September 24, 2008
CPA Review for FREE
www.CPAreviewforFREE.com
Lesson 10
Practice a Little Longer
From: Joe
I always love getting emails from candidates who are using our website. Here are two that I got earlier this week.
FROM LK: "I just wanted to send you a quick note. The CPA for free website is great. What a good idea! I did a lot of questions for the section that I most recently took and I received my score today: I got a 99 on the Auditing and Attestation section! Keep up the good work on that website. I know tons of new hires here at (Big CPA firm) who would love to have a free resource like that to use while studying."
FROM ERIK GREENAWALT IN PITTSBURGH: "I can't say enough just how beneficial cpareviewforfree.com has been for me in preparing for the CPA exam. This site helped me score a 98-yes, a 98!-on FAR. The question-and-answer format it provides is as good (if not better) than those competitors who charge hundreds-even thousands-of dollars. Plus, I can practice on questions wherever I am, whether in my
cubicle at work or on my deck at home. Thank you, thank you, thank you, cpareviewforfree.com! Now, on to AUD!"
Okay, I really do love getting 99s and 98s BUT always remember that the one and only goal is to get 75 and pass. It is great to see the super high scores but take your time, do the work, and just make sure you make 75. Only a few people can make a 98 but EVERYONE can make 75.
EVERYONE can make 75.
And, in the long run, no one is ever going to ask you your grade. They will just want to know that you passed. CPAreviewforFREE.com is here to help you reach that goal especially (in these tough economic times) if you just cannot afford to waste thousands of dollars on a program.
(1)-FREE STUFF. The people who create the CPA Exam at the AICPA send out information periodically about the exam. I got their regular email yesterday and they put in a reminder that I think is worth mentioning to you.
As probably most everyone knows, there are research questions on three of the parts of the CPA Exam (each part except for BEC). It somewhat resembles a Google search of the professional literature in order to find the appropriate answer to a question. From what can be told, the grade is relatively small but, indeed, as we all know, every point can be important. Here's some official guidance from the examiners:
"Large numbers of candidates continue to avail themselves of the free six-month subscriptions to authoritative literature used on the Uniform CPA Examination. . . , these subscriptions are available to candidates who are eligible to take the examination (i. e., those who have received Notices to Schedule). Subscriptions may be requested on the CPA Examination website, www.cpa-exam.org, under Prepare for the Exam/Access to Professional Literature.
"The free online package consists of AICPA Professional Standards and FASB Original Pronouncements. (FASB Current Text is not included as it is no longer used on the examination.) The Tax Code is not part of the package. Candidates seeking access to the Tax Code should contact publishers of the Code or search the Internet for versions that may be available on line.
"Candidates must perform online searches of professional literature databases in order to answer research questions on the CPA Examination. To become familiar with the authoritative literature search function in use on the live examination, candidates should view the Tutorial and Sample Tests, which are available on the CPA Examination website, www.cpa-exam.org. The Tutorial demonstrates the search features and the Sample Tests show the search functionality in action."
Quite obviously, we here at CPA Review for FREE believe in using as much free stuff as possible. For example, you can get free access to much of the professional literature and see how the research function works for free. Sounds like a good price to me. (However, as you can imagine, I don't think people should have to pay to learn how to pass the CPA Exam. I think passing the exam should be based on how much you are willing to work NOT how much you are willing to pay.)
(2)-If you need to unsubscribe from our weekly lessons, just scroll to the bottom of this email and click on the appropriate link.
As always, thanks to everyone who uses our site and tells others about us. Here are three interesting pieces of information about www.CPAreviewforFREE.com.
--Last week, our traffic increased by 18 percent over the previous week. And, indeed, that previous week was a 19 percent increase over the week before. The word is spreading that you don't need to pay thousands to pass the CPA Exam.
