CPA Cheat Sheet 2026

The 30 highest-yield CPA facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. Which business valuation method estimates value based on expected future cash flows discounted to present value? → Discounted cash flow (DCF) method
2. What is the primary purpose of an engagement letter in an audit? → To establish the terms and conditions of the audit engagement
3. What does the balance sheet show? → Assets, liabilities, and equity.
4. What is budget variance analysis in CPA financial management? → Comparing actual spending against budgeted amounts to explain differences
5. What is a strategic plan? → A long-term plan that guides an organization toward its vision and mission.
6. What is a near-miss report in CPA practice? → Documentation of an event that could have caused harm but did not
7. What are consequences of non-compliance in CPA practice? → Fines, license revocation, legal liability, and reputation damage
8. What is a budget variance? → The difference between budgeted costs and actual costs.
9. Under GASB standards, what is the primary measurement focus for governmental fund financial statements? → Current financial resources
10. What is depreciation? → The allocation of an asset's cost over time.
11. What is the primary goal of regulatory compliance in CPA practice? → Ensuring adherence to laws and standards governing professional practice
12. What role does feedback play in CPA professional development? → Identifying strengths and improvement areas to guide growth
13. What is the role of a financial analyst in strategic management? → To analyze financial data and provide insights for business decisions.
14. A CPA discovers during an audit that a client has committed an immaterial illegal act. What is the CPA's primary obligation? → Inform the client's management or those charged with governance
15. In IT systems, which process ensures data remains accurate, consistent, and unaltered during storage and transmission? → Data integrity
16. The master budget is BEST described as: → A comprehensive set of budgets culminating in pro forma financial statements
17. What is active listening in CPA practice? → Fully concentrating on the speaker and providing thoughtful feedback
18. What is a capital gain? → The increase in an asset’s market price, taxed upon sale.
19. When using net present value (NPV) for capital budgeting, a project should be accepted if: → NPV is greater than zero
20. Which organizational structure groups employees by function, such as marketing, finance, and operations? → Functional structure
21. What is trend analysis in CPA reporting? → Examining data over time to identify patterns and changes
22. What is budget variance analysis in CPA financial management? → Comparing actual spending against budgeted amounts to explain differences
23. Which statement best describes a CPA's responsibility when a client asks them to act as an expert witness? → The CPA must provide objective testimony based on professional expertise
24. A CPA who prepares a tax return using information provided by the client without independent verification is applying the concept of: → Reasonable reliance on client representations
25. Which of the following costs would be included in a product's cost under absorption costing but NOT under variable costing? → Fixed manufacturing overhead
26. What type of assurance engagement provides a conclusion in the form 'nothing has come to our attention' (negative assurance)? → Review engagement
27. Which procedure provides the highest level of assurance about the existence of accounts receivable? → Sending positive confirmation requests to customers
28. What is the purpose of management accounting? → To assist managers in making informed business decisions.
29. Under the COSO framework, which component addresses the entity's values, ethical standards, and the tone set by management? → Control environment
30. A sole proprietorship's primary disadvantage compared to a corporation is: → Unlimited personal liability