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CAREERS IN ACCOUNTING –
WE MAKE SUCCESS EASY!
How to Study for Success in School and Professional Accounting
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Planning Your Curriculum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Master’s Degree? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Importance of Grades . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Student Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Preparing for Exam Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Your Cognitive Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Study Suggestions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exam Questions and Explanations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certification of Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Overview of Accounting Certification Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rationale for Accounting Certification Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Examination Content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
How to Pass the CIA Exam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
How to Pass the CMA Exam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Steps to Become a CPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Improve Your Grades! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Order Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Accounting Students
Irvin N. Gleim, Ph.D., CPA, CIA, CMA, CFII
This booklet was developed to encourage you to think about learning and understanding in
contrast to short-term memorization. Your future--subsequent classes, certification examinations,
professional practices, etc.--is the focus:
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You invested in your future by going to college after high school.
You invested further by majoring in accounting, a profession that provides exceptional career
opportunities.
In spite of your success up to this point, your study methods are probably not as efficient as
they could be. Many students experience false success based on short-term memorization.
We are inviting and urging you to invest even further to improve the effectiveness of your study
time by learning and understanding, rather than memorizing, to earn better grades, pass
courses, obtain a degree, and get a job. You need professional competency to
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Pass the CIA (Certified Internal Auditor), CMA (Certified Management Accountant),
CPA (Certified Public Accountant), and/or EA (IRS Enrolled Agent) exams.
Practice professional accounting.
Work your way up to an executive position and succeed!
Please read this booklet carefully to gain a competitive advantage.
Order Gleim Exam Questions and Explanations books and
EQE Test Prep CD-Rom to help you
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Improve control of your study effort.
Learn and understand more in less time.
Earn higher grades.
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Careers in Accounting – We Make Success Easy!
A MILLION THANKS TO GLEIM CONTRIBUTORS
FOR THE MOST EFFECTIVE, EASIEST-TO-USE, AND LEAST EXPENSIVE STUDY MATERIALS
Literally millions of accounting students; CPA, CIA, CMA, and EA candidates; and others have used
Gleim Exam Questions & Explanations books and CD-Rom and Gleim certification review materials
during the past 30 years. More importantly, tens of thousands of Gleim users have submitted
questions, comments, suggestions, etc., about our products. THANK YOU GLEIM USERS for helping
develop the most relevant and useful accounting study materials.
In addition to the Gleim users, we also recognize and thank the hundreds of employees,
consultants, and accounting professors who have provided editorial content, comments, and
suggestions.
Finally, many thanks to our dedicated co-authors who have enjoyed helping students throughout
their careers:
William A. Collins, Professor of Business and Economics at the University of North Carolina
Dale L. Flesher, Professor at the School of Accountancy at the University of Mississippi
James R. Hasselback, Professor of Taxation at Florida State University
William A. Hillison, Professor of Accounting at Florida State University
Jordan B. Ray, Professor Emeritus at the University of Florida
HOW TO STUDY FOR SUCCESS IN SCHOOL AND PROFESSIONAL ACCOUNTING
The central theme of this booklet is control: establish plans, perform effectively, evaluate your
performance, understand shortcomings, and follow through with an improved strategy. This is an
executive approach that will work for you, especially if you aspire to be an executive. You should
because you will have the opportunity.
Planning Your Curriculum
Begin by chronologically listing all of your courses to date by semester (or quarter). Put credits
and grades to the right. Underneath this listing, organize a desirable schedule of remaining courses
and credits. After spending 10 minutes on this exercise, consult your university catalog, college and
departmental advisement sheets, and any other relevant materials. Make sure you will meet all the
requirements to graduate. Have you planned your courses in the proper sequence in terms of
prerequisites? After you have thought through your schedule, review it with an appropriate
administrator or counselor. Confirm that it satisfies the requirements for your graduation.
What is your objective? Presumably, it is to earn a degree in accounting and subsequently sit for
the CIA, CMA, CPA, and/or EA exams. Why? The prospects of employment are good and starting
salaries are high. What then? What will you be doing in 5 years? 10 years? 15 years? No one knows
for sure, but to the extent that you improve your study program, i.e., learn more and become more
qualified, you will brighten your prospects. Thus, you want to train not only to be a professional
accountant but also to be able to go on to bigger and better opportunities.
Careers in Accounting – We Make Success Easy!
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Master’s Degree?
Just as your bachelor’s degree is an investment in your future, so too is a master’s (MA, MS, or
MBA). Initially, a master’s in accounting translates to about a 10% - 20% premium in starting salary.
The primary advantage of having a master’s degree is that your employer will have higher expectations
as a result of your additional training. This usually translates into more opportunities, more
responsibility, faster promotion, and higher compensation.
Look at The Wall Street Journal on Tuesdays, when the employment ads are most numerous.
Listed positions frequently require a master’s; the CPA, CMA, and/or CIA designation; and several
years of experience for accounting executive positions, such as controller or treasurer. Adding the EA
designation will show your proficiency in tax matters.
The amount and availability of financial support is usually an impediment to continued schooling,
but borrowing funds is generally a prudent financial decision, especially since student spending is
limited relative to that of the career professional. In the business world, the accounting professional will
incur additional spending for items such as clothes, cars, housing, entertainment expenses, etc.
Avoid planning to return to school after you have saved enough money. Once you are working
and enjoying the lifestyle provided by a good salary, resuming the role of a student is not easy. Stay in
school until your educational goals have been met. A part-time job will also help defray some of your
costs. Education is the best investment you will make!
Many professionals attend graduate school on a part-time basis (evenings, weekends). These
programs offer a chance to interact with your peers who have similar interests and aspirations. An
added benefit of attending graduate school part-time is learning from the work experience of
classmates with various backgrounds, which significantly enriches class discussion.
Importance of Grades
Grades are important. Usually, a “B” average or higher is necessary to enter graduate and/or law
school. Some CPA firms and other employers restrict their hiring to individuals with a “B” average or
better. Conversely, many students with “C” or “C+” GPAs are extremely successful once out of school.
If your GPA is currently below an “A” average, this booklet is particularly relevant to you.
You must do your best in each course, especially those pertaining to your career. Other courses
are important because they affect your overall GPA and help make you a better-rounded person. Your
employer will be interested in you as a whole person, not just as an accounting technician.
Student Activities
To their detriment, some students overemphasize grades. You also need to develop your “people”
skills. Join your accounting club or society and the honorary accounting fraternity, Beta Alpha Psi, if
your school is a member of the American Association of Collegiate Schools of Business. To develop
leadership skills, volunteer to serve as an officer. Balance your academic efforts with other activities,
such as community service, intramural sports, student government, or pursuit of personal interests.
Almost all prospective employers are interested in your leadership, communication, and social skills.
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Careers in Accounting – We Make Success Easy!
Preparing for Exam Success
The Preparation Process – In order to be successful on examinations, you need to
1.
Understand the exam, including coverage, content, format, administration, and
grading. Virtually all certification programs, admission tests, and other established exams
have information books developed by those responsible for the examination. Also, review
manuals and “test prep” books usually exist to help you with the exam.