--Last week, we had visitors from 65 different countries (versus 48 in the previous week) with the Philippines, the United Arab Emirates, Canada, India, Japan, and Peru leading the way. www.CPAreviewforFREE.com is promoting world harmony (something we could all use at the moment) through the CPA Examination and free materials.
--Last week, the average visitor (the AVERAGE visitor) stayed on our site for 19 minutes and 51 seconds. We clearly have a lot of people who are sitting down and answering our questions and learning how to pass this exam. This is even more impressive because September is a dark month-no one is actually taking the exam right now.
(3)-KEEP PRACTICING. I have written email lessons like this one for about a dozen years, off and on. I have a million (well, several thousand) stories to tell. Here is my very favorite one. This is the one that means the most to me. I heard it on ESPN television about 8-10 years ago.
The NBA (the professional basketball league in North America) had its annual all-star game where the top 24 or so players are brought together to show their talents. On the night before the game, all of the players got together for a practice session since they were not used to playing with each other. After a couple of hours of tough practice, the coaches called a halt and the players went to the locker room to clean up and go out and relax.
However, four players stayed behind to practice their free throws. Each one went to a separate basket in a separate corner of the gym and simply began to shoot free throw after free throw, something that is just about as monotonous as possible. They were tired; they were ready to quit. But they stayed and shot those free throws. They kept on practicing even when they were exhausted.
The interesting part was that these were the four players who were leading the entire league at the time in free throw accuracy. They were already great; they just wanted to make sure they stayed at the top of their game. They found the time and the energy to keep on practicing.
You would have thought it would have been the poor free throw shooters who would have stayed behind in hopes of getting better. No, those folks were all out at the party. It was the people who wanted to excel who had the self-discipline to do even a bit more work.
How does this apply to the CPA Exam?
--There are going to be times when you are tired and ready to quit studying. Try to practice just a little bit longer.
--There are going to be times when you have something that you really want to do other than studying. Try to practice just a little bit longer.
--There are going to be times when you feel like you know enough. Try to practice just a little bit longer.
--There are going to be times when you are so frustrated with yourself that you want to give up. Try to practice just a little bit longer.
--There are going to be times when you are so optimistic that you feel nothing can stop you. Try to practice just a little bit longer.
When it comes to studying for the CPA Exam, most of the times the person who says "Stop" is you. The person who says "That's enough" is you. Before you stop, if you truly want to excel, try to practice just a little bit longer.
The race doesn't go to the swift or the smart or the rich or the lucky. I truly believe the race goes to the person who has the inner fortitude so that when they are really exhausted, they try to practice just a little bit longer.
(4)-Speaking of practicing. Here are four more questions that I just wrote and am getting ready to add to our database at www.CPAreviewforFREE.com. See how you do.
FINANCIAL ACCOUNTING AND REPORTING
Idelton Company buys 30 percent of Waynwrought Corporation on January 1, Year One. Several officers of Idelton are on the board of directors for Waynwrought so the company believes that it holds the ability to significantly influence the operating and financing decisions of Waynwrought and has decided to apply the equity method to account for the investment. In making this investment, Idelton paid a premium of $40,000 because Waynwrought held a valuable database that had not been included on its balance sheet since it did not have an historical cost. The database should be usable for five more years. In Year One, Waynwrought reported net income of $90,000 and paid dividends of $30,000. What amount of investment income should Idelton report on its own Year One income statement?
A - $9,000
B - $19,000
C - $27,000
D - $36,000
Answer is B
Dividends are not viewed as income when the equity method is applied (they reduce the balance of the investment). Instead, the income of the investee is accrued by the investor as it is earned. Waynwrought reported net income of $90,000 so this 30 percent owner should have recognized $27,000. However, when a portion of the original investment price was paid because the value of some investee assets were not properly reflected, then that cost must also be amortized unless the life cannot be determined. Here, there is a database and an additional $40,000 has been paid as a result. Because this value is only expected to last for five years, it is amortized over that period at the rate of $8,000 per year. Idelton should recognize $27,000 as its share of the investee's reported income but also subtract $8,000 because of the amortization of the excess amount paid because of the database when these shares were bought. The investment income is $27,000 minus $8,000 or $19,000.
