These CPA exam flashcards drill the rules and formulas that decide FAR, AUD and REG questions, plus the three disciplines. Every card is written against the AICPA blueprint in force for 2026, and none of it is lifted from a commercial review course.
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What the CPA Flashcards Cover
Four sections stand between a candidate and the licence. Three are fixed, the fourth is a pick.
AUDAuditing and attestation. Core, no way around it.
FARFinancial accounting and reporting. Core, the big one.
REGTaxation and regulation. Core, required.
One disciplineBAR, ISC or TCP. Pick one; all three earn the same licence.
Why Some Older CPA Flashcards Feel Off
The exam moved to this core-plus-discipline structure under CPA Evolution, and the old Business Environment and Concepts section, BEC, was retired with the change. The material did not vanish: most of it was folded into the disciplines, and some landed in FAR.
That is the quiet problem with recycled decks. A set written before the change still drills BEC as if it were on the schedule, and still tests topics that have since moved or dropped off the blueprint entirely. Every card here is written against the blueprint in force for 2026.
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FAR, Financial Accounting and Reporting
Accounts receivable turnover
Net credit sales ÷ average net accounts receivable
Times interest earned
EBIT ÷ interest expense
Double declining balance
Carrying amount × (2 ÷ useful life). Salvage is excluded from the rate, but depreciation stops once carrying amount reaches salvage.
Return on assets
Net income ÷ average total assets
Net realizable value
Estimated selling price in the ordinary course of business − reasonably predictable costs of completion, disposal and transportation
Where do debt issuance costs go?
A direct deduction from the carrying amount of the liability, not an asset. Exception: line-of-credit and revolving arrangements may be deferred as an asset.
Taxable vs deductible temporary differences
Taxable temporary differences create deferred tax LIABILITIES. Deductible temporary differences create deferred tax ASSETS.
Not-for-profit net asset classes
Two only: with donor restrictions, and without donor restrictions.
Contract asset vs receivable vs contract liability
A receivable is an unconditional right to consideration, only time has to pass. A contract asset is a right still conditioned on something besides time, like finishing another obligation. A contract liability is consideration received before performance.
COGS
Beginning inventory + purchases − ending inventory
Treasury stock, cost method: reissue above cost
The excess goes to APIC from treasury stock. Reissue below cost draws down that APIC first, then retained earnings.
Revenue over time: the three ways in
Any one: the customer receives and consumes the benefit as the entity performs; the work creates or enhances an asset the customer controls; or the asset has no alternative use AND the entity has an enforceable right to payment for work to date. Otherwise revenue waits for the point of transfer.
Governmental measurement focus and basis
Government-wide, proprietary and fiduciary: economic resources / accrual. Governmental funds: current financial resources / modified accrual.
Basic EPS
(Net income − preferred dividends) ÷ weighted average common shares outstanding
Working capital
Current assets − current liabilities. A stock measure of short-term cushion, not a ratio.
Cash ratio
(Cash + cash equivalents) ÷ current liabilities. Stricter than the current or quick ratio because receivables and inventory are out.
Straight-line amount per period
(Cost − salvage) ÷ useful life. Same amount each period unless a prospective change in estimate hits.
Sales per dollar of assets
Net sales ÷ average total assets. How many sales dollars each dollar of assets produced.
Return on equity
Net income ÷ average stockholders’ equity. DuPont splits it into margin × turnover × equity multiplier.
Where does interest paid sit on the statement of cash flows (US GAAP)?
Operating outflow under US GAAP, even though it is a financing cost. Dividends paid are financing.
Asset retirement obligation: initial measurement
Record the ARO at fair value (usually PV of the retirement cost) and capitalize the same amount to the related long-lived asset.
Weighted-average shares for basic EPS
Shares outstanding weighted for time. Stock splits and stock dividends recast all periods presented as if they had always been outstanding.
Factoring without recourse
Treat as a sale if control has transferred. Remove the receivables; any holdback or fee adjusts the gain or loss.
Nonmonetary exchange that lacks commercial substance
No gain is recognized unless boot is received. Boot received triggers a proportional gain; losses are recognized in full.
Principal or agent: who reports gross revenue?
The principal controls the good or service before transfer and reports gross revenue. The agent arranges for another party to provide it and reports only its fee. Indicators of control: primary responsibility for fulfillment, inventory risk, and discretion in setting price.
Gift card breakage
Amounts expected to go unredeemed are recognized as revenue in proportion to the pattern of actual redemptions, not when the card expires. If no reliable estimate exists, wait until redemption becomes remote.