The better you understand the process, the better you will perform. In college courses, ask
your professor for clarification of the exam process publicly in class and privately in his/her
office, talk to former students, and attempt to review exams from prior terms.
2.
Learn and understand the subject matter tested. Obtain content specification outlines for
established exams. Outline recommended reference books. Confirm coverage by looking
at past examinations (if available) and/or review manuals.
In college courses, confirm text and study unit coverage with your professor. Also, to what
extent are class lectures, examples, handouts, etc., tested?
3.
Practice answering recent exam questions to perfect your exam question-answering
techniques. Answering recent exam questions helps you understand the standards to
which you will be held. It also helps you learn and understand the material tested -- see
“Exam Questions and Explanations” on page 10.
4.
Plan and practice exam execution. Anticipate the exam environment and prepare a plan
including your arrival time, your manner of dress, the appropriate exam supplies, the
expected number of questions and the format, the order in which you will answer questions,
and the time you will spend on each question.
Expect the unexpected and adjust! Remember that your sole objective when taking an
examination is to maximize your score. Most examinations are “curved,” and you must
outperform your peers.
5.
Most importantly, develop confidence and assure success with a controlled preparation
program followed by confident execution during the examination.
Control – You have to be in control to be successful during exam preparation and execution.
Control can also contribute greatly to your personal and other professional goals. Control is a process
whereby you
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Develop expectations, standards, budgets, and plans.
Undertake activity, production, study, and learning.
Measure the activity, production, output, and knowledge.
Compare actual activity with expected or budgeted activity.
Modify the activity, behavior, or production to better achieve the desired outcome.
Revise expectations and standards in light of actual experience.
Continue the process.
The objective is to be confident that the best possible performance is being generated. Most
accountants study this process in relation to standard costs, i.e., establish cost standards and compute
cost variances.
Consider the following simple example: Every day you rely on control systems implicitly. When
you brush or comb your hair, you have expectations about the desired appearance of your hair and the
time required to style it. You monitor your progress and make adjustments as appropriate, e.g., brush it
a different way or speed up.
Careers in Accounting – We Make Success Easy!
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Develop and enforce standards in all of your endeavors. Exercise control, implicitly or explicitly.
Most endeavors will improve with explicit control. This is particularly true with certification examinations
and other academic tests.
1.
Practice your question-answering techniques (and develop control) as you prepare
answers/solutions to practice questions/problems during your study program.
2.
Develop explicit control over your study programs based on the control process discussed
on the previous page.
3.
Think about using more explicit control systems over any and all of your endeavors.
4.
Seek continuous improvement to meet your needs given a particular situation or constraint.
Additional practice will result in further efficiencies.
Your Cognitive Processes
Which mental processes do you use for learning? How do you internalize assignments? How do
you process facts and concepts to complete assignments and take tests? If, by better understanding
how you “study” and how you can be more efficient and effective, you improve your study processes
20%, you might change 80% scores to 96% scores and reduce 30 hours per week in the library to
24 hours.
Your Learning Process1
Learning in the broad sense is the change in behavior or knowledge as a result of experience,
practice, effort, etc. We are particularly interested in the narrower definition, i.e., knowledge (in
particular, accounting-related knowledge), in contrast to other behaviors and skills, like riding a bicycle,
or vocational skills, like cutting hair.
Psychologists have defined many categories of learning, such as classical conditioning,
trial-and-error earning, sensorimotor learning, verbal learning, concept learning, and rule learning.
Accountants focus on concept learning and rule learning.
Most accounting and business concepts are multidimensional; therefore, they can be better
understood by examining their multiple aspects. For example, you might view a financial accounting
transaction in light of
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Journal entry(ies) required
Impact on the financial statements
Consequences of the transaction for the business
Motivation of all parties to enter into the transaction
Behavioral implications to employees, customers, competitors, etc.
This multidimensionality describes understanding, i.e., relating many concepts, rules, and
relationships. The above list is an abbreviated example; take a minute to pencil in a few additional
dimensions in the margin.
Train yourself to consider the implications of the underlying business transactions for all
accounting procedures you study. For example, what effect will a given procedure have on
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Purchasing power?
Cash flows?
Financial ratios?
Other areas?
Two texts relied on in preparing the following discussions on learning process and cognitive ability are Bloom’s Taxonomy
of Educational Objectives, copyright © 1956 by David McKay Company, Inc., and Arthur Wingfield, Human Learning and
Memory: An Introduction, copyright © 1979 by Harper & Row.
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Careers in Accounting – We Make Success Easy!
Levels of Cognitive Ability
In ascending order of complexity, one categorization (Bloom) of the levels of knowledge is
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Recall knowledge
Understanding to interpret
Application of knowledge to solve problems
Analytical skills
Synthesis
Ability to evaluate
The levels above “recall knowledge” tend to be cumulative. They constitute building blocks of
cognitive processes. To interpret, you need some recall knowledge; to solve problems, you must
understand to interpret, etc.
1.
Recall knowledge. The first level is recall knowledge, e.g., definitions of technical terms
and sources of information. Objective questions often test this kind of knowledge, which is
the most fundamental since it entails basic memorization.
EXAMPLE: According to Statement on Financial Accounting Concepts No. 2, the two
primary decision-specific qualitative characteristics of accounting information are reliability
and relevance. This requires little mental processing beyond simple recall.
2.
Understanding to interpret. The second level of knowledge is the understanding and
interpretation of written and quantitative data. Questions at this level test understanding of
concepts, including interrelationships within data. This level of knowledge is also called
comprehension.
EXAMPLE: SFAC 2 defines reliability as the “quality of information that provides assurance
that the information is reasonably free from error and bias and faithfully represents what it
purports to represent.” What does this mean? Do you understand? Can you explain it to
someone else? The ability to explain it to someone else is a very good indicator of your
comprehension.
3.
Application of knowledge to solve problems. The third level of knowledge is problem
solving. Questions at this level examine practical applications of concepts to solve a
problem. Unfortunately, some problem solving is based only on recall knowledge.
EXAMPLE: Memorizing the cost of goods sold formula (CGS = BI + Pur – EI) is mere
recall. Instead you should understand that CGS equals purchases adjusted for the change
in inventory. For example, an increase in inventory means that not all of purchases were
sold. Conversely, a decrease in inventory means all of purchases plus some inventory
were sold.
Given BI, Pur, and EI, most students can solve for CGS by plugging numbers into the
formula. But an interpretive understanding of the relationship of the change in inventory
level to CGS permits solving more complex problems, e.g., effect of inventory errors.
4.
Analytical skills. The fourth level of knowledge is analytical ability, including identification
of cause-and-effect relationships, internal inconsistencies or consistencies, relevant and
irrelevant items, and underlying assumptions. The following question requires analysis and
interrelation of a number of variables to reach a conclusion.
EXAMPLE: Would you accept a customer’s order at a lower-than-usual price? Variables to
consider include contribution margin generated, available production capacity, and
psychological and economic effects on other customers.
Careers in Accounting – We Make Success Easy!
