CPALE Cheat Sheet | ExamFinch

Financial Accounting & Reporting

15.6% of exam
PAS 2 & PAS 16 Rules PFRS 9 & PFRS 16 Leases PAS 37 & Diluted EPS Standards Hierarchy

Advanced Financial Accounting & Reporting

15.6% of exam
Partnerships & Liquidation PFRS 3 & Consolidation PFRS 15 & PAS 21 Process Costing & GAM

Management Services

15.6% of exam
CVP & Operating Leverage Absorption vs Variable Costing Standard Costing Variances Capital Budgeting & DuPont

Auditing

15.6% of exam
Audit Risk & Internal Control Evidence & Audit Sampling Modified Audit Opinions Ethical Threat Categories

Taxation

15.6% of exam
Individual & Corporate Income Tax VAT, EOPT & Invoicing Estate & Donor's Taxes CMEPA & BIR Prescriptive Periods

Regulatory Framework for Business Transactions

22.2% of exam
Obligations & Defective Contracts Revised Corporation Code Votes AMLA, PDIC & BP 22 FRIA, Data Privacy & SRC

Quick Facts

Exam Philippine CPALE
Board PRC Board of Accountancy
Statute RA 9298 Accountancy Act
Questions 450 MCQs across 6 subjects
Schedule 18 hours over 3 days
Pass requirement 75% average; every subject ≥65%
Conditional credit ≥75% in majority; remaining-subject rules
Refresher 24 units after two complete failures

PFRS 9 Debt FVOCI vs Equity FVOCI FA

Debt FVOCI

SPPI plus collect-and-sell model
Subject to ECL impairment model
Recycles cumulative OCI on disposal

Equity FVOCI Election

Eligible non-trading equity; initial irrevocable election
No impairment testing in P&L
Never recycles OCI to P&L
Recycles to P&L vs never recycles

PFRS 9 Financial Asset Classifier FA

Debt passes SPPI, hold-to-collect → Measure at Amortised Cost
Debt passes SPPI, collect-and-sell → Debt FVOCI with recycling
Debt fails SPPI test → Measure at FVTPL
Equity held for trading → Measure at FVTPL
Non-trading equity, OCI elected → FVOCI without P&L recycling

PAS 2, PAS 16 & Standards FA

FSRSC Role Adopts IFRS as Philippine PFRS
PAS 8 Hierarchy Similar standards first, then Framework
PAS 2 Inventory Lower of cost and NRV
NRV Recovery Reverse up to original write-down
PAS 16 Revaluation Gain Credit OCI, unless reversing loss

PFRS 9, PFRS 16, PAS 37 & 33 FA

Amortised Cost Debt SPPI plus hold-to-collect business model Fair-value designation exceptions still apply
Equity FVOCI Election Irrevocable, no recycling to P&L Eligible non-trading equity; initial election
Short-term lease exemption ≤12 months; no purchase option PFRS 16; election conditions apply
PAS 37 Provision Present obligation, probable, reliable estimate
PAS 33 Dilution Control Continuing operations EPS governs dilution
Low-value lease exemption Assess underlying asset value when new

Downstream vs Upstream Inventory Sale AF

Downstream (Parent to Sub)

Seller is the parent entity
100% unrealised profit hits parent
NCI share is unaffected

Upstream (Sub to Parent)

Seller is the subsidiary entity
Unrealised profit reduces sub income
Split adjustment between parent, NCI
Parent-only vs shared with NCI

Partnerships, Liquidation & PFRS 3 AF

Loss Absorption Capacity Net capital interest over loss share
Statement of Affairs Secured, priority, and unsecured claims
PFRS 3 goodwill Consideration plus NCI plus prior interest Subtract identifiable net assets; measurement rules
Bargain Purchase Gain Reassess first, then credit P&L
Upstream Inventory Sale Share unrealised profit with NCI

PFRS 15, PAS 21, Process & GAM AF

PFRS 15 Cost-to-Cost Exclude abnormal waste from progress
Foreign-operation translation Closing-rate assets/liabilities; differences generally OCI Functional currency and exceptions matter
Weighted Average EUP Completed plus ending WIP work
FIFO EUP Current period work only
Regular NCA Receipt Dr Cash-MDS, Cr Subsidy NG

Absorption Costing vs Variable Costing MS

Absorption Costing

Fixed factory overhead in inventory
Required for external PFRS reporting
Higher profit when production > sales

Variable Costing

Fixed factory overhead expensed immediately
Used for internal CVP decisions
Higher profit when sales > production
Same fixed-overhead rate; other differences excluded