Whose inventory is it? FOB and consignment
FOB shipping point: the buyer owns it once it leaves the dock. FOB destination: the seller owns it until delivery. Consigned goods stay in the CONSIGNOR’s inventory no matter whose shelf they sit on.
FIFO vs LIFO when prices are rising
FIFO shows higher ending inventory and higher net income. LIFO shows higher COGS, lower income and lower current taxes. A company using LIFO for tax must also use it for book (the conformity rule).
Sales with a right of return
Recognize revenue only for goods NOT expected back. Book a refund liability for expected returns and a return asset for the right to recover the goods, measured at former carrying amount less recovery costs.
Cash equivalents and restricted cash
Cash equivalents are short-term, highly liquid investments with ORIGINAL maturities of three months or less from acquisition. Restricted cash is presented separately, but the cash flow statement reconciles the total of cash plus equivalents plus restricted amounts.
AUD, Auditing and Attestation
The engagement letter: what it has to nail down
A written understanding with the client covering the objective and scope, the auditor’s and management’s responsibilities, inherent limitations, the reporting framework, and expected report form. Agreeing terms in writing is required, not best practice.
Which control can management always override?
Any of them. Management override of controls is a risk present in every audit and is why the standards require specific procedures addressing it.
Substantive procedures vs tests of controls
Tests of controls assess whether a control operates effectively. Substantive procedures detect material misstatement directly. Substantive procedures are required for all relevant assertions of material classes regardless of control effectiveness.
Positive vs negative confirmation
Positive asks the recipient to respond either way, and is used where risk is higher. Negative asks for a response only on disagreement, and is appropriate only where risk is low, many small balances exist, and no exceptions are expected.
Fraud triangle
Incentive or pressure, opportunity, and rationalization. Standards require the team to discuss how and where fraud could arise, including management override.
COSO’s five components
Control environment, risk assessment, control activities, information and communication, and monitoring. All five must be present and functioning.
Significant deficiency vs material weakness
Both are more than a control deficiency. A material weakness is a reasonable possibility that a material misstatement will not be prevented or detected on a timely basis. A significant deficiency is less severe, still worth those charged with governance’s attention.
Blank confirmation forms: what makes them stricter?
The recipient fills in the balance rather than agreeing to a stated one, so a lazy sign-off cannot slip through. The trade is a lower response rate and more follow-up work on nonresponses.
Who owns the workpapers, and how long do they live?
The auditor owns the audit documentation, subject to confidentiality. Retain at least five years from the report release date for nonissuers, seven under PCAOB rules for issuers.
How soon must the audit file be locked down?
Assemble the final file within 60 days of the report release date for nonissuers, 45 days under PCAOB standards. After that, nothing may be deleted; late additions must document what was added, when and why.
What date goes on the audit report?
No earlier than the date the auditor has obtained sufficient appropriate evidence, including evidence that the statements, with disclosures, are complete and management has taken responsibility for them.
Dual dating
When one subsequent event is disclosed after fieldwork, the auditor may date the report for that note alone (‘January 30, except Note 12, February 14’). Responsibility for everything else stays frozen at the original date; a fully redated report extends it.
Facts discovered AFTER the report was issued
If the information existed at the report date and would have mattered, and people are still relying on the statements: discuss with management, determine the effect, and see that users are notified. If management refuses, notify regulators and known users of the report’s unreliability.
An omitted procedure surfaces after issuance
First assess whether other procedures compensated. If the omission impairs support for the opinion and the report is still being relied on, promptly perform the omitted procedure or an alternative. This differs from subsequent-facts cases: nothing was wrong with the statements yet.
Opening balances in a first-year audit
Obtain evidence that opening balances are free of misstatements affecting the current period: review the predecessor’s workpapers, and test current-year evidence that also proves openings, like collecting beginning receivables.
Where are analytical procedures REQUIRED?
Twice: as risk assessment procedures during planning, and near the end as an overall review of whether the statements make sense. Using them as substantive evidence in the middle is allowed, never required.
Testing at an interim date
The gap to year end must be covered. Extend conclusions with roll-forward procedures on the remaining period, and the higher the assessed risk, the closer to year end the substantive work belongs.
Monetary unit sampling in one card
Each dollar is a sampling unit, so bigger balances are automatically more likely to be selected. Efficient for testing overstatement with few expected errors; a poor fit for hunting understatement or zero balances.
The sample is done. Now what does the error mean?