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Synthesis. The fifth level is the ability to put parts together to form a new whole.
EXAMPLE: The development of the FASB’s major pension pronouncement (SFAS 87,
Employers’ Accounting for Pensions) illustrates the synthesis of existing elements. It
retains such aspects of prior pension accounting as delayed recognition of certain events,
reporting net cost, and offsetting liabilities and assets. SFAS 87 combines them with
applications of the existing principles of accrual accounting, full disclosure, and
comparability to develop a new approach to pension accounting.
6.
Ability to evaluate. The sixth level is evaluative ability. What is the best (most effective)
method (alternative)? Evaluation has in common with analysis and synthesis the
consideration of qualitative as well as quantitative variables. Qualitative variables are
usually multidimensional and thus cannot be meaningfully quantified or measured. For
example, multiple-choice questions consist of a series of either true or false statements
with one exception (the correct answer); if the question is evaluative, all of the answer
choices will be true or false, but one answer will be better than the others.
EXAMPLE: “The most important nonfinancial issue that a company should consider is...”
requires evaluation of qualitative variables.
Undergraduate accounting courses generally emphasize the first three levels: recall,
interpretation, and problem solving. Your career in professional accounting, however, will require and
emphasize the last three levels: analysis, synthesis, and evaluation. Gleim products will help you
reach these higher levels.
Put another way, the first three levels are required to prepare financial data. The second three are
necessary to use financial data and exercise professional judgment. How does accounting differ from
bookkeeping? Professional judgment.
Yes, in your study of accounting, you must go well beyond recall and memorization. Many
accountants move on to executive positions after beginning their professional career as an
“accountant.” Even those who remain in accounting exercise more and more judgment and rely less
and less on rote memory as they take on and exercise more responsibility.
Study Suggestions
Where to Study
Study where you study best. Some study best at home. Others study best at the library. Some
prefer to study at different locations at various times in the day and/or on different days. Still others
study at only one location.
The issue is effective study. You must seek out the study locations that provide you with the most
effective environment for concentration, which means avoiding or blocking out distractions, which are
most often produced by people you know. Try out-of-the-way places where other accounting
majors/friends do not study, e.g., the English library or fine arts library.
When to Study
Study on a regular basis, 7 days a week to the extent possible. Stay ahead of all assigned
material. Do not wait to study before exams and assignment due dates. This emphasizes rote
memorization, which does not result in learning and understanding. You will improve your grade point
average and increase the amount learned by investing several hours on each class at the very
beginning of each term (see the next section, “Course Overview”).
Are you a morning person? Do you study effectively first thing in the morning or in the evening?
Experiment with different study times to determine when you are most effective and schedule your time
accordingly.
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Careers in Accounting – We Make Success Easy!
Remember, the important point is that you must study regularly to stay ahead. Class lectures
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and discussion are much more meaningful and beneficial when you have studied the assignment prior
to attending class. A good rule to follow is, “You are behind if you are not ahead.” Stay ahead of all
of your classes by following a regular study schedule.
Course Overview
At the very beginning of the term, as soon as you have your text and syllabus, you should obtain
an executive overview of each course. Begin by writing down the study unit titles. What is the
course about? How does its content relate to courses you have already taken and to courses you plan
to take in the future?
Given this brief study unit listing and perhaps also a course description provided in the syllabus,
you are in a position to survey the individual study units in the text. You began with a one-line listing of
study units. Now skim each study unit, reading the introduction and summary/conclusion. Your
objective is to gain more insight into each study unit’s content and approach than that provided by the
study unit title. Document your effort with a short paragraph and/or summary outline of each study
unit. After you have completed your study unit-by-study unit analysis, examine the entire course
overview. Has your executive overview of the course changed and become more focused as a result of
your study unit-by-study unit analysis?
The entire process will probably take 2 to 4 hours. Spend half a day at the library and do a
thorough job for each course. This initial investment of time will pay dividends because at this point you
have a basis for understanding how the study units and their parts fit into the overall course. Now you
will be able to put individual definitions and concepts into the context of the entire course. Through the
exercise of control, you will be more efficient and effective and thus will be better prepared to attain the
analytical, synthesis, and evaluative levels of knowledge.
How to Study a Study Unit
Before reading a study unit, gain a general understanding of the study unit contents. The following
seven steps should precede actual study:
1.
Skim through the study unit. What is it about?
2.
Read the study unit summary.
3.
Look at the requirements of the exercises and problems to see what is expected.
4.
Try to answer the discussion questions at the back of the study unit to see if you can
provide answers based upon your present knowledge and common sense. If possible,
relate real life (business world) examples to the discussion questions or requirements to
help your understanding.
5.
Obtain and use the appropriate Gleim Exam Questions and Explanations book and
EQE Test Prep CD-Rom:
AUDITING & SYSTEMS • FEDERAL TAX • FINANCIAL ACCOUNTING
BUSINESS LAW/LEGAL STUDIES • COST/MANAGERIAL ACCOUNTING
Each Gleim product is thoroughly cross-referenced to textbooks used at universities
throughout the U.S. Accordingly, you can identify specific areas in the Gleim book
for each study unit in your textbook and answer 5 to 10 questions to determine the
standards to which you will be held. Gleim’s EQE Test Prep CD-Rom allows you to
study, self-test, and measure your progress. Please see our presentation on the
inside front cover of this booklet.
Careers in Accounting – We Make Success Easy!
6.
Outline the study unit based on the headings. Rewrite them in your own words.
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Do not recopy phrases from the textbook. Put concepts into your own words so you
understand, rather than memorize.
Now that you have an overview of the study unit and have thought about what is in it, you
can begin studying, rather than simply reading. Studying means understanding. What
is the author saying? Do you agree? How does each concept fit into the study unit?
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Remember, the objective is not to read the study unit and complete an assignment. The
objective is to understand the material well enough to be able to explain it to someone else. To this
end, you need to be sufficiently conversant with the material in each study unit so that you can
confidently discuss it, question it, and/or critique it with your professor, as well as assimilate it with class
lectures and notes.
Ask at least one question during each class session. There is not always enough time for
everyone to ask questions in class, but do not use that as an excuse for your failure to participate.
Engage your professor in discussion about a topic, procedure, or principle that you do not understand.
Many accounting students are introverts, sit passively in class, and only receive information. This
approach is inefficient because these students simply write down formulas, definitions, etc., for later
regurgitation without understanding the concepts. While introverts are frequently attracted to
accounting, practicing accountants are expected to be extroverts and demonstrate effective
communication skills. Accountants are in the communication business and must be good
communicators.
Stay ahead of your professor, answer all questions asked (usually to yourself) and look ahead
during lectures. Anticipate what will be next. Preclass preparation permits you to learn in class. The
poor alternative (both inefficient and ineffective) is to play “catch-up,” i.e., attempt to memorize lists,
definitions, etc., out of context after class is over. Remember, you have Gleim Exam Questions and
Explanations products to supplement your study and significantly improve your preparation.
