Certified Public Accounting Exam |
The new section tests awareness of the general business environment and business conceptions that accounting students need to understand in order to see the inherent business rationalities for and the accounting implications of business transactions.
The profession realised the need for testing in this area of business knowledge because most look to CPAs to interpret business concepts. As is true for the entire Uniform CPA Examination, these concepts are tested in the context of entry-level CPA practice.
There are five specific areas of Business Environment and Concepts that may be tested in detail on the Certified Public Accounting Exam.
· Business Structures
· Economic concepts essential to understanding the entity's business and industry
· Financial Management
· Information technology and how it affects the business
· Planning and measurement
Below is summary by section that a certified public accountant candidate will be examined on:
Business Structures
A CPA examination candidate should be able to:
Distinguish the advantages and disadvantages of various business forms such as limited partnerships or Limited Liability Corps.
Differentiate between the rights, duties, legal obligations, and authority of owners and that of management.
Point out the general characteristics of various business forms such as Joint ventures or Limited Liability Corps.
Determine the recommended business form based on given facts and circumstances.
List the factors supporting a fiscal vs a calendar year end for financial
reporting and federal taxation purposes and Identify circumstances indicating when a business should be closed.
Determine income available for distribution or be able to allocate profit and losses to the owners.
Business Econimic Concepts
For the Certified Public Accounting Exam Candidates should be able to:
Recognize circumstances giving rise to changes in exchange rates.
List the components of the business cycle and recognize circumstances affecting economic cycles.
Point out the economic circumstances giving rise to inflation, deflation, expansion and recession.
Determine the effect on an entity’s net income and financial position from changes in supply and demand.
Determine the purpose of transfer pricing.
Understand of exchange rate fluctuations on financial position and operations.
Understand the effect of Federal Reserve Board actions on the national economy.
Differentiate between real, nominal, and effective interest rates.
Understand economic events and the effect on the business cycle on an entity’s financial position and business operations.
Financial Management
For the Certified Public Accounting Exam Candidates should be able to:
Analyze the trade-offs between risk and return. Recognize the objectives and limitations of capital budgeting tools.
Utilize capital budgeting tools such as net present value, internal rate of return, payback method, discounted payback and discounted annual cash flows, including performing calculations. Calculate the effective interest rate.
Apply capital budgeting tools to make appropriate business decisions.
Project periodic cash flows given certain facts and circumstances.
Differentiate between and determine when appropriate to use different forms of financing.
Describe and define various business risks, such as interest rate risk or interest rate risk.Calculate current and working capital ratios.
Demonstrate an understanding of inventory management techniques, such as just-in-time and economic order quantity.
Information Technology
The candidate should be able to:
Apply the traditional concept of segregation of duties to IT functions.
Planning And Measurement
The CPA exam will ask the applicant to:
Define and calculate joint and by-product costing, variable and absorption costing.
Define and determine appropriate circumstances for using performance measures.
Identify and calculate the components of a master budget.
Calculate the effect of depreciation in operating and capital budgeting.
Differentiate between cost-volume-profit analysis, target costing, and transfer pricing. Perform cost-profit-volume analysis.
Define calculate, and explain budget variances.
Point out the appropriate analytical tool in given circumstances.
Define and differentiate among job costing, process costing, and activity-based.
Nigeria: Accounting Board Partners NERC to Improve Standards (AllAfrica.com)
Lagos — The Nigerian Electricity Regulatory Commission (NERC) and the Nigerian Accounting Standard Board (NASB) are collaborating to develop an accounting system to aid the determination of electricity tariff, report cost and expenses for the Nigerian Electricity Supply Industry (NESI).
BDO (SA) Selects Maconomy’s Tax, Audit and Accounting ERP Solution (CRM Today)
Maconomy, the international supplier of ERP solutions for Professional Services Organizations (PSO), has signed a deal with the South African audit firm BDO Spencer Steward, a part of the world's fifth-largest accounting network. The deal includes an ERP solution for 480 users.
Ex-Beazer Accountant Sued by SEC for Accounting Fraud (Update1) (Bloomberg)
July 1 (Bloomberg) -- Beazer Homes USA Inc .’s former chief accounting officer was sued by the U.S. Securities and Exchange Commission for fraudulently managing earnings to meet analysts’ expectations and boost executive bonuses.
HSE accounting systems ‘outdated’ (Irish Examiner)
ARCHAIC accounting systems mean the Health Service Executive cannot manage its €15 billion budget properly.
Neverland Accounting (Forbes)
Why Michael Jackson's balance sheet looked like an ailing company's.
For more information about the Uniform CPA Examination contact:
Massachusetts Board of Public Accountancy Phone: 617-727-1845