REG CPA Exam
To prepare for the Regulation (REG) exam, you will need to master federal taxation and business law. This section of the CPA exam is intended to prepare future Certified Public Accountants (CPAs) to understand and apply the regulations that will affect their work.
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The trickiest part of this exam is making sure you are keeping up with the most recent regulations, since updates are released regularly.
Here, we’ll review how to pass the REG exam and go over exam structure, content, questions, scoring, and more.
REG CPA Exam Quick Facts
- REG stands for Regulation.
- The FAR CPA exam is 4 hours long.
- There are 76 multiple-choice questions and 8 task-based simulations on the REG exam.
- REG content is subject to yearly updates based on new laws and regulations.
- The REG CPA exam pass rate is around 60%.
- The REG exam covers 5 main content areas: ethics, professional responsibilities, and federal tax procedures; business law; federal taxation of property transactions; federal taxation of individuals; and federal taxation of entities.
How to Pass the REG CPA Exam
The REG exam is going to go in depth into a wide range of topics revolving around federal taxation, business law, and ethics. And you need to make sure you are studying up-to-date information since laws and regulations are updated yearly.
The key to passing the REG exam should be unsurprising; it’s organizing an effective study plan. So, let’s talk about the best way to study for the REG exam.
Best Way to Study for the REG CPA Exam
The best way to study for the REG exam is by outlining the exam content, understanding the nature of the subjects, and creating a plan that you can commit to.
How to Pass REG CPA Exam:
- Make a plan (and stick to it)
- Stay consistent
- Take practice quizzes and practice exams
- Time yourself (on question types, testlets, and the exam overall)
- Don’t depend on a cram-session at the last minute
The most straight-forward way to pass the REG exam is by studying with a CPA Review Course. Most CPA exam test prep providers, like Wiley CPA, will give you a personalized study plan and access to a library of up-to-date study materials like video lessons, practice questions, and practice exams.
Tips for Passing the REG CPA Exam
In addition to creating a study plan, here are a few other study tips for passing the REG CPA exam.
Practice Your Memorization
25%-35% of the REG exam will test your ability to remember and understand memorized principles, and 35%-45% of the exam will test your ability to apply those memorized principles. So, memorization is particularly important on the REG section of the CPA exam.
Some ways you can enhance your memorization practice are using CPA flashcards, making a connection between the new information and something you already know, getting enough sleep and exercising (yes, these really help with memorization), writing out the principles, doing practice questions, and, most importantly, repeating your memorization practice often.
Don’t Worry About Operational vs. Pretest Questions
Whatever you do, do not try to guess which questions are operational and which are pretest questions. Yes, the operational questions count toward your exam score and pretest questions do not, but you won’t be able to tell the difference and trying to decide whether to skip a question is a waste of time.
Give every question your best try and remember that wrong answers don’t count against you, so don’t leave any questions blank.
Ensure Materials Are up to Date
You want to make sure you are studying the most current information because REG is consistently updated to reflect new laws and regulations. You can ensure your materials are up to date by reviewing the REG CPA Blueprint or by using a CPA Review Course with updated materials.
Take CPA REG Exam Practice Exams
Since the REG exam requires a lot of memorization and application, practice exams are a great way to test what you understand and what you don’t. They will also help you practice your time management skills and get comfortable with the different question formats. If you’re curious what practice exams are like and wonder how you’d do on the CPA exam, sign up to take Wiley’s free CPA practice exam.
Set Yourself up for Success for the CPA REG Exam
Don’t undercut your success by neglecting to take care of your basic needs while you’re studying for the CPA exam. You will have to make sacrifices, but your self-care should not be one of them. Make sure to stay hydrated, eat well, exercise, and get enough sleep along your CPA journey to set yourself up for success. You can pass the exam without running yourself ragged—you’ve got this!
REG CPA Exam Tax Law Changes
Each year tax laws and regulations change, and these changes can impact the REG exam. That’s why it’s so important to make sure you have up-to-date study materials. CPA exam REG changes are reflected in the REG CPA Blueprint, and you can also make sure you are studying the most current information by using a CPA Review Course with updated study materials.
REG CPA Exam Format
REG CPA exam format divides the exam questions into 5 testlets—2 MCQ testlets and 3 TBS testlets.
- Testlet 1: 38 MCQs
- Testlet 2: 38 MCQs
- Testlet 3: 2 TBS
- Testlet 4: 3 TBS
- Testlet 5: 3 TBS
After the third testlet, you get a 15-minute break that does not count towards your 4 hours of total testing time.