Attempt to relate your current course material to that covered in previous courses. A thorough
understanding of the material in previous courses makes it feasible to tie the contents of all your
courses together. A potential weakness of undergraduate accounting programs is that one course is
taken at a time, without the “integration” of the individual courses into an entire program that usually
occurs in graduate programs.
Make notes in the margins of your books; they are your study vehicle. Just as you should ask
questions and discuss topics with your professor, you need to understand your text. Critique your text
as you study! How could it be improved? How would you organize and present the material?
Highlighters and underlining: Do not become completely dependent on them! Yes, many
students highlight and underline, but using short-term memory to become familiar with the concepts,
facts, and definitions is not a satisfactory method to complete courses. You are in school to learn and
understand with the objective of a successful career, not just to get a diploma.
How to Complete Homework Assignments
Most accounting course assignments consist of computational problems. They are largely similar
to the examples and illustrations in your study units. Thus, most of your homework problems are
susceptible to “cookbooking,” or copying from the study unit illustration, step-by-step. Barely more than
rote memorization is required to achieve false success. Do not cookbook!
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Careers in Accounting – We Make Success Easy!
You are adequately prepared to complete your homework assignments under exam conditions
(time pressure and no reference back to the study unit) because you have previously accomplished the
necessary building blocks in your individualized control process: establishing where and when to study,
surveying the course, studying your textbook, answering multiple-choice questions in the Gleim Exam
Questions and Explanations book and EQE Test Prep CD-Rom, and participating in class.
Scan the exercise or problem and set a 5-, 10-, or 15-minute time limit. With a watch before you,
see how much you can accomplish within the time limit. As you get each problem under control, note
the issues you need to research after you have substantially completed the problem.
Put yourself in a frame of mind to be highly productive during homework preparation. Effective
time management is very important to successful exam performance. Do your best! No one can ask
for more.
Develop and use your question answering techniques on each homework assignment. These
systematic methods of problem solving should be executive in nature. Before you start, determine what
has to be done, how it has to be done, the sequence of procedures, etc. It is the same general
approach recommended for course overviews, studying a study unit, taking an exam, etc.
Exam Questions and Explanations
Experts on testing increasingly favor multiple-choice questions as a valid means of examining
various levels of knowledge. The ACT, SAT, GMAT, and other entrance examinations consist entirely
of multiple-choice questions. The CIA, CMA, and EA exams are now 100% multiple-choice questions.
The percentage of objective questions on the CPA exam has also increased. Using objective questions
to study for undergraduate examinations is an important tool not only for obtaining good grades, but
also for long-range preparation for certification and other examinations. The following suggestions can
help you study in conjunction with each Gleim Exam Questions and Explanations product:
1.
Locate the study unit that contains questions on the topic you are currently studying. Each
Exam Questions and Explanations book and EQE Test Prep CD-Rom contains crossreferences to the tables of contents of most textbooks.
2.
Work through a series of questions, selecting the answers you think are correct.
3.
If you are using the Gleim book, do not consult the answer or answer explanations on
the right side of each page until after you have chosen and written down an answer.
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It is crucial that you cover the answer explanations and intellectually commit yourself
to an answer. A bookmark is provided at the back of each Gleim book for this
purpose. This method will help you understand the concept much better, even if you
answered the question incorrectly. EQE Test Prep CD-Rom automates this process
for you.
Study the explanations to each question you answered incorrectly. In addition to learning
and understanding the concept tested, analyze why you missed the question. Did you
misread the question? Misread the requirement? Make a math error? Not know the
concept tested? Identify your weaknesses and take corrective action (before you take a
test).
●
Studying the important concepts that we provide in our answer explanations will help
you understand the principles to the point that you can answer that question (or any
other like it) successfully.
11
Careers in Accounting – We Make Success Easy!
5.
Prepare a summary analysis of your work on each subunit (topic). If you have EQE Test
Prep CD-Rom, simply view your performance analysis information. Some sample column
headings could be:
Date
Subunit
Time to
Complete
Questions
Answered
Avg. Time
per Question
Questions
Correct
Percent
Correct
The analysis will show your weaknesses (areas needing more study) and also your
strengths (areas of improvement). You can improve your performance on objective
questions both by increasing your percentage of correct answers and by decreasing the
time spent per question.
SUCCESSFUL ACCOUNTING STUDENTS STUDY WITH
THE GLEIM SERIES
(see inside front cover)
“The Gleim books helped me because they test you on all subjects covered in class and better prepare you for
exams. A lot of exam questions are modeled after the Gleim questions, especially when the professor
recommends the book in class. The study guides have also been useful because they simplify some of the
language found in traditional books and provide examples to supplement one’s learning. I only wish I had
known the software was available as a study tool sooner!”
Kirk Khan, accounting graduate student
A
ccounting is competitive (academically and professionally). The Gleim Series provides a
competitive advantage by improving the effectiveness of your study time through learning and
understanding. Gleim will help you to:
●
Learn and understand more in less time
●
Improve your test scores and earn higher grades
●
Practice answering CPA exam questions now
●
Propel yourself into a career in accounting
After graduation, you will compete with graduates from schools across the country in the
accounting job market. Make sure you measure up to standards that are as demanding as the
standards of your counterparts at other schools. These standards will be tested on professional
certification exams.
The Gleim Series works! Each book is a comprehensive source of multiple-choice questions with
thorough explanations of each correct and incorrect answer. You learn from our explanations
regardless of your answers to the questions. Pretest before class to see if you are strong or weak in
the assigned area. Retest after class and before each exam or quiz to be certain you really understand
the material. The questions in these books cover virtually all topics in your courses. Rarely will you
encounter questions for which you are not well prepared. Each Gleim book is cross-referenced to the
primary textbook used in your class. To maximize your study, use Gleim’s Exam Questions and
Explanations Test Prep CD-Rom – details on inside front cover!
The student next to you has the exam questions – do you? See what might be on the exam before
you take it! Use Gleim’s Exam Questions and Explanations books and EQE Test Prep CD-Rom
to master the material in your courses and learn how to succeed on exams – almost 9,000 questions
with detailed discussions covering every accounting, tax, business law, and auditing topic!
12
Careers in Accounting – We Make Success Easy!
CERTIFICATION OF ACCOUNTANTS
Overview of Accounting Certification Programs
The CPA (Certified Public Accountant) exam is the grandparent of all the professional accounting
examinations. Its origin was in the 1896 public accounting legislation of New York. In 1917, the
American Institute of CPAs (AICPA) began to prepare and grade a uniform CPA exam. It is currently
used to measure the technical competence of those applying to be licensed as CPAs in all 50 states,
Guam, Puerto Rico, the Virgin Islands, and the District of Columbia. During the first year of computerbased testing, April 2004 - April 2005, over 50,000 candidates sat for at least one section of the CPA
exam.
The CIA (Certified Internal Auditor) and CMA (Certified Management Accountant) examinations
are relatively new certification programs compared to the CPA. The CMA exam was first administered
in 1972, and the first CIA exam in 1974. Why were these certification programs begun? Generally, the
requirements of the CPA designation instituted by the boards of accountancy, especially the necessity
for public accounting experience, led to the development of the CIA and CMA programs. The IRS
Enrolled Agent (EA) certification is available for persons specializing in tax.
