Home › Study Guides › CPA Exam Practice Questions: 10 Samples With Full Rationales
Ten worked questions across AUD, FAR and REG, plus the section format and a five-part practice rotation.
Good CPA exam practice questions do more than test recall. They force the same two-step reasoning the real exam demands: apply a rule, then apply it to a messy fact pattern. What follows is ten original questions spanning the three Core sections, each with a full rationale explaining why the right answer is right and why the traps are traps, followed by the current exam format and a system for turning a practice-question habit into a passing score.
On format, every candidate sits three mandatory Core sections plus one Discipline section of their choice. Auditing and Attestation carries 78 multiple-choice questions and seven task-based simulations. Financial Accounting and Reporting carries 50 multiple-choice questions and seven simulations. Regulation carries 72 multiple-choice questions and eight simulations. Among the Disciplines, Business Analysis and Reporting carries 50 and seven, Information Systems and Controls carries 82 and six, and Tax Compliance and Planning carries 68 and seven. Each section runs four hours.
A few things are worth knowing before you start practising. The passing score is 75, scaled on a nought-to-99 range rather than a percentage of questions answered correctly. Scoring weight is roughly half multiple-choice and half simulations on every section except Information Systems and Controls, where the multiple-choice portion carries more. Core sections are open for continuous testing year-round, while Discipline sections run in a one-month testing window at the start of each quarter, so plan your Discipline date around that window rather than around when you feel ready. You only pick one Discipline, and most candidates choose by career track: Business Analysis leans toward audit and valuation-heavy roles, Tax Compliance toward tax, and Information Systems toward systems and controls. And exam fees run somewhere in the region of a few hundred dollars per section depending on your state board, which sets its own numbers on top of the recommended fee, so a full four-section pass runs into four figures before any retakes. Confirm your exact fee with your board.
Here are ten questions written in the current question style, mixing straight recall with multi-step application. Give yourself about a minute and a half per question to simulate multiple-choice pacing.
First, on revenue recognition. A company contracts to deliver equipment plus one year of unspecified software updates for a single price of 120,000 dollars, where the equipment has a standalone selling price of 100,000 and the updates 20,000. At the point the equipment is delivered, 100,000 dollars of revenue is recognised. This is a two-performance-obligation contract: the equipment delivered at a point in time, and the updates as a stand-ready obligation recognised over the year. The transaction price is allocated on relative standalone selling prices, so 100,000 goes to the equipment and is recognised on delivery, with the remaining 20,000 recognised rateably over the update period. Recognising the full 120,000 ignores the second obligation, and treating a single price as meaning a single obligation is something the standard explicitly rejects.
Second, on bonds. A company issues 500,000 dollars of five-year bonds with a stated rate of six per cent when the market rate is eight, so the bonds are issued at a discount. Interest expense in year one is higher than the cash interest paid, because effective interest is carrying value times the market rate. When bonds are issued at a discount the carrying value sits below face value, but expense under the effective interest method is carrying value times the market rate, which is always higher than cash interest, being face value times the stated rate, for a discount bond. The difference amortises the discount and increases carrying value each period. Getting the direction backwards is the most common trap on bond amortisation questions, mixing up how discounts and premiums each affect the expense-against-cash relationship.
Third, on leases. A lessee enters a four-year lease for equipment with a six-year useful life, with no ownership transfer, no purchase option, and a present value of lease payments equal to seventy per cent of fair value. This is an operating lease. None of the finance lease criteria are met: no transfer, no option, a lease term that is not a major part of remaining economic life at four years of six, or about sixty-seven per cent, below the roughly seventy-five per cent guideline, and seventy per cent present value, below the roughly ninety per cent threshold. With none of the five criteria triggered it defaults to operating. Sales-type and direct financing are lessor classifications rather than lessee ones, which is a fast way to eliminate two choices before running any tests.
Fourth, on audit evidence. Evaluating evidence for the existence of accounts receivable, confirming balances directly with customers provides the strongest evidence. External confirmation is generally strongest because it comes from an independent third party outside the client's control. Client-prepared schedules and management inquiry are internally generated and carry higher risk of bias or error, and recalculating the allowance tests valuation rather than existence. Matching the procedure to the specific assertion being tested, whether existence, completeness, valuation or rights, is one of the most heavily tested skills in auditing.
Fifth, on internal control. A controller who both initiates wire transfers and reconciles the bank statement is a segregation-of-duties deficiency. One person holding both custody and execution, meaning initiating transfers, and record-keeping and reconciliation over the same asset removes the built-in check that catches errors or fraud. Segregation of duties sits inside the broader control activities component of the framework, but the exam tests it as its own recognisable pattern, so look for any answer describing one person controlling two of the three functions of authorisation, custody and record-keeping over the same transaction cycle.