REGULATION
Julia sold her stock in ABC Company to her sister Hannah for $30,000. Julia's tax basis in this investment was $33,000. Sixteen months later, Hannah sold the stock to an unrelated third party for $32,000 in cash. What is the income tax effect of Hannah's sale?
A - Neither a gain or a loss
B - Gain of $2,000
C - Gain of $1,000
D - Loss of $1,000
Answer is A
The first transaction results in a disallowed loss of $3,000 ($30,000 less $33,000) because the investment was sold to a related party. The second transaction was to an unrelated party and results in a gain of $2,000 ($32,000 less $30,000). The disallowed loss of $3,000 can then be used to reduce this gain for tax purposes to zero. However, a disallowed loss of this type cannot be used to create a taxable loss. Therefore, although the loss of $3,000 is greater than the eventual gain of $2,000, it can only reduce the gain to zero. That is its limit.
AUDITING AND ATTESTATION
An independent auditor is currently attempting to gain evidence about a reporting company's accounts receivable. According to the records, the company is owed $760 by Arnold Alexander Wilson. Which of the following is true?
A - Confirmation is primarily an evidence gathering technique to substantiate the valuation assertion made by management.
B - Confirmations tend to be done late in the fiscal year so that the balance being confirmed is close to the balance sheet date.
C - If internal control is weak, negative confirmations are more likely to be used than positive confirmations.
D - Subsequent payment of the account after the end of the year can be used as evidence that the balance is properly stated at the balance sheet date.
Answer is D
The most important purpose in an audit of confirmation is to prove that the balance actually does exist. Many frauds have been created by recording false receivables to boost reported revenues (and net income). Confirmation attempts to gain evidence that the balance (and the debtor) do exist. Because confirmation generally takes a considerable period of time, it is usually performed early in an audit unless serious problems are expected. Positive confirmations ask for a response in all cases and is viewed as a better testing technique than negative confirmations which only ask for communication if a problem is found. Thus, positive confirmations are more likely to be used when additional risk is involved such as when internal control risk is assessed as high. Finally, the collection of a balance does help to indicate that the balance did exist and is collectible. Auditors often spend considerable time in the period right after the end of the year reviewing cash
collections for that reason.
BUSINESS ENVIRONMENT AND CONCEPTS
A company has a rule that an investment must earn an annual effective income rate of 10 percent or more before the investment can be made. Currently, the company is looking at two investments. Investment A has a cost of $20,000 and its expected cash flows have a present value based on a 10 percent annual income rate of $19,000. Investment B has a cost of $34,000 and its expected cash flows have a present value based on a 10 percent annual income rate of $33,000. Which of the following statements is true?
A - Both investments meet the company's criteria.
B - Only Investment A meets the company's criteria.
C - Only Investment B meets the company's criteria.
D - Neither investment meets the company's criteria.
Answer is D
Investments should be made when they have a net present value that is positive. The net present value is the present value of the future cash flows to be generated (computed at a desired rate) less the cost to make the investment. Both of these investments have a negative net present value of $1,000 ($19,000 less $20,000 and $33,000 less $34,000). They are not earning an annual income rate of 10 percent because the resulting figure is negative.
Have a great rest of the week.
Try to keep practicing as long as you can. I fully understand that you are probably getting tired and would love to do something else. It will all be over relatively soon and if you stick with it, you will have the CPA Exam passed and you will feel GREAT!!!!
Joe Hoyle
Co-Founder
CPA Review for FREE
www.CPAreviewforFREE.com
Wednesday, September 24, 2008
Monday, September 22, 2008
A 98 in FAR! Yes, a 98!