Certification is important to professional accountants because it provides
1.
2.
3.
4.
5.
Participation in a recognized professional group
An improved professional training program arising out of the certification program
Recognition among peers for attaining the professional designation
An extra credential for the employment market/career ladder
The personal satisfaction of attaining a recognized degree of competency
These reasons hold particularly true in the accounting field due to wide recognition of the CPA
designation. Accountants and accounting students are often asked if they are CPAs when people learn
they are accountants. Thus, there is considerable pressure for accountants to become certified. A new
development is multiple certifications, which is important for the same reasons as initial certification.
Accounting students and recent graduates should look ahead and obtain multiple certifications to
broaden their career opportunities. The table of selected CIA, CMA, and CPA examination data on the
opposite page provides an overview of these accounting examinations. Additional information about
the IRS enrolled agent (EA) exam is available at www.gleim.com/accounting/ea/. Use Gleim to pass
each of these certification exams.
Rationale for Accounting Certification Programs
The primary purpose of professional examinations is to measure the technical competence of
candidates. Competence includes technical knowledge, ability to apply such knowledge with good
judgment, and comprehension of professional responsibility. Additionally, the nature of these
examinations (low pass rate, broad and rigorous coverage, etc.) has several very important effects.
1.
Candidates are forced to learn all of the material that should have been presented and
learned in a good accounting educational program.
2.
Relatedly, candidates must integrate the topics and concepts that are presented in individual
courses in accounting education programs.
3.
The content of each examination provides direction to accounting education programs; i.e.,
what is tested on the examinations will be taught to accounting students.
13
Careers in Accounting – We Make Success Easy!
Examination Content
The content of certification examinations is specified by the respective governing boards with lists
of topics to be tested. In the Gleim review manuals – CIA Review, CMA Review, CPA Review, and EA
Review – the material tested is divided into subtopics we call study units. A study unit is a more
manageable undertaking than an overall part of each exam. The listings of study units on pages 14,
16, and 18 provide an overview of the content of these exams.
CIA, CMA, CPA EXAMINATION SUMMARY
CIA
CMA
CPA
Sponsoring Organization
Institute of Internal Auditors
247 Maitland Avenue
Altamonte Springs, FL 32701
(407) 937-1100
www.theiia.org
Institute of Management Accountants
10 Paragon Drive
Montvale, NJ 07645-1718
(201) 573-9000
(800) 638-4427
www.imanet.org
American Institute of
Certified Public Accountants
Harborside Financial Center
201 Plaza Three
Jersey City, NJ 07311-3881
(201) 938-3750
www.aicpa.org
Passing Score
75%
70%
75%
Average Pass Rate by
Exam Part
35%-40%
55%
40%-45%
Cost
$380 (50% student discount)
$460 (50% student discount;
requires IMA membership)
$500-$800 (varies by state)
Year Examination Was
First Administered
1974
1972
1917
I. Internal Audit Role in
Governance, Risk, and
Control (3-1/2 hours)
1. Business Analysis
(3 hours)
1. Business Environment &
Concepts (2-1/2 hours)
II. Conducting the Internal
Audit Engagement
(3-1/2 hours)
2. Management Accounting and
Reporting (4 hours)
2. Auditing & Attestation
(4-1/2 hours)
III. Business Analysis and
Information Technology
(3-1/2 hours)
3. Strategic Management
(3 hours)
3. Regulation (3 hours)
IV. Business Management
Skills (3-1/2 hours)
4. Business Applications
(3 hours)
4. Financial Accounting &
Reporting (4 hours)
Length of Exam
14 hours
13 hours
14 hours
When Administered
Mid-May and Mid-Nov
On Demand
Jan-Feb Apr-May
July-Aug Oct-Nov
Candidates Sitting for Exam:
Total number of candidates sitting for two examinations; many are repeaters.
Major Exam Sections
and Length
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
4,363
4,547
4,961
5,103
4,557
4,649
4,646
5,169
7,972
11,724
15,912
19,451
26,147
31,539
30,634
4,839
6,404
7,464
7,879
8,259
8,675
8,679
*5,456
*5,276
*4,950
*4,823
*5,791
*5,100
*5,200
*6,644
143,572
140,042
136,541
140,100
131,000
126,000
122,232
121,437
116,906
126,770
115,423
106,079
108,900
108,700
**100,000
*Does not include double-counting which occurred in previous years.
**Exam parts, not candidates for three calendar quarters, which is about a 50% drop from 2000 and 2003 levels.
Other professional accounting-related designations include CBA (Certified Bank Auditor), CDP (Certificate in Data
Processing), CFA (Chartered Financial Analyst), CFE (Certified Fraud Examiner), CISA (Certified Information Systems
Auditor), Enrolled Agent (one enrolled to practice before the IRS).
14
Careers in Accounting – We Make Success Easy!
LISTING OF CIA REVIEW STUDY UNITS
Part I: Internal Audit Role in Governance, Risk, and
Control
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Standards and Proficiency
Charter, Independence, and Objectivity
Internal Audit Roles I
Internal Audit Roles II
Control I
Control II
Planning and Supervising the Engagement
Managing the Internal Audit Activity I
Managing the Internal Audit Activity II
Engagement Procedures and Fraud
Part II: Conducting the Internal Audit Engagement
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Engagement Information
Communicating Results and Monitoring Progress
Specific Engagements I
Specific Engagements II
Information Technology I
Information Technology II
Specific IT Engagements
Statistics and Sampling
Other Engagement Tools
Ethics and Fraud
Part III: Business Analysis and Information
Technology
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Business Performance
Managing Resources and Pricing
Financial Accounting I
Financial Accounting II
Finance
Managerial Accounting
Regulatory, Legal, and Economic Issues
Information Technology I
Information Technology II
Information Technology III
Part IV: Business Management Skills*
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Structural Analysis and Strategies
Industry and Market Analysis
Industry Environments
Strategic Decisions
Global Business Issues
Motivation and Communications
Organizational Structure and Effectiveness
Managing Groups
Influence and Leadership
Time Management, Conflict and Negotiation
*Persons who have passed the CPA or CMA exams (and many other professional exams) are not required to take Part IV
of the CIA exam.
The explosive growth in the number of candidates sitting for the CIA exam (see page 13) is
certainly the result of a combination of factors including the Sarbanes-Oxley legislation and the Enron/
WorldCom scandals.
Management cannot personally observe the functioning of all officers, employees, and specialized
functions (finance, marketing, operations, etc.). Each has a unique perspective. Only internal auditing
is in a position to take a total company point of view, and firms are increasingly enlisting the ranks of
certified professionals.
The CIA exam is a two-day exam. Each of the four parts consists of 125 multiple-choice questions
and is 3 1/2 hours in length (8:30 a.m. - 12:00 p.m. and 1:30 p.m. - 5:00 p.m.). Thus, you will budget
1.5 minutes per question, leaving 20 minutes of “extra” time.
The first two parts of the CIA exam focus on the theory and practice of internal auditing. The body
of knowledge of internal auditing and the auditing skills to be tested consist of
1.