Project the sample misstatement to the population, compare the projected amount plus an allowance for sampling risk with tolerable misstatement, and consider the qualitative cause: an error from fraud outweighs its dollar size.
IT general controls vs application controls
General controls cover the environment: access security, program change management, and computer operations. Application controls live inside a process, like edit checks and matching. If general controls fail, automated application controls cannot be relied on.
Sales cutoff testing
Take shipping documents from just before and after year end and trace both directions: shipments before year end into this year’s sales, shipments after into next year’s. It targets the occurrence and completeness of revenue around the date that matters.
The search for unrecorded liabilities
Examine cash disbursements AFTER year end and unmatched vendor invoices, asking what the payment was for and when the obligation arose. A January payment for December services belongs in December’s payables.
The fraud risk you must presume
Improper revenue recognition. The auditor presumes it is a fraud risk in every audit; if the presumption is rebutted as not applicable, the reasoning must be documented.
Using the client’s internal auditors
Assess their competence and objectivity first. They may provide direct assistance under supervision, but the external auditor cannot share the opinion, cannot delegate significant judgments, and must do more of the work where risk is higher.
The rest of the annual report: your job?
Read the other information and consider whether it is materially inconsistent with the statements or with what you learned in the audit. No opinion is given on it, but an uncorrected material inconsistency has to be addressed in the report or by withdrawal.
REG, Taxation and Regulation
Charitable contribution AGI ceilings
Cash gifts to public charities are deductible up to 60% of AGI; long-term appreciated property at fair value up to 30%. Excess carries forward five years, keeping its percentage category.
Section 1231: the netting result
Net §1231 gains are long-term capital gain; net §1231 losses are ordinary. The most favorable combination in the Code. Two rules bite first: depreciation recapture converts gain to ordinary income before anything is netted, and the five-year lookback recharacterizes gain as ordinary to the extent of prior unrecaptured §1231 losses.
Standard deduction vs itemizing
Take the greater. Itemized deductions include qualified medical above the AGI floor, state and local taxes subject to the cap, qualified home mortgage interest, charitable contributions, and casualty losses in federally declared disaster areas.
UCC: when does risk of loss pass?
It follows the shipping terms and the parties’ agreement, not title. Shipment contract, on delivery to the carrier. Destination contract, on tender at the destination.
When is a contract required to be in writing?
MY LEGS: Marriage, Year (cannot be performed within one), Land, Executor (promise to pay estate debts from personal funds), Goods of $500 or more under UCC §2-201, Surety (promise to answer for another’s debt).
Section 199A QBI: the headline limit
20% of qualified business income from a pass-through, with a wage/property limitation that phases in above threshold taxable income, and specified-service trades restricted at those same thresholds.
Wash sale rule
Disallow the loss if substantially identical stock or securities are bought within 30 days before or after the sale. Add the disallowed loss to the basis of the new shares.
MACRS personal property: half-year convention default
One-half year of depreciation in the year placed in service and the year of disposal, unless the mid-quarter convention is triggered (more than 40% of personal property placed in service in the last quarter).
Substantial authority vs reasonable basis
Substantial authority is the higher of the two common return-position standards (~40% likelihood). Reasonable basis is lower (~20%) and generally needs disclosure to avoid preparer penalties.
Self-employment tax mechanics
Net self-employment earnings times 92.35% is the base. The combined rate applies up to the Social Security wage base, with the Medicare piece continuing above it. Half of the self-employment tax is deductible in arriving at AGI.
Estimated tax safe harbors
No underpayment penalty if payments cover 90% of the current year’s tax or 100% of last year’s (110% when prior-year AGI exceeded $150,000), paid evenly through the year.
Failure to file vs failure to pay
Failure to file runs 5% of unpaid tax per month up to 25%; failure to pay runs 0.5% per month up to 25%. When both apply in a month, the file penalty is reduced by the pay penalty. Filing on time even without paying avoids the expensive one.
The accuracy-related penalty
20% of the underpayment for negligence or a substantial understatement, which for individuals means exceeding the greater of 10% of the correct tax or $5,000. Substantial authority, or reasonable basis plus disclosure, defends the position.
Who may use the cash method?
Most individuals and small businesses. C corporations and partnerships with a C corporation partner qualify only by meeting the average-gross-receipts test over the prior three years. Tax shelters never qualify; inventory-heavy taxpayers may still need accrual for purchases and sales.
Net operating losses now
Post-2017 NOLs carry forward indefinitely with no general carryback, and the deduction is limited to 80% of taxable income in the carryforward year. Pre-2018 NOLs keep their old 20-year, 100% rules.
