Plain-English definitions of the terms for US CPA study. Simplified for learning; AICPA blueprints and your state board are authoritative.
| Term | Definition |
|---|---|
| GAAP | Generally Accepted Accounting Principles (US). |
| Accrual accounting | Recording revenue/expense when earned/incurred, not when cash moves. |
| Deferral | Postponing recognition of revenue or expense. |
| Balance sheet | A statement of assets, liabilities and equity at a point in time. |
| Income statement | A statement of revenue and expenses over a period. |
| Cash flow statement | Cash movements from operating, investing and financing. |
| Attestation | An engagement providing assurance on subject matter. |
| Audit | An independent examination of financial statements. |
| Independence | The auditor’s freedom from conflicts that impair objectivity. |
| Materiality | The threshold at which an item could influence decisions. |
| Internal control | Processes that safeguard assets and ensure reliable reporting. |
| Deferred tax | Tax effects of timing differences between books and tax. |
| Depreciation | Allocating an asset’s cost over its useful life. |
| Task-based simulation | A realistic exam task beyond multiple choice. |
| Core section | A required CPA section (AUD, FAR, REG). |
| Discipline | The chosen CPA specialism (BAR, ISC, TCP). |
| State board | The body that licenses CPAs in a US state. |
| 150-hour rule | The common education requirement for licensure. |
| Ethics | Professional conduct rules for accountants. |
| Assurance | Confidence provided about information’s reliability. |