"I can't say enough just how beneficial cpareviewforfree.com has been for me
in preparing for the CPA exam. This site helped me score a 98 -- yes, a 98!
-- on FAR. The question-and-answer format it provides is as good (if not
better) than those competitors who charge hundreds -- even thousands -- of
dollars. Plus, I can practice on questions wherever I am, whether in my
cubicle at work or on my deck at home. Thank you, thank you, thank you,
cpareviewforfree.com! Now, on to AUD!" -- Erik Greenawalt, Pittsburgh
in preparing for the CPA exam. This site helped me score a 98 -- yes, a 98!
-- on FAR. The question-and-answer format it provides is as good (if not
better) than those competitors who charge hundreds -- even thousands -- of
dollars. Plus, I can practice on questions wherever I am, whether in my
cubicle at work or on my deck at home. Thank you, thank you, thank you,
cpareviewforfree.com! Now, on to AUD!" -- Erik Greenawalt, Pittsburgh
Thursday, September 4, 2008
Questions to Consider as You Begin Your Journey To Success
APPROXIMATELY 2,000 FREE QUESTIONS AND ANSWERS
September 1, 2008
CPA Review for FREE
www.CPAreviewforFREE.com
Lesson 7
Questions to Consider as You Begin Your Journey To Success
From: Joe
Best of luck to everyone who gets these email lessons down in the Louisiana
area. I have several former students who live down in New Orleans and I know
how scary and dangerous the hurricanes can be. I hope it is over soon and you
are back to being safe.
(a)—If this is your first email lesson from us, I want to welcome you. I send
these lessons out about 2-4 times each month to help current and future
candidates get ready to pass the CPA Exam. Thousands of accountants pass the
exam every quarter and so can you. Our goal at CPAreviewforFREE is to help
every person who wants to pass the CPA Exam to achieve that goal.
If you ever decide that you need to unsubscribe, the process is easy. Scroll
to the end of the lesson and click on the unsubscribe link. We love having you
with us but please feel free to unsubscribe whenever you need.
(b)—Please check out our advertisers on our website. They help us to provide
all of this free material to you through CPAreviewforFREE. Without them, we
would not exist. Plus, they provide a lot of great services that can really be
helpful.
(c)—Don’t forget to check out our free video tips under “Take a Study
Break” at www.CPAreviewforFREE.com. I hope to have a fourth one up in the
next couple of days. Each one is roughly 4-5 minutes long.
(d)—Also notice, as indicated in our last lesson, you can now find the
complete steps for an audit engagement at www.CPAreviewforFREE.com under CPA
Exam Resources on the homepage. Good information; it is helpful in coming to
understand the auditing process.
(1)—SEPTEMBER QUESTIONS. September is a month when the CPA Exam “goes
dark.” In other words, no one can take the CPA Exam in September. Thus,
everyone is getting ready. It is a great time, here on September 1, to plan out
your strategy for the October-November testing window. Things go so much better
if you have a plan. The CPA Exam is too important to leave your preparation to
random chance. Here are some questions that you should consider, starting
today.
--Have you qualified to take the CPA Exam? Have you received your NTS
(notice to schedule)? If you have not applied for the CPA Exam, read
“Applying for the CPA Exam” under CPA Exam Resources at
www.CPAreviewforFREE.com.
--Have you read the NTS carefully? There is a lot of very helpful
information included.
--If you have not previously taken the CPA Exam, have you read “The
Structure of the CPA Exam” at CPA Exam Resources at www.CPAreviewforFREE.com.
The more you know about the exam, the easier it is to pass. You don’t want
any surprises.
--Have you considered how many parts you want to take in October and
November? Do you want to take 1, 2, 3, or 4? As I have said before in these
email lessons, it all depends on how much time you have to study. This is a
very important question. For some advice, go to www.CPAreviewforFREE.com and
click on “resources” at the top of the page and then look at the “FAQ”
section.