Sixth, on audit opinions. Where financial statements are materially misstated by a departure from generally accepted accounting principles, but the misstatement is not so pervasive that it undermines the statements as a whole, the auditor issues a qualified opinion. This is the exact line the exam draws: material but not pervasive gives a qualified opinion, while material and pervasive gives an adverse one. A disclaimer is reserved for scope limitations severe enough that the auditor cannot form an opinion at all, rather than for known misstatements. That two-by-two of material against pervasive is tested from multiple angles.
Seventh, on capital losses. A single taxpayer with 8,000 dollars of net capital losses and no capital gains deducts 3,000 this year, with 5,000 carrying forward indefinitely. Individuals may deduct up to 3,000 dollars, or 1,500 if married filing separately, of net capital losses against ordinary income per year. The excess is not lost: it carries forward indefinitely, retaining its character as short-term or long-term. The common wrong answer is that the excess disappears, because test-takers remember the cap but forget the carryforward.
Eighth, on S corporation basis. Where a shareholder's stock basis is 2,000 dollars and the corporation passes through a 6,000 dollar loss, the excess 4,000 is suspended and carried forward until the shareholder has sufficient basis. Loss deductions are limited to stock basis plus debt basis, meaning loans the shareholder personally made to the corporation, and once basis hits zero any additional loss is suspended rather than lost, becoming deductible in a future year once basis is restored through contributions, loans or income allocations. The distractor about deducting against debt basis only describes the ordering rules but misstates the outcome.
Ninth, on firm offers. Where a merchant sends another merchant a signed written offer stating it will remain open for sixty days, with no consideration given, the offer is irrevocable under the Uniform Commercial Code's firm offer rule, up to a three-month maximum. That rule is a specific exception to the general contract-law requirement that option contracts need consideration: a merchant's signed written promise to hold an offer open is enforceable without it, but only up to three months. Sixty days sits within the cap, so the offer holds for the full period; had the stated period exceeded three months it would be capped rather than enforced as written. Applying the general common-law rule where the Code's exception controls is the trap.
Tenth, on professional responsibility. Where a certified public accountant discovers after issuing an audit report that a material subsequent event occurred which the client refuses to disclose or correct, the right course is to notify the client that the report can no longer be associated with the financial statements and take steps to prevent further reliance. That obligation extends, if necessary, to notifying regulators or third parties known to be relying on the statements. Doing nothing or waiting leaves misleading statements in circulation with the auditor's name attached, and amending unilaterally without notifying the client skips required steps in the standard's sequence.
On building a practice rotation, five things matter. Rotate by section rather than randomly, working each section in blocks until you are consistently hitting seventy per cent per topic, because mixing sections too early tests whether you can context-switch rather than whether you know the material. Weight practice toward simulations rather than only multiple-choice, since simulations are worth roughly half your score on every section but get less practice time because they take longer to write and grade; do not let convenience skew your preparation. Track accuracy by topic rather than only overall, because a seventy-five per cent overall score can hide a forty per cent score on one heavily weighted topic, so review your platform's topic breakdown weekly and re-drill weak spots specifically. Use full mocks only after topic scores stabilise, because a four-hour timed mock under exam conditions is a readiness check rather than a teaching tool, and taken too early it mostly tells you what you already know you do not know. And review every miss with a reason code, sorting wrong answers into not knowing the rule, knowing it but misapplying it to the fact pattern, or a careless timing error; the review pass is where scores actually move, not the act of answering more questions.
CoStudy's CPA question banks cover all three Core sections and all three Discipline options, with rationales written for every question, meaning not just which letter is correct but why the other three are wrong. The first ten questions of any section's bank are free with no signup, so you can check the question quality and rationale depth before spending anything. One honest note: this is a practice-question supplement rather than a full review course. It does not include video lectures, adaptive study planning or a pass guarantee, so if you have not been through the material yet, pair it with a review course or your accounting coursework. It is built for drilling and retention after you have learned the concept, not for learning it cold.
A few questions come up repeatedly. On volume, most candidates who pass comfortably work through several thousand questions per section across their full preparation, including at least two or three full-length timed mocks per section, though rigorous review of fifteen hundred questions beats four thousand answered on autopilot. On readiness, consistent seventy-five per cent or better on fresh unseen questions by topic, plus a passing score on at least one full-length timed mock. On whether practice questions match real difficulty, that varies a lot between free samples and paid banks, so judge any source by whether it includes multi-step application rather than only definition recall, whether every question carries a full rationale, and whether the topic mix matches the section's actual blueprint weighting. On Discipline sections, you do need different practice for each, since the three test different content and you only sit one, so pick early based on career track and focus there. And on whether practice questions can replace a full review course, not if you are learning the material for the first time: they test and reinforce knowledge rather than teaching it from scratch, and work best layered on top of a course or coursework.
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