Chapter One

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Successful completion of the Uniform CPA Examination is one of the requirements for becoming a Certified Public Accountant (CPA) in one of the 54 jurisdictions in which it is given. Passing the CPA examination can have a significantly positive effect on your career. If you have completed your accounting education, it is imperative that you put forth the effort to complete the exam. Successful completion of the CPA exam is an attainable goal but it takes work. Keep this foremost in your mind as you undertake your study program.

It is important to note that the AICPA expects you to be familiar with the functionality and format of the CPA exam before you report to a testing center to take it. This expectation is set forth in a notice on the AICPA's Web site as shown below.

This book will help you gain the required understanding of the functionality and format of the simulations on the exam. It will also help you to develop an effective approach to completing simulations.

ADMINISTRATION OF THE CPA EXAM

The four sections of the CPA Examination are delivered in a computer-based format. This provides a significant advantage to you as a candidate. You may take the exam one section at a time. As a result, your studies can be focused on that one section, improving your chances for success. In addition, during eight months of every year, you may take the exam on your schedule, six days a week and in the morning or in the afternoon.

PURPOSE OF THE CPA EXAM

The CPA exam is designed to test the entry-level knowledge and skills necessary to protect the public interest. The knowledge and skills were identified through Practice Analyses using inputs from practicing CPAs. The skills identified include:

Analysis-the ability to organize, process, and interpret data to develop options for decision making.

Judgment-the ability to evaluate options for decision-making and provide an appropriate conclusion.

Communication-the ability to effectively elicit and/or express information through written or oral means.

Research-the ability to locate and extract relevant information from available resource materials.

Understanding-the ability to recognize and comprehend the meaning and application of a particular matter.

You should keep these skills foremost in your mind as you prepare and sit for any section of the CPA Exam.

The CPA exam is comprised of four sections: Auditing and Attestation, Financial Accounting and Reporting, Regulation, and Business Environment and Concepts. All four sections contain multiple-choice testlets. The Auditing and Attestation, Financial Accounting and Reporting, and Regulation sections also each include two simulations.

SCORING THE EXAM

CPA exam scores are reported on a scale from 0 to 99. Except for the Business Environment and Concepts, the total score is a combination of scores from the multiple-choice questions and simulation parts of the exam. The total score for the Business Environment and Concepts section is determined by a candidate's performance on the multiple-choice questions. A total score of 75 is required to pass each section.

Most of the responses on the computer-based CPA examination are objective in nature. Obviously, this includes the responses to the multiple-choice questions. However, it also includes most of the responses to the requirements of simulations. Requirements of simulations include responses involving check boxes, entries into spreadsheets, form completion, graphical responses, drag and drop, transfer to answer, and written communication. All of these responses, with the exception of written communication, are computer graded. Therefore, no consideration is given to any comments or explanations outside of the structured responses. You must provide the correct response and only the correct response.

Graders are used to score the responses involving written communication, (e.g., a written memorandum). area written communication is graded for quality of the writing; not for technical accuracy. However, the communication must be on point to be graded at all. That is, it must be responsive to the requirement. In other words, it must be helpful to the person or persons to whom it is addressed. A second review will be performed for all candidates that earn initial grades that are just below the 75-point cut-off.

On the Auditing and Accounting, Financial Accounting and Reporting, and Regulation sections, the multiple-choice questions account for 70% of the total score. The objective portions of the simulations account for 20% of the total score and the communication parts of the simulations account for 10% of the total score. Therefore, reasonable performance on the simulations is essential to obtaining a passing score on any one of these sections. The historical cumulative pass rates on all parts are of the exam are between 40 and 45%.

Multiple-Choice Testlets

The multiple-choice questions within each section are organized into three groups, which are referred to as testlets. Each multiple-choice testlet is comprised of approximately 30 multiplechoice questions. The multiple-choice testlets vary in overall difficulty. A testlet is labeled either "medium difficult" or "difficult" based on its makeup. A "difficult" testlet has a higher percentage of hard questions than a "medium difficult" testlet. Every candidate's first multiple-choice testlet in each section will be a "medium difficult" testlet. If a candidate scores well on the first testlet, he or she will receive a "difficult" second testlet. Candidates that do not perform well on the first testlet, receive a second "medium difficult" testlet. Because the scoring procedure takes the difficulty of the testlet into account, candidates are scored fairly regardless of the type of testlets they receive.

Simulations

Simulations are condensed case studies that are designed to test skills and knowledge that cannot effectively be tested with multiple-choice questions. Simulations generally begin with a scenario that provides the basis to perform a number of exercises. The exercises may involve completing spreadsheets or forms, selecting answers to objective questions, researching an issue, or completing a professional communication. While the requirements vary, every simulation will have both a research and a communication requirement. The simulations are the principal ways that practice skills are tested, especially communication and research.

COMPLETING SIMULATIONS

The simulations are presented in a Windows-based format that navigates similar to other programs that you have no doubt used. When the simulation is opened, it is presented with a series of tabs across the top. An example of the tabs from a simulation for the Auditing and Attestation section of the exam is illustrated below:

Certain of the tabs are informational in nature.

Others, the ones with a pencil logo, contain requirements that must be completed.

To navigate from tab to tab, you simply use the mouse to click on the desired tab.

Windows Functionality

As indicated above, the CPA Exam software works much like all Windows-based programs. Therefore, the more familiar you are with programs such as Microsoft Word and Excel, the easier it will be for you to use the exam software. The following is a summary of some of the functionality important to working simulations. To get more practice, you should review the AICPA tutorials and practice exams (www.cpa-exam.org) and the software included with this text.