--Have you actually scheduled the exams that you are going to take in
October and November? If you want specific dates, it is better to make the
reservation early. If you are taking more than one part in October-November,
try to leave as much time in between as possible.
--Have you scheduled out how many hours you are going to try to study each
week in September (I am not sure that scheduling more than one month in advance
is very helpful)? Have you scheduled out how many hours you are going to study
each day for the next two weeks? (You don’t need to study every day but you
probably need to study most days.) Have you scheduled out when you are going to
be studying each day during the coming week? Have you scheduled out exactly
what you are going to be accomplishing each of the next two or three days?
--Preparation requires two processes: (1) going over new material and (2)
reviewing previously covered material. Do you have a schedule for how much time
you are going to spend on each? I am a big believer that you divide your
remaining time into three parts. For the first 1/3 of the time, you only study
new material and work new problems. During the second 1/3, you study new
material 2/3 of the time and review previous material for the remainder. For
the final 1/3 of the study time, you only cover new material 1/3 of the time
with review making up the other 2/3. I think this pattern helps you get through
everything and keep it all fresh in your brain.
--Have you decided how you are going to keep notes? You need those for
review purposes; you cannot keep everything in your head. Here is my rule. If
you work a question and get it right, you probably do not need to take any notes
on it. If you work a question and get it wrong, you want to isolate what you
missed and take a note on just that. Focus on the part that you missed. There
is where you have the opportunity to learn. That was the part you did not know.
I like keeping my notes on 3 by 5 cards with a question on one side and the
answer on the other. That way you have something you can carry with you to
study and it is very easy to use.
--Have you looked at the hundreds and hundreds of questions on
www.CPAreviewforFREE.com to see how you can start working them and begin to add
points right now. Read a question and get it right, then move on. Read a
question and miss it, then stop and isolate the mistake and set up your note
card. Set a goal: how many questions and problems do you want to do
today? Tomorrow?
Go about the exam the right way and you can do it!!!
(2)—FACT: roughly half of the people who take each of the four parts of the
CPA Exam pass while roughly half fail. Half pass and half fail. Consequently,
your primary goal is to be in the upper half. If you can get into a position
where your knowledge is in the upper half, you’ve got a great chance to pass
the exam. You do not need to be in the topo 1 percent. Not the upper 10
percent or even the upper 25 percent, just the upper half. That is a goal that
YOU can achieve. You might not be able to be number one in class but, if you
work at it, you CAN get in the upper half.
You know the next question: how do you get into the upper half? Today, in
the United States, it is Labor Day, a national holiday. Most people spent the
day enjoying the vacation. Everyone needs a rest occasionally and, if you needed
a break from preparing for the CPA Exam, I hope you took it. I always believe
that occasional relaxation and occasional exercise will help you function more
effectively the rest of the time.
However, when I took the CPA Exam, I always worried that I wasn’t smart
enough (I think this must be a universal human problem—self-doubt). I
wondered how I could ever catch up with those smart people so I could get in the
upper half. I didn’t want to be first; I just wanted to pass. One of my
favorite techniques was to study when I did not think other people were
studying. That really made me feel good. Whether it was Friday night or
Saturday morning or on holidays or on Sunday afternoon when most people are
watching football, I loved the idea that I was adding points to my score when
other people were loafing.
If you are taking the exam in October-November, you want to start working on
building a sense of confidence RIGHT NOW. One way to do that is to study in a
way that makes you feel like you are getting ahead of the competition. So, each
week, come up with a time where most people are not studying. Then, you put in
30 minutes or so—enough time so that you know you have added some points.
When I was preparing for the CPA Exam, I would decide what I wanted to do in
the first 30 minutes of the next day. When I went to bed at night, I placed my
books right beside my bed. In fact, I would open them to the spot I planned to
study.
Then, in the morning, before I even got out of bed, I grabbed my books and put
in 30 minutes. I felt strong the rest of the day. I loved realizing that I had
studied before other people had even gotten out of bed. No matter what I did
during the rest of the day, I had made progress.
