The CPA Exam is one of the most challenging professional certification tests, and multiple-choice questions (MCQs) make up a significant portion of its structure.
Whether you’re tackling Financial Accounting and Reporting (FAR), Regulation (REG), Auditing and Attestation (AUD), or Business Environment and Concepts (BEC), mastering MCQs is essential to passing the CPA Exam.
This guide offers a comprehensive approach to understanding, practicing, and excelling at MCQs, complete with practical examples and actionable strategies.
What Are CPA Exam Multiple-Choice Questions?
Contents
MCQs test your knowledge, understanding, and application of concepts across all four CPA Exam sections. They are typically presented in two testlets per section, with each testlet containing 33–38 questions, depending on the section. Questions vary in difficulty, covering a mix of basic recall, application, and analytical skills.
For instance, a straightforward FAR question might ask:
“What is the formula for calculating net income?”
The answer would be: Net Income=Revenues−Expenses\text{Net Income} = \text{Revenues} – \text{Expenses}Net Income=Revenues−Expenses
In contrast, a more advanced question might require calculating net income using given financial data, testing your ability to apply the formula in context.
Why Are MCQs Important?
MCQs account for 50% of the total score in all CPA Exam sections except BEC, where they account for 50% along with written communication tasks and simulations. Your performance on MCQs significantly impacts your overall score, and the exam’s adaptive testing system adjusts the difficulty of the second testlet based on your performance in the first. Performing well on MCQs can help you approach simulations with more confidence.
How to Approach CPA Exam MCQs
Read the Question Carefully
Before answering, ensure you fully understand what the question is asking. For example:
Question: “What is the book value of a company’s assets if total assets are $500,000, accumulated depreciation is $100,000, and liabilities are $200,000?”
Key Detail: Focus on the relationship between total assets and accumulated depreciation to calculate the book value.
Solution:
Book Value=Total Assets−Accumulated Depreciation=500,000−100,000=400,000\text{Book Value} = \text{Total Assets} – \text{Accumulated Depreciation} = 500,000 – 100,000 = 400,000Book Value=Total Assets−Accumulated Depreciation=500,000−100,000=400,000
Careful reading ensures you focus on relevant data and avoid unnecessary distractions.
Use the Process of Elimination
Eliminating incorrect answers increases the likelihood of choosing the correct one. For example:
Question: “Which of the following is not a component of internal control?”
Choices:
- a. Control Environment
- b. Risk Assessment
- c. Audit Procedures
- d. Monitoring
By identifying that audit procedures are not part of internal control, you eliminate distractions and narrow down your answer to c.
Identify Key Words and Phrases
Key words like “except,” “not,” and “most likely” significantly impact the question’s intent. For example:
Question: “Which of the following is not considered taxable income for individuals?”
Choices:
- a. Wages
- b. Inheritances
- c. Business income
- d. Interest income
By recognizing “not,” you focus on identifying the non-taxable option, which is b. inheritances.
Manage Your Time Wisely
Allocate 1–1.5 minutes per question to ensure you finish the testlet within the recommended 30–35 minutes. For difficult questions, make an educated guess, flag them, and revisit if time permits.
Strategies for Practicing MCQs
Use CPA Review Courses
Invest in a quality CPA review course, such as Becker, Wiley, or Roger CPA Review, which offer extensive MCQ practice. These courses provide explanations for correct and incorrect answers, helping you learn from your mistakes.
Practice Under Timed Conditions
Simulate exam conditions by practicing MCQs within a set time limit. This builds your ability to manage time effectively and reduces test-day anxiety.
Review Explanations Thoroughly
When practicing, focus not just on whether you got a question right or wrong but why. Understanding the reasoning behind correct answers strengthens your conceptual knowledge and application skills.
Focus on Weak Areas
Identify topics where you struggle and prioritize those in your practice sessions. For instance, if you consistently miss questions on deferred tax liabilities in REG, dedicate extra time to studying tax timing differences.