Selling a principal residence: §121
Exclude up to $250,000 of gain ($500,000 joint) if you owned AND used the home as a principal residence for two of the last five years. Available once every two years; depreciation claimed after May 1997 is not excludable.
AOTC vs Lifetime Learning Credit
American Opportunity: per STUDENT, first four years of postsecondary, up to $2,500 (100% of the first $2,000, 25% of the next $2,000), 40% refundable. Lifetime Learning: per RETURN, any coursework including graduate, up to $2,000, nonrefundable.
Qualifying child vs qualifying relative
Child: relationship, age (under 19, or under 24 and a full-time student), same principal home over half the year, and the child did not provide over half their own support. Relative: gross-income ceiling plus the taxpayer providing over half the person’s support.
Partnership distributions: current vs liquidating
Current: reduce outside basis; gain only when CASH received exceeds basis, and property takes the lower of its inside basis or remaining outside basis. Liquidating: the partner’s entire remaining outside basis lands on the property received.
Guaranteed payments
Payments to a partner determined without regard to partnership income, for services or capital. Ordinary income and self-employment income to the partner, deductible by the partnership. They do not run through the profit-sharing ratios.
Corporate charitable deduction limit
10% of taxable income computed before the charitable deduction, the dividends-received deduction, and certain loss carrybacks. Excess carries forward five years.
§1244 small business stock loss
An ORIGINAL holder’s loss on qualifying small business corporation stock is ordinary, up to $50,000 ($100,000 joint) per year; the excess is capital. It rewards the founder, not a later buyer of the shares.
§1202 qualified small business stock
Gain on original-issue C corporation stock in an active qualified business can be excluded after a multi-year holding period, capped at the greater of a fixed dollar ceiling or ten times basis. S corporation stock never qualifies.
Secured transactions: attachment vs perfection
Attachment makes the interest enforceable against the DEBTOR: value given, debtor rights in the collateral, and an authenticated security agreement (or possession). Perfection ranks it against THIRD PARTIES, usually by filing; a PMSI in consumer goods perfects automatically.
Holder in due course
Take a NEGOTIABLE instrument for value, in good faith, without notice of defenses or dishonor. An HDC takes free of personal defenses (failure of consideration, ordinary fraud) but never free of real defenses like forgery, material alteration, infancy or discharge in bankruptcy.
BAR, Business Analysis and Reporting
NPV vs IRR
NPV discounts at the required rate and accepts positive projects; IRR finds the rate where NPV is zero. When they rank mutually exclusive projects differently (size or cash-flow timing), trust NPV: it assumes reinvestment at the required rate, not at the IRR itself.
The after-tax cost of debt in WACC
Multiply the borrowing rate by one minus the tax rate, because interest is deductible. Equity gets no such shield, which is one reason debt looks cheaper in the weighted average cost of capital until leverage risk catches up.
Breakeven and contribution margin
Contribution margin is price minus variable cost per unit. Breakeven units equal fixed costs divided by contribution margin per unit; target-profit units add the profit to the numerator. In dollars, divide by the contribution margin RATIO.
Direct materials variances
Price variance: actual quantity times (actual price minus standard price), owned by purchasing. Quantity variance: standard price times (actual quantity used minus standard quantity allowed), owned by production. Isolate price at purchase, not at use.
Translation vs remeasurement
Functional currency is the foreign currency: TRANSLATE at current rates and park the adjustment in OCI. Functional currency is the reporting currency: REMEASURE with the temporal method (monetary at current, nonmonetary at historical) and the gain or loss hits income.
Fair value hedge vs cash flow hedge
Fair value hedge: hedging a recognized asset, liability or firm commitment; gains and losses go to EARNINGS along with the hedged item. Cash flow hedge: hedging a forecasted transaction; the effective portion sits in OCI and reclassifies when the transaction affects income.
Goodwill impairment testing
Optional qualitative screen, then one quantitative step: compare the reporting unit’s fair value with its carrying amount. Impairment equals the shortfall, capped at the goodwill balance. There is no recovery write-up later.
ISC, Information Systems and Controls
RPO vs RTO
Recovery point objective: how much DATA you can afford to lose, which drives backup frequency. Recovery time objective: how long you can afford to be DOWN, which drives failover design. A short RPO with a long RTO means little lost data but a slow return.
What is a SOC 2 report actually about?
A service organization’s controls relevant to security, availability, processing integrity, confidentiality and/or privacy (Trust Services Criteria). It is not an opinion on the user entity’s financial statements.
