CPA Exam

The CPA Exam is a comprehensive assessment designed to evaluate the knowledge and skills necessary for a career in accounting.

Structure and Format of the CPA ExamCore Accounting PrinciplesEthics and Professional Responsibility
Auditing Procedures and Risk AssessmentAdvanced Financial ReportingFederal Taxation and Business Law
Applying Accounting Concepts in PracticeTax Planning and ComplianceEthical Decision-Making in Accounting
Effective Study PlanningMastering Multiple-Choice and SimulationsTest Day Preparation and Mindset
Structure and Format...Core Accounting Prin...Ethics and Professio...Auditing Procedures ...Advanced Financial R...Federal Taxation and...Applying Accounting ...Tax Planning and Com...Ethical Decision-Mak...Effective Study Plan...Mastering Multiple-C...Test Day Preparation...
Basic Concepts

Core Accounting Principles

What Are Core Accounting Principles?

Core accounting principles are the fundamental concepts that guide the preparation and presentation of financial statements. These include principles such as the accrual basis, consistency, conservatism, and the matching principle.

Key Principles

  • Accrual Basis: Revenues and expenses are recognized when they occur, not just when cash is exchanged.
  • Consistency: Accounting methods should be applied consistently over time.
  • Conservatism: Anticipate potential losses, but do not anticipate gains.
  • Matching Principle: Expenses should be matched to the revenues they generate.

Importance for the CPA Exam

These principles form the foundation for questions in all exam sections, especially FAR. Mastery is essential for interpreting financial statements and solving case-based simulations.

Real-World Relevance

Accountants use these principles to ensure financial reports are accurate, reliable, and comparable across periods and organizations.

Examples

  • An accountant recognizes revenue when a service is performed, even if payment arrives later.

  • A company applies the same depreciation method each year to remain consistent.

In a Nutshell

Core accounting principles guide how financial statements are prepared and interpreted.

Key Terms

Accrual Basis
An accounting method that records revenues and expenses when they are earned or incurred.
Matching Principle
The concept of recording expenses in the same period as related revenues.
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Ethics and Professional Responsibility