The typical undergraduate auditing class (as represented by auditing texts, e.g., Arens and
Loebbecke, Taylor and Glezen, etc.)
2.
Internal auditing textbooks (e.g., Sawyer and Sumners, The Practice of Modern Internal
Auditing, and Atkisson, Brink, and Witt, Modern Internal Auditing)
3.
Various IIA (Institute of Internal Auditors) pronouncements (e.g., The IIA Code of Ethics,
Standards for the Professional Practice of Internal Auditing, and Statement of
Responsibilities of Internal Auditing)
4.
Reasoning ability, communications, and problem-solving skills, and dealing with auditees
within an audit context (i.e., the questions will cover audit topics, but test audit skills)
The remaining 50% of the exam, Parts III and IV, assures that internal auditors are conversant with
topics, methodologies, and techniques ranging from individual and organizational behavior to
economics and information technology.
Careers in Accounting – We Make Success Easy!
15
How to Pass the CIA Exam
1.
Make the decision and the commitment to take the CIA exam.
2.
Register for the CIA program and apply to take Parts I, II, III, and/or IV. The cost for IIA
members is $60 for registration and $85 per part. Students receive a 50% discount.
Application deadlines are 3/31 and 9/30 for the May and November exams, respectively.
Registration/application forms are available at www.theiia.org.
3.
Commit to a thorough preparation program using the complete Gleim system (see inside
back cover). Mail or fax an order form (pp. 23-24). Alternatively, call (800) 874-5346 or go
to www.gleim.com/CIA/.
a.
b.
Your first order of business after you receive Gleim CIA Review is to carefully read and
understand the Introduction, which explains the examination process, content,
grading, etc. Do not underestimate the value of expertise in exam administration vs.
jumping into the study of testable material. The expertise you attain will pay
dividends when you are at the exam site.
Next, you need to establish and maintain your study schedule. Each exam part is
covered by 10 study units in our review materials. For each CIA Review study unit,
we recommend the following steps:
In the online course, complete multiple-choice quiz #1 before studying each study unit.
This is essential to develop your question-answering skills for questions that you do NOT
know the answer.
After the initial 20-question test, use the online audiovisual presentation for an overview of
the study unit. The audio CDs can be substituted for the audiovisual presentation.
Complete the 30-question true/false quiz in the online course.
Study the Knowledge Transfer Outline, especially the troublesome areas identified in the
diagnostic multiple-choice and true/false quizzes. You can use the online course or the
book to study the outline.
Complete multiple-choice quiz #2 in the online course and review the answer explanations.
Complete two 20-question quizzes in the Test Prep CD-Rom while in test mode. After
EACH test session, immediately switch to study mode and select “questions missed in last
session” so you can reanswer these questions AND analyze why you answered each
question incorrectly.
It is imperative that you complete your predetermined number of study units per week so you
can review your progress and realize how attainable a comprehensive CIA review program is when
using the combination of Gleim’s books, Test Prep CD-Rom, audios, and online course.
Remember to meet or beat your schedule to give yourself confidence.
After you complete each quiz, ALWAYS review the questions you missed.
FOCUS on why you selected the incorrect answer, NOT the correct answer.
You want to learn from your mistakes while you are studying so you avoid
mistakes on the exam.
16
Careers in Accounting – We Make Success Easy!
LISTING OF GLEIM CMA REVIEW STUDY UNITS*
Part 1: Business Analysis
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Factors Affecting the Firm
Consumption and Production
Market Structures
Macroeconomic Issues, Measures, and Cycles
Government Participation in the Economy
Comparative Advantage and Free Trade
Trade Barriers and Agreements
Foreign Exchange
Other Global Business Topics
Risk Assessment and Controls
Internal Auditing
Systems Controls and Security Measures
Forecasting
Linear Programming and Network Analysis
Probability, Decision Trees, and Other Techniques
The Development of Accounting Standards
Financial Statement Assurance
Liquidity, Capital Structure, and Solvency
Return on Investment, Profitability, and Earnings
Other Analytical Issues
Part 2: Management Accounting and Reporting
1. Budgeting
2. Cost Management Terminology and Concepts
3. Job-Order Costing, Overhead Costs, and Service
Department Allocation
4. Process Costing and Other Cost Accumulation
Systems
5. Overview of Information Systems and Systems
Development and Design
6. Technology of Information Systems
7. Electronic Commerce and Other Topics
8. Cost and Variance Measures
9. Responsibility Accounting and Financial Measures
10. The Balanced Scorecard and Quality Considerations
11. Overview of External Financial Reporting
12. Overview of Financial Statements
13. Cash and Receivables
14. Inventories and Investments
15. Long-Lived Assets
16. Liabilities
17. Equity and Revenue Recognition
18. Other Income Statement Items
19. Business Combinations and Derivatives
20. SEC Requirements and the Annual Report
*WARNING!!!
About 30% of CMA test questions will require mathematical calculations.
Practice computational questions to prepare for exam success!
Part 3: Strategic Management
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Strategic and Tactical Planning
Manufacturing Paradigms
Business Process Performance
Marketing’s Strategic Role within the Firm
Marketing Information and Market Segmentation
Other Marketing Topics
Risk and Return
Financial Instruments
Cost of Capital
Managing Current Assets
Financing Current Assets
The Decision Process
Data Concepts Relevant to Decision Making
Cost-Volume-Profit Analysis
Marginal Analysis
Cost-Based Pricing
The Capital Budgeting Process
Discounted Cash Flow and Payback
Ranking Investment Projects
Risk Analysis and Real Options
Part 4: Business Applications
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Organization Structures
Jobs and Teams
Leadership Styles and Sources of Power
Motivational Theories and Diversity Issues
Organization Communication
Behavior – Alignment of Organizational Goals
Behavior – Budgeting and Standard Setting
Behavior – Reporting and Performance
Evaluation
Ethics as Tested on the CMA Exam
Part 1 Review – Business Economics and
Global Business
Part 1 Review – Internal Controls and
Quantitative Methods
Part 1 Review – Financial Statement Analysis
Part 2 Review – Budget Preparation and Cost
Management
Part 2 Review – Information Management and
Performance Measurement
Part 2 Review – External Financial Reporting I
Part 2 Review – External Financial Reporting II
Part 3 Review – Strategic Planning and
Strategic Marketing
Part 3 Review – Corporate Finance
Part 3 Review – Decision Analysis
Part 3 Review – Investment Decisions
The CMA exam has broader coverage than the CPA exam in several areas. For example:
1.
CMA topics like risk management, finance, management, and marketing are covered lightly,
if at all, on the CPA exam.
2.
The CMA exam tests internal auditing to a greater degree than does the CPA exam.
3.
The CMA exam tests business ethics, but not business law.
CMA questions are generally more analysis-oriented than CPA questions. On the CPA exam, the
typical requirement is the solution of an accounting problem, e.g., consolidated worksheet, funds
statement, etc.
Careers in Accounting – We Make Success Easy!
17
How to Pass the CMA Exam
1.