Common Pitfalls and How to Avoid Them
Overthinking Questions
Overanalyzing can lead to second-guessing. Trust your initial instincts, especially if the answer aligns with concepts you’ve studied. For example, if a question aligns closely with the GAAP rules you’ve learned, avoid adding hypothetical scenarios to complicate your reasoning.
Neglecting Practice Questions
Skipping MCQ practice can leave you unprepared for the real exam. Regular practice is crucial to familiarizing yourself with the question format and improving your speed and accuracy.
Practical CPA Exam MCQ
Example 1: Basic Recall Question (FAR)
Question: “What is the primary purpose of the statement of cash flows?”
Choices:
- a. To measure profitability.
- b. To report financial position.
- c. To show cash inflows and outflows.
- d. To summarize shareholder equity.
The correct answer is c. To show cash inflows and outflows.
Example 2: Application Question (REG)
Question: “A taxpayer sells an asset for $120,000, with an original purchase price of $100,000 and accumulated depreciation of $20,000. What is the taxpayer’s gain or loss on the sale?”
Solution:
Adjusted Basis=Purchase Price−Accumulated Depreciation=100,000−20,000=80,000
{Adjusted Basis} = {Purchase Price} – {Accumulated Depreciation} = 100,000 – 20,000 = 80,000
Adjusted Basis=Purchase Price−Accumulated Depreciation=100,000−20,000=80,000
Gain on Sale=Sale Price−Adjusted Basis=120,000−80,000=40,000{Gain on Sale} = {Sale Price} – {Adjusted Basis} = 120,000 – 80,000 = 40,000
Gain on Sale=Sale Price−Adjusted Basis=120,000−80,000=40,000
The correct answer is $40,000 gain.
How Are CPA Exam Multiple-Choice Questions Scored?
CPA Exam multiple-choice questions (MCQs) are scored using a weighted system where each correct answer contributes to your overall score. The exam employs adaptive testing for MCQs, meaning the second testlet adjusts in difficulty based on your performance in the first.
Harder questions in the second testlet carry more weight, allowing candidates to earn a higher score for correctly answering more challenging questions.
CPA Exam Test-Day Tips for MCQs
Stay Focused
Minimize distractions during the exam by concentrating on one question at a time. Avoid dwelling on previous questions or worrying about upcoming ones.
Trust the Adaptive Test System
Remember that the CPA Exam adapts to your performance. If the questions feel harder in the second testlet, it likely means you performed well on the first, which is a positive indicator.
Flag and Revisit Questions
Use the flagging feature to mark questions you’re unsure about. Return to them at the end if time permits, using fresh insights gained from completing other questions.
Verify Calculations
Double-check your calculations for numerical questions to ensure accuracy. For instance, in a lease liability question, confirm that you’ve applied the correct formula for present value.
Keep Moving Forward
Avoid spending excessive time on a single question. Make an educated guess, flag it if necessary, and move on to maintain your pace.
Frequently Asked Questions
How many multiple-choice questions are on each section of the CPA Exam?
Each CPA Exam section includes two testlets of multiple-choice questions, with 33–38 questions per testlet. The total number of MCQs per section varies slightly, but it typically ranges from 66 to 76 questions.
How are multiple-choice questions scored on the CPA Exam?
MCQs account for 50% of the total score in all sections except BEC, where they are weighted with written communication tasks. The adaptive nature of the exam adjusts the difficulty of the second testlet based on performance in the first.
What’s the best way to approach difficult multiple-choice questions?
Use the process of elimination to rule out obviously incorrect answers and focus on the remaining choices. If unsure, make an educated guess, flag the question, and revisit it later if time allows.
Can multiple-choice questions repeat concepts across testlets?
Yes, similar concepts may appear in different testlets, but the questions themselves will vary in wording or complexity. This reinforces your understanding and tests your ability to apply knowledge in different contexts.
Bottom Line
Mastering multiple-choice questions is a critical component of CPA Exam success. By understanding the structure of MCQs, practicing effectively, and employing strategic approaches on test day, you can maximize your performance and build confidence.
Remember, success in MCQs requires a balance of theoretical knowledge, practical application, and time management. With consistent effort and the right strategies, you’ll be well on your way to passing the CPA Exam and achieving your professional goals.