You don’t need to be number one. You don’t even need to be number 40. You
just need to be in the top half. If you will start adding points when other
people are resting or playing, you are moving yourself up in the rankings and
getting ever closer to your goal.
(3)—WORDS FROM A GOOD BOOK. A friend of mine (actually the father of one of
my former students) sent me a book last week titled The Last Lecture by Randy
Pausch. Randy Pausch, for those of you who do not know, was a college professor
who died at a young age. However, before he died, he went back to his college
(Carnegie Mellon) and gave a wonderful lecture. You can see it at
http://www.youtube.com/watch?v=ji5_MqicxSo and it is well worth your time. Stop
reading this and go watch—it will help you.
The book that I received is a series of about 60 short thoughts that Pausch
wrote on a variety of topics dealing with living. Trust me, it is a tough book
to read without wanting to jump up and make more of your time on this planet.
On page 36, Pausch says “Fundamentals, fundamentals, fundamentals. As a
college professor, I’ve seen this as one lesson so many kids ignore, always to
their detriment: You’ve got to get the fundamentals down, because otherwise
the fancy stuff is not going to work.”
I agree completely with Pausch on the fundamentals. It is true about a lot of
things in life, even including the CPA Exam. Whether it is hand grenades or
horseshoes, you are not going to succeed unless you know the fundamentals. Most
people start preparing for the CPA Exam with a sense of being overwhelmed. They
want to skip the fundamentals and go right to the overly complex stuff.
“I’ve got to learn it all. I’ve got to learn all of the most difficult
topics in accounting, auditing, tax, and the like. It is just too much for
me.”
Don’t let yourself get distracted. You have to learn the fundamentals. You
have to know the basics. You just need to get in the upper half; you don’t
need to be perfect. To do that, the fundamentals are enough. How do you compute
bad debt expense? How do you handle the exchange of assets? How do you compute
present value? When is interest revenue not taxable?
In fact, one of my suggestions, as you study, is to start making a list of the
fundamentals. As you cover a topic, what parts do you see over and over? Just
make a simple list that you can go back and read now and then.
---Double-declining balance depreciation is 2 over the life times the book
value. That is a fundamental.
---Basic earnings per share is net income less preferred stock dividends
declared divided by the weighted average number of common shares. That is a
fundamental.
It is easy to fail the CPA Exam by actually trying to learn too much. If you
can just learn the fundamentals, you should be ready to pass.
September 1, 2008
CPA Review for FREE
www.CPAreviewforFREE.com
Lesson 7
Questions to Consider as You Begin Your Journey To Success
From: Joe
Best of luck to everyone who gets these email lessons down in the Louisiana
area. I have several former students who live down in New Orleans and I know
how scary and dangerous the hurricanes can be. I hope it is over soon and you
are back to being safe.
(a)—If this is your first email lesson from us, I want to welcome you. I send
these lessons out about 2-4 times each month to help current and future
candidates get ready to pass the CPA Exam. Thousands of accountants pass the
exam every quarter and so can you. Our goal at CPAreviewforFREE is to help
every person who wants to pass the CPA Exam to achieve that goal.
If you ever decide that you need to unsubscribe, the process is easy. Scroll
to the end of the lesson and click on the unsubscribe link. We love having you
with us but please feel free to unsubscribe whenever you need.
(b)—Please check out our advertisers on our website. They help us to provide
all of this free material to you through CPAreviewforFREE. Without them, we
would not exist. Plus, they provide a lot of great services that can really be
helpful.
(c)—Don’t forget to check out our free video tips under “Take a Study
Break” at www.CPAreviewforFREE.com. I hope to have a fourth one up in the
next couple of days. Each one is roughly 4-5 minutes long.
(d)—Also notice, as indicated in our last lesson, you can now find the
complete steps for an audit engagement at www.CPAreviewforFREE.com under CPA
Exam Resources on the homepage. Good information; it is helpful in coming to
understand the auditing process.