CPA REG Exam Multiple-Choice Questions
Multiple-choice questions (MCQs) are a big part of the REG exam (they account for 50% of your final score). You can expect to encounter 76 MCQs on REG, which is more than any other CPA exam part. In the REG exam, these 76 MCQs are divided into 2 testlets of 38 MCQs each.
You will be given 4 answers to choose from to complete these questions, and they will test your understanding and application of federal tax, business law, and ethics principles.
CPA REG Exam Task-Based Simulation (TBS) Questions
The REG exam has 8 TBS questions, and they are split up into 3 different testlets. Testlet #3 has 2 TBS questions, Testlet #4 has 3 TBS questions, and Testlet #5 has 3 TBS questions. These 3 TBS testlets account for 50% of your final REG grade.
REG CPA exam simulations are harder than MCQs because they require you to apply different principles in real-world scenarios. TBSs are like case studies that you have to provide a response for. There are usually multiple parts to the answer, and you can get partial credit, so don’t leave any part of a TBS blank. Different TBS answer formats include fill-in-the-blank, matching, research, or another answer format.
REG CPA Exam Content
What is on the REG CPA exam? Here we’ll go over a REG CPA exam breakdown to review the 5 main content areas tested on this section of the CPA exam.
Area I: Ethics, Professional Responsibilities, and Federal Tax Procedures
Ethics, Professional Responsibilities, and Federal Tax Procedures make up 10-20% of the REG exam. According to the CPA Blueprint, this area will test on professional responsibilities in tax practice, licensing and disciplinary systems, federal tax procedures, and legal duties and responsibilities of a CPA.
Area II: Business Law
Business Law also makes up 10-20% of the REG exam. According to the CPA Blueprint, this area will test on legal implications of business transactions as they relate to accounting, auditing, and financial reporting, areas of agency, contracts, debtor-creditor relationships, government regulation of business, and business structure, The Uniform Commercial Code under the topics of contracts and debtor-creditor relationships, nontax-related business structure content, and federal and widely adopted uniform state laws and references.
Area III: Federal Taxation of Property Transactions
Federal Taxation of Property Transactions makes up 12-22% of the REG exam. According to the CPA Blueprint, this area will test on the federal income taxation of property transactions, federal gift taxation, accounting methods and periods, and tax elections.
Area IV: Federal Taxation of Individuals
Federal Taxation of Individuals makes up 15-25% of the REG exam. According to the CPA Blueprint, this area will test on federal income tax for individuals, from both a tax preparation and tax planning perspective.
Area V: Federal Taxation of Entities
Federal Taxation of Entities makes up 28-38% of the REG exam, which is the largest content area. According to the CPA Blueprint, this area will test on federal income taxation of entities including sole proprietorships, partnerships, limited liability companies, C corporations, S corporations, joint ventures, trusts and tax-exempt organizations, from both a tax preparation and tax planning perspective, federal tax law for business entities, and tax liabilities.
Pronouncement Policies for REG CPA Exam Content
Seeing as the REG exam is frequently updated to reflect new laws and regulations, the AICPA has guidelines on when this new content can be tested.
Changes to the Internal Revenue Code, federal taxation regulations, and federal laws outside of federal taxation can be tested 6 months after the change has taken effect. And Uniform Acts changes can be tested one year after adoption by a simple majority of the jurisdictions.
REG CPA Exam Time
You will have 4 hours total to complete each part of the CPA exam, including REG.
There are 76 MCQs and 8 TBSs on the REG exam that you will need to get through within the allotted time. These 84 questions are divided into 5 testlets, so it’s a good idea to have a personal time management goal for each testlet. You can time yourself with practice exams to make sure you’ll keep up a good pace on exam day.
On the REG exam, your first 2 testlets will have 38 MCQs each, your third testlet will have 2 TBSs, and your last 2 testlets will have 3 TBSs each.
A good starting place to time yourself on these sections is giving yourself around 45 minutes for each MCQ testlet, 35 minutes for the third testlet, and just over 50 minutes for each of the last 2 testlets with 3 TBSs each. This plan gives you about 15 minutes of wiggle room, so add and subtract time to different testlets based on how quickly you move through the different types of questions.
Some tips for saving time on the REG exam include timing yourself on practice exams before the big day, budgeting less time for Testlet #1 since it will definitely be of medium difficulty (and Testlet #2 could be harder depending on how well you do on Tesltet #1), and reading the MCQ answers in each lesson before skimming the provided text.