2.
3.
4.
Purchase the Gleim/Flesher complete system, including the books, Test Prep CD-Rom,
audios, and Gleim Online.
Apply for membership in the IMA and register to take the desired exam parts. You can do
this online at www.imanet.org/. Student membership is $37/year. Take one part at a time.
When you register and pay $130 for a part ($165 for exams at most international sites), you
have 120 days to take the part. Upon receipt of authorization to take the exam, call
Prometric to schedule your test.
Plan your preparation process. It’s easy. Complete one study unit at a time. Use the 6-step
process on page 15, i.e., use the same study steps as for the CIA exam. Orderly,
controlled preparation builds confidence, reduces anxiety, and produces success!
PASS THE EXAMINATION at your Prometric Testing Center.
a.
You have 180 minutes to answer 110 questions, i.e., 1.6 minutes per question. (Part 2
is 240 minutes to answer 140 questions, and Part 4 is entirely essays.) We suggest
you attempt to answer eight questions every 10 minutes, which is 1.25 minutes per
question. This would leave you with 40-60 minutes to revisit questions that you have
marked for review.
1)
b.
c.
On your Prometric computer screen, the time remaining appears at the upper
right of your screen.
2) Remember, Gleim’s CMA Test Prep CD-Rom and Gleim Online emulate the
Prometric computer screens and testing process. This provides you with a
distinct, head-start advantage since you will not have to expend any valuable
time or energy familiarizing yourself with how to use Prometric’s exam software.
Answer the questions in chronological order.
1) Do not agonize over any one question. Stay within your time budget.
Read each question carefully to determine the precise requirement.
1)
Focusing on what is required enables you to ignore extraneous information and
to proceed directly to determining the precise requirement.
a)
2)
Be especially careful to note when the requirement is an exception; e.g.,
“All of the following statements regarding a company’s internal rate of
return are true except:”
Determine the correct answer before reading the answer choices. The
objective is to avoid allowing the answer choices to affect your reading of the
question.
a) Read each answer choice with close attention.
i)
3)
Even if answer (A) appears to be the correct choice, do not skip the
remaining answer choices. Answer (B), (C), or (D) may be better.
ii) Treat each answer choice as a true/false question.
Select the best answer. The answer is selected by either pressing the answer
letter on your keyboard or by using your mouse. Select the most likely or best
answer choice. If you are uncertain, make an educated guess. Your score is
determined by the number of correct responses: answer every question.
a)
d.
As you answer a question, you can mark it by pressing “M” or unmark a
marked question by pressing “M.”
b) It is not necessary to “mark unanswered questions. Prometric provides
options to review both unanswered questions and marked questions.
After you have answered, marked, or looked at and not answered all 110 questions,
you will be presented with a summary screen that shows how many questions you
did not answer and how many you marked. First revisit and answer all of the
unanswered questions, then the “marked” questions.
18
Careers in Accounting – We Make Success Easy!
Listing of CPA REVIEW Study Units
Business Environment and Concepts
Regulation
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
1.
2.
3.
4.
5.
6.
7.
Proprietorships and General Partnerships
Noncorporate Limited Liability Entities
Corporations: Formation, Powers, and Financing
Corporations: Governance and Fundamental Changes
Economic Concepts I
Economic Concepts II
Working Capital Policy and Management
Long-Term Capital Financing
Financial Statement Analysis
Risk Management
IT and Business Information Systems
IT Controls
Hardware, Software, and Data
Processing Modes, Databases, and Networks
E-Commerce
Planning and Budgeting
Business Performance
Cost Behavior and Definitions
Product Costing and Related Topics
Standard Costs and Variance Analysis
Auditing and Attestation
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Engagement Responsibilities
Risk Assessment
Strategic Planning Issues
Internal Control Concepts and Information Technology
Internal Control – Sales-Receivables-Cash Receipts Cycle
Internal Control – Purchases-Payables-Cash
Disbursements Cycle
Internal Control – Payroll and Other Cycles
Tests of Controls
Internal Control Communications
Evidence – Objectives and Nature
Evidence – The Sales-Receivables-Cash Cycle
Evidence – The Purchases-Payables-Inventory Cycle
Evidence – Other Assets, Liabilities, and Equities
Evidence – Key Considerations
Evidence – Sampling
Reports – Standard, Qualified, Adverse, and Disclaimer
Reports – Other Modifications
Review, Compilation, and Special Reports
Related Reporting Topics
Governmental Audits
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
AICPA Ethics
CPAs and the Law
Agency
Contracts
Debtor-Creditor Relationships
Government Regulation of Business
Negotiable Instruments, Bank Transactions,
and Related Topics
Sales
Secured Transactions
Real Property and Insurance
Gross Income
Deductions
Tax Computations and Tax Procedures
Property Transactions
Corporate Taxable Income
Corporate Tax Computations
Corporate Tax Special Topics
S Corporations
Partnerships
Estates and Trusts
Financial Accounting and Reporting
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Concepts and Standards
Financial Statements
Income Statement Items
Financial Statement Disclosure
Cash and Investments
Receivables
Inventories
Property, Plant, and Equipment
Intangibles and Other Assets
Payables and Taxes
Employee Benefits
Long-Term Liabilities
Leases and Contingencies
Equity
Business Combinations
Foreign Currency Issues and Other Topics
Governmental Concepts
Fund Accounting and Reporting
Not-for-Profit Concepts
Not-for-Profit Accounting and Reporting
Computer Administered CPA Exam (effective April 2004)
The CPA exam is an on-demand test administered at hundreds of Prometric testing centers
throughout the United States. The quality, integrity, and prestige of the CPA exam increased AND the
exam became easier for candidates to prepare for and pass. Computerization of the CPA exam is a
win-win development.
Basic requirement: Pass all 4 sections of the CPA exam within 18 months.
1.
If you don’t pass all 4 sections in 18 months, you lose credit for any section passed more
than 18 months prior to the current date.
2.
The exam sections are:
Auditing & Attestation (AUD)
Financial Accounting & Reporting (FAR)
Regulation (REG)
Business Environment & Concepts (BEC)
4.5 hours
4.0 hours
3.0 hours
2.5 hours
Careers in Accounting – We Make Success Easy!
a.
b.
19
Multiple-choice “testlets”: There will be 3 groups of 30 multiple-choice questions given
as testlets on each section of the exam, except Regulation where there will be 24
instead of 30 multiple-choice questions.
Simulation “testlets”: Auditing, Financial and Regulation will each have 2 simulations
or case study testlets. These two simulations will account for 30% of the grade in
each exam section. Each simulation will begin with directions and an explanation of
the “situation.” Thereafter there will be a series of requirements using the following
testing formats:
1)
2)
3)
4)
5)
Drop-down boxes
Check boxes
Forms (Regulation tax questions only)
Communication
Research
3.
The CPA exam is administered at Prometric Testing Centers, and is composed of a series of
testlets. The testlet sequence is predetermined. You will have 3 multiple-choice testlets
followed by 2 simulation testlets in Auditing, Financial, and Regulation (Business has only
3 testlets of multiple choice).