The scroll bar allows you to view material in a document that is too large to fit on the screen. On the CPA Exam, the scroll bar will be active whenever all the material in a window will not fit on the screen. To scroll down, you simply click on the down arrow; the up arrow can be clicked on to move up the document.

When you have opened a tool or resource (e.g., spreadsheet, depreciation schedule, etc.) over an existing window, you may be able to resize the item by holding down the left mouse button while it is positioned on a spreadsheet corner. You can then drag the item to the desired size. You can always move the item by holding down the left mouse button on the item's title bar and moving it to the desired location. As with any other Windows-based program, the item may be closed by right clicking on the X in the title bar.

In some cases it will be useful or necessary to view two tabs at one time. Split screen functions allow you to split the screen horizontally (Split Horz) or vertically (Split Vert). If you split the screen horizontally, a complete set of new tabs will appear in the new windowpane and you will be defaulted to the Directions tab unless the windowpane you have open is using that tab. You may then select any tab except the one that you have open in the other windowpane. To adjust the size on the windowpanes, simply hold the left mouse button down while moving the borderline between the two windowpanes. You can use the scroll arrows to view the hidden portion of the window.

You should choose the horizontal or vertical split depending on the task being performed. The horizontal split usually will be more convenient because you can see the entire width of the window. However, in completing a research task, the vertical split may be easier to work with. To eliminate the split, you should right click on the Unsplit button.

The copy and paste buttons work like the same functions in other Windows-based programs. Items or cells that are selected can be copied by right clicking the Copy button, and pasted by right clicking the Paste button after the desired (highlighted) position has been selected. Splitting screens make copying and pasting easy.

Tools. Several tools are available in every simulation, including a scratch spreadsheet and a calculator. The scratch spreadsheet may be called up by left clicking on the Sheet button. The CPA exam spreadsheet functions much like an Excel spreadsheet. Titles, numbers or functions may be put in any blank cell. The size of the cells may be changed by holding the left mouse button down on the cell borderline and dragging it to the desired width or height.

As with an Excel spreadsheet, you can use a number of operators to perform calculations. The Help button may be used to call up the list of operators that can be used as illustrated below.

The spreadsheet also can accommodate a number of functions. They may also be called up using the Help button at the top of the screen, as illustrated below.

A calculator may be called up by right clicking on the Calculator button. This calculator works like others that you would be familiar with. However, at the bottom, the calculator has Copy/Paste function buttons that makes it easy to transfer the calculation to an answer box.

Simulation Screen Layout

As described above, simulations have multiple parts separated by computer tabs. Typically they begin with directions and situation tabs and continue with tabs requiring responses and a Resource tab. An example of simulation instructions is shown below.

Types of Responses

The responses required by the tabs of a simulation vary in their nature. Any of the following types of responses might be required on a simulation's parts:

Multiple selection

Drop-down selection

Numeric and monetary inputs

Formula answers

Check box response

Form completion

Research results

Written communication

The following screenshot illustrates a part that involves multiple selections:

[ILLUSTRATION OMITTED]

The screenshot below illustrates a tab that requires the candidate to select the response that represents a plausible explanation for the ratio changes using a drop-down menu.

The following screenshot illustrates a part that requires inputting amounts or formulas. The calculator tool may be used to compute the appropriate input amount.

The screenshot below illustrates a part that requires completion of a form.

In completing a Research tab, you will be required to search the professional literature or income tax code and transfer the relevant section to the answer area. To transfer the answer, you should use the Split Screen function with the Research tab open in one pane and the professional standards (or tax code) screen open in the other pane. You may search the literature using the standards (or code) table of contents or by performing a word search.

Once you find the appropriate section, you can highlight it as shown below.

Then you can use the Transfer to Answer button to transfer the paragraph to the answer area. Remember you must use the Transfer to Answer button; copy and paste will not work.

If you need to transfer an additional section you can do so in the same manner. Subsequently selected sections will be placed in the answer sheet right below the previously transferred section, as illustrated below.

In the regulation section you will sometimes be asked to transfer the appropriate citation to an income tax code section. To perform this task, you would simply highlight the appropriate section and use the Transfer to Answer button to transfer the citation to the answer sheet as illustrated below.

The written communications requirements of simulations will involve some real-world writing assignments that a CPA might have to perform, such as drafting a memorandum to a client explaining a tax or accounting issue, or a memorandum to the working papers addressing an accounting issue. Remember the communications are not graded for technical accuracy. However, they must be on point to be graded at all. Therefore, you should not devote a lot of time to considering the technical accuracy of your communication. As long as it is responsive to the requirement it will be graded for writing quality. The screenshot below illustrates a communication requirement for the Financial Accounting and Reporting section of the CPA exam.

ORGANIZATION OF THE BOOK

The remainder of the book helps you develop the skills that will make you successful in mastering simulations on the CPA exam. Chapter 2 provides vital strategies for approaching the research requirements of CPA exam simulations. In Chapter 3 you will be provided with a detailed description of how to improve your written communications to maximize your score on those requirements of all sections of the exam. Chapters 4, 5, and 6 provide detailed guidance on how to complete Financial Accounting and Reporting, Regulation, and Auditing and Attestation simulations, respectively.

IMPORTANT NOTICE

Candidates are responsible for reviewing the Uniform CPA Examination tutorial and sample tests. Thorough familiarity with the examination's functionality, format, and directions is required before candidates report to test centers. Failure to follow the directions provided in the tutorial and sample tests, including the directions on how to respond, may adversely affect candidate scores.

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Excerpted from "Wiley CPA Exam" by O. Ray Whittington. Copyright (C) by O. Ray Whittington. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher. Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.