CVP, Leverage & Costing MS

Break-Even Units Fixed costs divided by unit CM
After-tax target to pretax target Divide by one minus tax rate Applicable tax model; rate below one
Degree of operating leverage Contribution margin divided by EBIT Nonzero EBIT; consistent linear CVP
Costing profit reconciliation Inventory change times fixed overhead rate Same rates; other differences excluded
Sunk Cost Historical cost, irrelevant to decisions
DOL and margin of safety Reciprocals under consistent linear CVP

Variances, Capital Budgeting & Ratios MS

Materials price-variance price gap Actual price minus standard price Multiply by applicable actual quantity
Labour efficiency-variance hours gap Actual hours minus standard hours allowed Multiply by standard rate; actual output
EOQ Formula Square root of 2DS over H
Net present value Discounted inflows minus discounted outflows
DuPont ROE Net margin, turnover, equity multiplier

COSO Five Internal Control Components AU

CRIME: environment, risk, information, monitoring, control activities
C: Control environment R: Risk assessment I: Information & communication M: Monitoring E: Existing control activities (mnemonic)

PSA Modified Audit Opinion Picker AU

Material misstatement, not pervasive → Qualified opinion ( Except-for wording )
Material and pervasive misstatement → Adverse opinion
Material evidence limit, not pervasive → Qualified opinion ( Possible effects )
Potentially material, pervasive evidence limitation → Disclaimer of opinion
Most significant communicated audit matters → Consider applicable PSA 701 KAM reporting ( Never replaces a modified opinion )

PSA Risk, Control & Evidence AU

PSA 200 Assurance High reasonable assurance, never absolute
Detection Risk Inversely related to assessed RMM For fixed acceptable audit risk
COSO Five Components Environment, risk, info, activities, monitoring
Independent external evidence Often stronger; assess authenticity and context
PSA 701 KAM Never substitutes for modified opinion

Five Code of Ethics Threats AU

FASSI: Familiarity, Advocacy, Self-interest, Self-review, Intimidation threats
F: Familiarity threat A: Advocacy threat S: Self-interest threat S: Self-review threat I: Intimidation threat

Audit Opinions, Sampling & Ethics AU

Qualified Opinion Material but non-pervasive issue
Adverse Opinion Material and pervasive misstatement
Disclaimer of Opinion Missing evidence; potentially material pervasive effects
Incorrect Acceptance Sampling risk threatening audit effectiveness
Five Ethical Threats Self-interest, self-review, advocacy, familiarity, intimidation

Zero-Rated VAT vs VAT-Exempt Sale TA

Zero-Rated Sale

Taxable transaction at 0% output
Credits and refunds require statutory conditions
Counts toward VAT registration threshold

VAT-Exempt Sale

Not subject to output VAT
No input VAT credit allowed
Attributable input VAT becomes cost
Input credit right vs none

Philippine Tax Rate & Period Picker TA

Eligible pure-business taxpayer elects 8% → Apply statutory base and threshold ( Mixed-income deduction differs )
Testing small domestic-corporation 20% rate → Check both income and asset ceilings ( Specified land excluded; incentives separately governed )
Regular assessment, timely return → 3-year BIR assessment window ( Section 203 )
Willfully false, fraudulent, or unfiled return → Assess applicable ten-year discovery rule ( Section 222; evidence and exceptions matter )
Services input VAT after EOPT → Require valid VAT invoice

Individual & Corporate Income Tax TA

8% income-tax election Eligible non-VAT business; threshold rules apply
Mixed-income 8% base No additional PHP 250,000 deduction
Regular corporate income tax Generally 25%; special statutory rates differ
Small domestic-corporation 20% rate Both taxable-income and asset tests apply
Current MCIT rate 2% statutory gross income Compare with applicable regular income tax
20% taxable-income ceiling (PHP) 5 million; qualifying domestic corporation
20% asset ceiling (PHP) 100 million; qualifying land excluded
MCIT starting year Fourth taxable year after commencement year
8% ceiling (PHP) 3 million; include non-operating income
Pure-business 8% base Eligible excess above PHP 250,000

NIRC Sec 203 vs Sec 222 Assessment TA

Sec 203 Ordinary Rule

3 years from deadline or filing
Applies to regular honest returns
Whichever date comes later governs

Sec 222 Extraordinary Rule

10 years from discovery date
Willful falsity; innocent errors alone insufficient
Also covers failure to file
3 years filing vs 10 discovery