4.
Each testlet will be completed separately. Once you complete a testlet, you cannot return to
it. You may take breaks between testlets to stretch or go to the bathroom, but the time
remaining in the exam continues to run during breaks.
5.
Cost to take the CPA exam will be about $500 - $800 as determined by individual State
Boards. Before individual State Board fees are added to obtain total cost,
NASBA-AICPA-Prometric costs are about $470.
Steps to Become a CPA
1.
Make the commitment to become a CPA. It’s a big step but well worth it.
2.
Decide when you are going to take the CPA exam (the sooner, the better!).
3.
Determine the state board to which you will apply to sit for the CPA exam. If you are not
going to practice public accounting, you may wish to become certified in a state that issues
a CPA certificate separate from a license to practice. To check individual State Board
requirements, go to www.gleim.com/accounting/CPA/requirements.php or www.nasba.org.
4.
Obtain, complete, and submit your application form, including transcripts, pay fees, etc. and
you will receive a Notice To Schedule (NTS) from NASBA.
5.
Commit to thorough, systematic preparation for the exam using Gleim’s complete system to
guarantee your success.
a.
b.
c.
d.
CPA Review books (Auditing, Financial, Regulation, and Business)
CPA Test Prep CD-Rom: nearly 7,000 CPA questions, all updated to current tax law,
FASB Statements, etc.
CPA Audio Review available on CDs.
Complete, comprehensive CPA Review Online and Simulation Wizard courses.
6.
Schedule your test with Prometric (online, national 800#, or call your local Prometric testing
site).
7.
Take and PASS the CPA exam while you are in control using the Gleim Time Control
System. Gleim will make it easy.
Call (800) 874-5346 and ask to speak to a CPA exam personal counselor (students welcome!), or visit
www.gleim.com/CPA/ for more information.
20
Careers in Accounting – We Make Success Easy!
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AUDITING & SYSTEMS EXAM QUESTIONS AND EXPLANATIONS
(Thirteenth Edition)
Introduction
1. External Auditing Standards and Professional Responsibilities
2. Audit Planning and Risk Assessment
3. Internal Control
4. Audit Evidence and Procedures
5. Information Systems
6. Statistical Sampling
7. Audit Reports
8. Special Reports and Other Reporting Issues
9. Internal Auditing
FINANCIAL ACCOUNTING EXAM QUESTIONS AND EXPLANATIONS
(Twelfth Edition)
Introduction
1. Conceptual Framework
2. The Accounting Process
3. Comprehensive Income and the Statement of Income
4. Present Value and Future Value
5. Current Assets, Cash, Accounts Receivable, and Short-Term Notes
Receivable
6. Inventory
7. Property, Plant, and Equipment
8. Depreciation and Depletion
9. Intangible Assets and Research and Development Costs
10. Investments in Debt Securities, Equity Securities, and Derivatives
11. Current Liabilities, Compensated Absences, and Contingencies
12. Long-Term Liabilities
13. Pensions, Other Postretirement Benefits, and Postemployment Benefits
14. Leases
15. Corporate Equity
16. EPS and Share-Based Payment
17. Accounting for Income Taxes
18. Accounting Changes and Error Corrections
19. Statement of Cash Flows
20. Accounting for Changing Prices
21. Financial Statement Disclosures
22. Long-Term Construction-Type Contracts, Installment Sales, and
Consignments
23. Financial Statement Analysis Based on Percentage Relationships
24. GAAP Accounting for Partnerships
25. Business Combinations, Consolidations, and Branch Accounting
26. Interim Financial Reporting
27. Foreign Currency Translation and Transactions
28. Accounting for State and Local Government Entities
29. Not-for-Profit Organizations
30. Specialized Accounting Issues
COST/MANAGERIAL ACCOUNTING EXAM QUESTIONS AND
EXPLANATIONS
(Seventh Edition)
Introduction
1. Overview and Terminology
2. Activity-Based Costing
3. Job-Order Costing
4. Process Costing
5. Quality
6. Cost Allocation: Support Costs and Joint Costs
7. Absorption and Variable Costing
8. Cost-Volume-Profit Analysis
9. Budgeting
10. Standard Costs and Variances
11. Responsibility Accounting, Performance Measurement, and Transfer
Pricing
12. Nonroutine Decisions
13. Capital Budgeting
14. Inventory Management: Traditional and Modern Approaches
15. Probability and Statistics
16. Regression Analysis
17. Linear Programming
18. Other Quantitative Approaches
FEDERAL TAX EXAM QUESTIONS AND EXPLANATIONS
(Sixteenth Edition)
Introduction
Individual
1. Gross Income
2. Exclusions from Gross Income
3. Business Expenses and Losses
4. Limitations on Losses
5. Other Deductions for Adjusted Gross Income
6. Deductions from AGI
7. Individual Tax Computations
8. Credits
Property
9. Basis
10. Depreciation, Amortization, and Depletion
11. Capital Gains and Losses
12. Sale of Business Property
13. Nontaxable Property Transactions
Other Entities
14. Partnerships: Formation and Operation
15. Partnerships: Distributions, Sales, and Exchanges
16. Corporate Formations and Operations
17. Advanced Corporate Topics
18. Income Taxation of Estates, Trusts, and Tax-Exempt Organizations
Other Topics
19. Accounting Methods
20. Employment Taxes and Withholding
21. Wealth Transfer Taxes
22. Preparer Rules
23. Federal Tax Process and Procedure
BUSINESS LAW/LEGAL STUDIES EXAM QUESTIONS AND EXPLANATIONS
(Sixth Edition)
Introduction
1. The American Legal System
2. The American Court System
3. Civil Litigation and Procedure
4. Constitutional Law
5. Administrative Law
6. Criminal Law and Procedure
7. Tort Law
8. Contracts: The Agreement
9. Contracts: Consideration
10. Contracts: Capacity, Legality, Mutuality, and Statute of Frauds
11. Contracts: Interpretation, Conditions, Discharge, and Remedies
12. Contracts: Third-Party Rights and Duties
13. Sale of Goods: The Sales Contract, Interpretation, and Risk of Loss
14. Sale of Goods: Performance, Remedies, and Warranties
15. Negotiable Instruments: Types, Negotiation, and Holder in Due Course
16. Negotiable Instruments: Liability, Bank Transactions, and Electronic Fund
Transfers
17. Negotiable Instruments: Documents of Title and Letters of Credit
18. Secured Transactions
19. Suretyship
20. Bankruptcy
21. Personal Property and Bailments
22. Computers and the Law
23. Real Property: Interests and Rights
24. Real Property: Transactions
25. Mortgages
26. Creditor Law and Liens
27. Landlord and Tenant
28. Wills, Estate Administration, and Trusts
29. Agency
30. Partnerships and Other Entities
31. Corporations: Nature, Formation, and Financing
32. Corporations: Operations and Management
33. Federal Securities Regulation
34. Insurance
35. Environmental Law
36. Antitrust
37. Consumer Protection
38. Employment Regulation
39. International Business Law
40. Accountants’ Legal Responsibilities
21
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