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. For federal tax purposes, a partnership's income is taxed at which level? → Only at the partner level based on each partner's distributive share
4. What does the current ratio measure? → The ability to meet short-term obligations with short-term assets
5. Which GASB concept requires governments to report on their fiscal accountability by using the modified accrual basis in fund statements? → Fiscal accountability
6. What does the balance sheet show? → Assets, liabilities, and equity.
7. The alternative minimum tax (AMT) for corporations was reinstated by which legislation for tax years beginning after December 31, 2022? → Inflation Reduction Act
8. What is budget variance analysis in CPA financial management? → Comparing actual spending against budgeted amounts to explain differences
9. Which condition would most likely cause an auditor to assess control risk at the maximum level? → The entity lacks effective internal controls over a financial reporting process
10. Under GASB standards, infrastructure assets such as roads and bridges may be reported using the: → Either the depreciation method or the modified approach
11. In comparable company analysis used within financial modeling, which multiple is most commonly used for capital-structure-neutral comparisons? → EV/EBITDA multiple
12. What is a strategic plan? → A long-term plan that guides an organization toward its vision and mission.
13. Under the Uniform Commercial Code (UCC), a firm offer made by a merchant is irrevocable for up to how long without consideration? → 3 months
14. In a rising interest rate environment, which bond characteristic provides the greatest protection against price decline? → Short maturity and high coupon
15. What is a near-miss report in CPA practice? → Documentation of an event that could have caused harm but did not
16. What are consequences of non-compliance in CPA practice? → Fines, license revocation, legal liability, and reputation damage
17. What is a budget variance? → The difference between budgeted costs and actual costs.
18. In an LBO (leveraged buyout) model, what is the primary metric used to assess whether the deal generates an acceptable return for the private equity sponsor? → Internal rate of return (IRR) and multiple of invested capital (MOIC)
19. Under GASB standards, what is the primary measurement focus for governmental fund financial statements? → Current financial resources
20. What is depreciation? → The allocation of an asset's cost over time.
21. A taxpayer sells a capital asset held for 14 months at a gain. How is this gain classified? → Long-term capital gain
22. What is the primary goal of regulatory compliance in CPA practice? → Ensuring adherence to laws and standards governing professional practice
23. What role does feedback play in CPA professional development? → Identifying strengths and improvement areas to guide growth
24. What is the role of a financial analyst in strategic management? → To analyze financial data and provide insights for business decisions.
25. A general partnership is formed when: → Two or more persons agree to carry on a business for profit as co-owners
26. For purposes of the home office deduction, which method allows taxpayers to deduct $5 per square foot of the home office up to 300 square feet? → Simplified method
27. Under the AICPA's Statements on Standards for Tax Services (SSTSs), when may a CPA rely on information provided by a client without verification? → When the information appears reasonable and the CPA has no reason to doubt it
28. 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
29. In IT systems, which process ensures data remains accurate, consistent, and unaltered during storage and transmission? → Data integrity
30. In a financial model, 'capex intensity' is best described as: → Capital expenditures as a percentage of revenue