(1)—SEPTEMBER QUESTIONS. September is a month when the CPA Exam “goes
dark.” In other words, no one can take the CPA Exam in September. Thus,
everyone is getting ready. It is a great time, here on September 1, to plan out
your strategy for the October-November testing window. Things go so much better
if you have a plan. The CPA Exam is too important to leave your preparation to
random chance. Here are some questions that you should consider, starting
today.
--Have you qualified to take the CPA Exam? Have you received your NTS
(notice to schedule)? If you have not applied for the CPA Exam, read
“Applying for the CPA Exam” under CPA Exam Resources at
www.CPAreviewforFREE.com.
--Have you read the NTS carefully? There is a lot of very helpful
information included.
--If you have not previously taken the CPA Exam, have you read “The
Structure of the CPA Exam” at CPA Exam Resources at www.CPAreviewforFREE.com.
The more you know about the exam, the easier it is to pass. You don’t want
any surprises.
--Have you considered how many parts you want to take in October and
November? Do you want to take 1, 2, 3, or 4? As I have said before in these
email lessons, it all depends on how much time you have to study. This is a
very important question. For some advice, go to www.CPAreviewforFREE.com and
click on “resources” at the top of the page and then look at the “FAQ”
section.
--Have you actually scheduled the exams that you are going to take in
October and November? If you want specific dates, it is better to make the
reservation early. If you are taking more than one part in October-November,
try to leave as much time in between as possible.
--Have you scheduled out how many hours you are going to try to study each
week in September (I am not sure that scheduling more than one month in advance
is very helpful)? Have you scheduled out how many hours you are going to study
each day for the next two weeks? (You don’t need to study every day but you
probably need to study most days.) Have you scheduled out when you are going to
be studying each day during the coming week? Have you scheduled out exactly
what you are going to be accomplishing each of the next two or three days?
--Preparation requires two processes: (1) going over new material and (2)
reviewing previously covered material. Do you have a schedule for how much time
you are going to spend on each? I am a big believer that you divide your
remaining time into three parts. For the first 1/3 of the time, you only study
new material and work new problems. During the second 1/3, you study new
material 2/3 of the time and review previous material for the remainder. For
the final 1/3 of the study time, you only cover new material 1/3 of the time
with review making up the other 2/3. I think this pattern helps you get through
everything and keep it all fresh in your brain.
--Have you decided how you are going to keep notes? You need those for
review purposes; you cannot keep everything in your head. Here is my rule. If
you work a question and get it right, you probably do not need to take any notes
on it. If you work a question and get it wrong, you want to isolate what you
missed and take a note on just that. Focus on the part that you missed. There
is where you have the opportunity to learn. That was the part you did not know.
I like keeping my notes on 3 by 5 cards with a question on one side and the
answer on the other. That way you have something you can carry with you to
study and it is very easy to use.
--Have you looked at the hundreds and hundreds of questions on
www.CPAreviewforFREE.com to see how you can start working them and begin to add
points right now. Read a question and get it right, then move on. Read a
question and miss it, then stop and isolate the mistake and set up your note
card. Set a goal: how many questions and problems do you want to do
today? Tomorrow?
Go about the exam the right way and you can do it!!!
(2)—FACT: roughly half of the people who take each of the four parts of the
CPA Exam pass while roughly half fail. Half pass and half fail. Consequently,
your primary goal is to be in the upper half. If you can get into a position
where your knowledge is in the upper half, you’ve got a great chance to pass
the exam. You do not need to be in the topo 1 percent. Not the upper 10
percent or even the upper 25 percent, just the upper half. That is a goal that
YOU can achieve. You might not be able to be number one in class but, if you
work at it, you CAN get in the upper half.
