Preparing for the CPA exam requires hundreds of hours of study, as well as a financial investment. Making smart decisions about review courses and other resources can save time and increase your chances of passing the exam. Use these tips to decide on a plan of study.
The two building blocks
Financial accounting and managerial accounting courses provide the foundation for all of the other accounting knowledge you need to pass the exam. If you’re not clear about the material presented in these courses, you’ll really struggle with more advanced concepts.
As an example, financial accounting covers debit and credits, along with normal account balances and double-entry accounting. I’ve seen CPA candidates struggle with posting accounting entries because they are not clear about these concepts.
For starters, the balance sheet formula is (assets = liabilities + equity). To keep this equation in balance, we increase assets with a debit, while liability and equity accounts are increased with a credit. It’s possible to both increase and reduce an asset account, and keep the balance sheet equation in balance. If you pay cash for a truck, for example, you debit (increase) a truck asset account and credit (decrease) the cash asset account. If you don’t understand these relationships, you can’t move on to more complex topics.
If you took financial accounting and managerial accounting courses several years ago, or if your instructor was not effective, you may not have a good accounting foundation. You should consider taking a CPA review course, so that you can reinforce your knowledge about these topics.
Over the years, many people have asked me if the time and expense of taking a CPA review course is worth it. This blog post reviews the three most popular CPA review courses, and you’ll notice that the cost may be over $3,000.
Generally, I think that taking a course is worth the cost because of the huge benefit of gaining your CPA designation. I took the Becker CPA review years ago, and I continue to recommend Becker to CPA candidates. Even if a person is studying a review book and is getting 80% on the practice exams, I still recommend Becker because it helps even the best student work problems faster.
The review courses have improved their product over the years, so that you can learn their content in a variety of ways, including video, audio, notes, and index cards. However, nothing replaces the learning that happens in a live class experience. You’re more engaged and focused in a classroom with other people, and you also learn as you listen to questions from other students. If things just aren’t clicking as you take a review course on your own, attend a live class. The instructions can really add value.
As both an accounting and finance guy, I’ve noticed that many finance topics on the exam are not clearly explained by accountants. The two areas of study are so different that it’s tough to be an expert in both. So, if you’re fuzzy on some of the finance concepts, reach out to someone who works in the finance profession. Pension accounting, for example, is a particularly tough area on the CPA exam. Find a financial professional who manages money for pension plans and ask them for help with pension assets and liabilities. It takes some time, but asking for help can really pay off.
You have many different resources to choose from as you study for the CPA exam. Use these tips to plan your study and pass the exam.