than reading.
How StudyPDF builds full practice tests from your review course
Fifteen questions can show you where you are shaky. They cannot get you ready for a four hour section, and a generic bank rarely matches the emphasis of the review course you are actually paying for.
StudyPDF works from your own material instead. You upload your review course PDFs, the printed textbook chapters you scanned, your firm's training deck or the notes you took in a live class, and Bo, the study agent, builds full-length practice tests from those exact pages. Every question is grounded in what you uploaded, and every explanation cites where the answer came from, so when something looks wrong you can go straight to the source and settle it. You can regenerate fresh tests as often as you want, narrow them to one area such as leases or the audit risk model, and track which concepts you keep missing across sessions. That matters most if you are studying around a full time job, because it puts your limited hours on the topics that are actually costing you points.
You do not need to upload anything to start. If you are on a lunch break with nothing in front of you, name a topic instead, for example revenue recognition or basis rules, and Bo writes a practice test from that. Starting is free.
Written by the StudyPDF team. Last updated 2026-08-19.