Full, incremental and differential backups
Full copies everything, slow to make and fast to restore. Incremental copies changes since the LAST BACKUP of any kind, fast to make, restore needs the full plus every increment. Differential copies changes since the last FULL, so restoring needs only two sets.
Symmetric vs asymmetric encryption
Symmetric uses one shared key, fast but the key has to travel. Asymmetric uses a public and private pair, slower but nothing secret is exchanged. TLS uses asymmetric handshakes to agree on a symmetric session key, taking the best of both.
What actually counts as multifactor authentication
Two DIFFERENT factor types: something you know (password), something you have (token, phone), something you are (biometric). A password plus security questions is two of the same type, so it is not MFA.
IDS vs IPS
An intrusion detection system monitors traffic and ALERTS; humans respond. An intrusion prevention system sits inline and BLOCKS in real time. The trade: prevention can break legitimate traffic on a false positive, detection cannot.
Least privilege and the account lifecycle
Grant only the access a role needs, approve grants by the data owner, review entitlements periodically, and deprovision immediately at termination or transfer. Orphaned accounts of departed employees are a standing exam answer for access risk.
Hashing vs encryption
A hash is one-way: it proves INTEGRITY, because any change to the input changes the digest, but it cannot be reversed to recover the data. Encryption is two-way and protects CONFIDENTIALITY. Passwords are stored hashed (and salted), not encrypted.
TCP, Tax Compliance and Planning
Portability of the estate exclusion
A deceased spouse’s unused exclusion (DSUE) transfers to the survivor only if a timely estate tax return is filed making the election, even when no tax is due. Miss the 706 and the unused exclusion is simply lost.
Simple vs complex trusts and DNI
A simple trust must distribute all accounting income currently, makes no charitable gifts and distributes no principal; anything else is complex. Distributable net income caps both the trust’s distribution deduction and the amount taxable to beneficiaries, and it carries the character of the income out to them.
Choice of entity: the levers that decide it
Self-employment tax exposure versus reasonable-compensation planning in an S corporation, double taxation of C corporation distributions, whether owners need basis from entity debt for losses (partnerships give it, S corporations do not), the QBI deduction, and the exit: asset sale versus stock sale.
Roth vs traditional: the timing lever
Traditional defers tax to withdrawal; Roth pays now and never again, with no lifetime required minimum distributions for the owner. Low-bracket years (a gap year, early retirement before Social Security) are the window where Roth contributions or conversions are cheapest.
Filing a consolidated return
An affiliated group: a common parent holding at least 80% of vote AND value, directly or through a chain of includible corporations. The election lets intercompany profits defer and one member’s losses offset another’s income, and it is binding going forward.
FAQs
Are these CPA exam flashcards free to use without an account?
Yes. The whole deck loads with the page. Progress is stored in the browser when storage is available, so a private window simply starts fresh each visit.
Which sections does the CPA deck cover?
All three cores, AUD, FAR and REG, plus the three discipline sections: BAR, ISC and TCP. Filter to one section when you want a focused block, or run everything together when you want interleaving.
How should the FAR formula strip be used?
Tap a formula to open that card directly. Say the answer out loud before you turn the card over. The strip is a launcher into the deck, not a separate calculator.
Will CPA flashcards replace a full CPA review course?
No. Cards lock in rules, definitions and computations. A course still carries the lectures, the question bank and the simulations. Cards work best in the gaps between question blocks.
Can a professor or a student chapter link to this CPA flashcard deck?
Yes, and it is free for classroom and club use. Linking is preferred over copying the cards, so any correction reaches every reader at once.
How often is the CPA deck reviewed?
It is checked against the blueprint each time the AICPA publishes a revision, and against the quarterly pass-rate releases when a card cites a number.
Sources
- AICPA: Exam blueprints · Pass rates · Scoring · Exam timetable
- NASBA: CPA Examination · Licensure · State boards
- AICPA and NASBA: CPA Evolution
An original study aid with no affiliation to the AICPA or NASBA. Your state board of accountancy sets eligibility, credit and licensure rules, so confirm any date or threshold with the board you applied to.
Bryce Welker is a regular contributor to Forbes, Inc.com, YEC, and Business Insider. After graduating from San Diego State University, he went on to earn his Certified Public Accountant license and created CrushTheCPAexam.com to share his knowledge from reviewing hundreds of accounting courses while helping thousands of other accountants become CPAs. Bryce was named one of Accounting Today’s “Accountants To Watch” among other accolades. As Seen On Forbes