You know the next question: how do you get into the upper half? Today, in
the United States, it is Labor Day, a national holiday. Most people spent the
day enjoying the vacation. Everyone needs a rest occasionally and, if you needed
a break from preparing for the CPA Exam, I hope you took it. I always believe
that occasional relaxation and occasional exercise will help you function more
effectively the rest of the time.
However, when I took the CPA Exam, I always worried that I wasn’t smart
enough (I think this must be a universal human problem—self-doubt). I
wondered how I could ever catch up with those smart people so I could get in the
upper half. I didn’t want to be first; I just wanted to pass. One of my
favorite techniques was to study when I did not think other people were
studying. That really made me feel good. Whether it was Friday night or
Saturday morning or on holidays or on Sunday afternoon when most people are
watching football, I loved the idea that I was adding points to my score when
other people were loafing.
If you are taking the exam in October-November, you want to start working on
building a sense of confidence RIGHT NOW. One way to do that is to study in a
way that makes you feel like you are getting ahead of the competition. So, each
week, come up with a time where most people are not studying. Then, you put in
30 minutes or so—enough time so that you know you have added some points.
When I was preparing for the CPA Exam, I would decide what I wanted to do in
the first 30 minutes of the next day. When I went to bed at night, I placed my
books right beside my bed. In fact, I would open them to the spot I planned to
study.
Then, in the morning, before I even got out of bed, I grabbed my books and put
in 30 minutes. I felt strong the rest of the day. I loved realizing that I had
studied before other people had even gotten out of bed. No matter what I did
during the rest of the day, I had made progress.
You don’t need to be number one. You don’t even need to be number 40. You
just need to be in the top half. If you will start adding points when other
people are resting or playing, you are moving yourself up in the rankings and
getting ever closer to your goal.
(3)—WORDS FROM A GOOD BOOK. A friend of mine (actually the father of one of
my former students) sent me a book last week titled The Last Lecture by Randy
Pausch. Randy Pausch, for those of you who do not know, was a college professor
who died at a young age. However, before he died, he went back to his college
(Carnegie Mellon) and gave a wonderful lecture. You can see it at
http://www.youtube.com/watch?v=ji5_MqicxSo and it is well worth your time. Stop
reading this and go watch—it will help you.
The book that I received is a series of about 60 short thoughts that Pausch
wrote on a variety of topics dealing with living. Trust me, it is a tough book
to read without wanting to jump up and make more of your time on this planet.
On page 36, Pausch says “Fundamentals, fundamentals, fundamentals. As a
college professor, I’ve seen this as one lesson so many kids ignore, always to
their detriment: You’ve got to get the fundamentals down, because otherwise
the fancy stuff is not going to work.”
I agree completely with Pausch on the fundamentals. It is true about a lot of
things in life, even including the CPA Exam. Whether it is hand grenades or
horseshoes, you are not going to succeed unless you know the fundamentals. Most
people start preparing for the CPA Exam with a sense of being overwhelmed. They
want to skip the fundamentals and go right to the overly complex stuff.
“I’ve got to learn it all. I’ve got to learn all of the most difficult
topics in accounting, auditing, tax, and the like. It is just too much for
me.”
Don’t let yourself get distracted. You have to learn the fundamentals. You
have to know the basics. You just need to get in the upper half; you don’t
need to be perfect. To do that, the fundamentals are enough. How do you compute
bad debt expense? How do you handle the exchange of assets? How do you compute
present value? When is interest revenue not taxable?
In fact, one of my suggestions, as you study, is to start making a list of the
fundamentals. As you cover a topic, what parts do you see over and over? Just
make a simple list that you can go back and read now and then.
---Double-declining balance depreciation is 2 over the life times the book
value. That is a fundamental.
---Basic earnings per share is net income less preferred stock dividends
declared divided by the weighted average number of common shares. That is a
fundamental.
It is easy to fail the CPA Exam by actually trying to learn too much. If you
can just learn the fundamentals, you should be ready to pass.
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