VAT, Transfer Tax, CMEPA & Remedies TA

General VAT sales threshold PHP 3 million; statutory exceptions apply Check current CPI adjustments and registration
EOPT VAT Document VAT invoice substantiates goods, services
Resident-decedent estate tax 6% net taxable estate PHP 5 million standard deduction
Donor-tax annual exemption PHP 250,000; qualifying statutory exclusions differ
Resident-individual deposit interest Generally 20%; transitional exemptions may apply CMEPA; verify income and taxpayer scope
CMEPA transitional instruments Pre-July-2025 instruments can retain prior treatment Conditions and unchanged terms govern
Qualifying resident-decedent family home Deduction capped at PHP 10 million
Annual donor-tax computation 6% above PHP 250,000 net gifts

Art 1231 Extinguishment of Obligations RF

PaLoCoCoCoNo: Payment, Loss, Condonation, Confusion, Compensation, Novation
Pa: Payment or performance Lo: Loss of thing due Co: Condonation or remission Co: Confusion or merger Co: Compensation No: Novation

Voidable vs Void Contracts RF

Voidable Contract

Incapacity or vitiated consent
Valid and binding until annulled
Can be cured by ratification

Void/Inexistent Contract

Unlawful object or absolute simulation
Cannot create enforceable contractual obligation
Nullity action does not prescribe
Ratification depends on the defect class

RFBT Votes & Statutory Threshold Picker RF

Dissolution does not prejudice creditors → Board majority + majority stock ( RCC Sec 134 )
Dissolution may prejudice creditors → Board majority + 2/3 stock ( RCC Sec 135 )
Delegate by-law amendment power → 2/3 outstanding capital stock ( Majority revokes )
Single casino cash transaction → Report amounts above PHP 5 million ( AMLA threshold )
BP 22 notice received → Assess five-banking-day payment opportunity ( All statutory elements still required )

Civil Code & Revised Corporation Code RF

Art 1231 Extinguishment Payment, loss, condonation, confusion, compensation, novation
Defective Contracts Rescissible, voidable, unenforceable, void
One Person Corporation Natural person, trust, or estate
Stock-corporation by-law amendment Board majority plus outstanding-stock majority
Prejudicial Dissolution Board majority plus 2/3 stock

Four Defective Contract Classes RF

RVUV: Rescissible, Voidable, Unenforceable, Void or inexistent contracts
Rescissible: specified prejudice and statutory remedy Voidable: incapacity or vitiated consent Unenforceable: statutory grounds; ratification possible Void: unlawful object; absolute simulation

AMLA, PDIC, BP 22, DPA & FRIA RF

Covered-bank cash threshold >PHP 500,000 in one banking day
Covered real-estate developers and brokers Cash above PHP 7.5 million Single transaction; AMLA scope applies
PDIC maximum deposit insurance PHP 1 million per depositor/bank Bank closure from 15 March 2025
BP 22 Notice Cure Pay within 5 banking days
DPA Core Principles Transparency, legitimate purpose, proportionality

Common Traps

Mixed-Income 8% Tax Option Trap

Eligible pure-business base excludes PHP 250,000 ≠ Mixed-income base has no extra deduction

EOPT VAT Substantiation Trap

VAT Invoice substantiates service input ≠ Official Receipt is supplementary only

PDIC Deposit Insurance Trap

PHP 1 million: post-effective-date bank closures ≠ Earlier closures retain applicable earlier limits

PAS 33 Antidilution Control Trap

Continuing operations EPS tests dilution ≠ Bottom-line net income does not

COA Government NCA Entry Trap

NCA receipt credits Subsidy NG ≠ Receiving NCA is not expense

PSA 701 Key Audit Matters Trap

KAM highlights most significant audit matters ≠ KAM never replaces modified opinion

Last Minute

1. Pass: average ≥75%, every subject ≥65%
2. Six-subject majority requires at least four
3. Two complete failures: 24 refresher units
4. PAS 2 reversals cannot exceed write-down
5. PFRS 9 equity FVOCI never recycles
6. Upstream inventory profit affects NCI share
7. DOL needs nonzero operating profit
8. Independent evidence still needs reliability assessment
9. Small-corporation 20% requires both statutory tests
10. Resident-estate standard deduction: PHP 5 million
11. MCIT year: commencement year plus four
12. PDIC limit: per depositor, per bank

CPA Licensure Examination (Philippines, CPALE)

Practice Questions 270 questions Study Guide 122 topics Cheat Sheet 70 facts Flashcards 50 cards Games 20 terms Shorts 1 short Podcast
Word games 20 terms Guess the Term T E R M S Read the clue and guess the term in 6 tries. Word games 20 terms Term Match Swap tiles to line up three of the same term. Word games 20 terms Term Pairs ? ✓ ✓ ? ? Flip two cards at a time to find matching terms. Word games 20 terms Term Search Q T E R M X Find five hidden terms in a grid of letters.