From: Joe
(a) – I always appreciate so much all of the emails that I get from CPA Exam candidates. It is a great job when you hear from people from all around the world. It is a neat time when technology is so advanced that you can assist people living in dozens of different countries.
Here are a couple of the emails that I got this week:
"Let me start by saying your website is incredible. The questions on your website are much better then (Giant) CPA Review. The explanations of the answers are in the league of their own. . . . I hope your website puts them out of business. . . . Thank you for your website and your motivational YouTube videos."
"Thank you very much for your encouragement and the great effort behind the creation of your CPAREVIEWFORFREE website. My heartfelt appreciation goes out to the entire team behind this great work. I am a CPA student from the Middle East, planning to sit for BEC and FARE at the end of November. Although I started using (Well Known) CPA review book, I found the questions and answers on your web site quite different and more informative. Plus, they boost my confidence level. Once again, thank you very much."
And finally a request from a candidate. If you are interested in doing a study group in this area, hit "reply" and let us know and we will forward the information.
Here's the request: "I discovered your website through AccountingCoach.com and extend my gratitude for the sample questions and the guidance provided for successfully passing the CPA Exam. I live in the East Los Angeles area. I am interested in discovering other candidates in the area who might be interested in creating a study group. Your help in this matter in great appreciated."
(b) – Don't forget that you can find hundreds and hundreds of great CPA Exam review questions at www.CPAreviewforFREE.com. Study a topic intensely or take randomized exams. Read the questions and study the answers. Take notes on the ones you miss. Start adding those points to your base of knowledge. You need 75 points; we can help you get them.
(c) – If you need to unsubscribe, just scroll to the end of this email lesson and click on the appropriate link.
(1) – I am a big fan of William Shakespeare. I just think it is truly amazing that one person could write so many wonderful, beautiful, and insightful words. I even try to get my intermediate accounting students to go see Shakespeare plays because they need to know more than just accounting to be successful in life.
I was recently reading a fictional book about Shakespeare and someone in that book asked him how he could write so many magnificent works. His answer was immediate and to the point: "I worked very hard."
I think we all give way too much credence to the importance of virtually everything other than hard work. Whether you are playing football or baseball or studying for intermediate accounting or preparing for the CPA Exam, there really is absolutely nothing that takes the place of hard work. It is hard to get successful at anything without hard work.
I have taught in college now for 38 years; I have worked with tens of thousands of students and exam candidates. I have found that virtually all of my students are capable of making an A. However, I already know who WILL make an A. If you teach something for that many years, you learn such things. Almost without exception, the students who get the high grades are the ones who work the hardest. Just like Shakespeare: simple and to the point. It is not about ability; it is not about smarts; it is not about having the knack. It is much more basic than that. The students who work the hardest—put in the most hours and do so with genuine intensity—tend to earn the good grades.
Ray Kroc, the man who built McDonalds into the giant company it is today has a wonderful and famous quote: "Luck is a dividend of sweat. The more you sweat, the luckier you get."
How much are you sweating in order to pass the CPA Exam? If you are not sweating, you probably need to work a bit harder.
There is a question that is probably the most important one that you can ask yourself while you are preparing for the CPA Exam: Am I outworking the other candidates or are they outworking me? That is a question that I don't often hear people asking but I think that is the crucial question. If you can truthfully say "I know there are thousands of people who really want to become CPAs and they are studying very hard but I am still outworking them" then you are on the road to success. Your sweat is making you lucky. However, if you know, deep down in your heart, that lots and lots of people around the world are outworking you, then you know what you have to do. You have to kick it up a notch. You have to push yourself just a little bit more. You have to figure out how to work as hard as they are.
How do you start? How do you work harder? Start by working just 15 more minutes every day. If you usually work 75 minutes each day, then work 90 minutes instead. That doesn't seem like much of a change but you just increased your time BY 20 PERCENT. Everyone can find 15 free minutes per day. Don't try to double your time; that is not realistic. Make it your goal over the next week to add 15 minutes per day to your study time. Even that small of a change can add an incredible amount of points to your total.
Okay, I know what you are going to say: "I'm working so hard now, I'm so busy now, I'm so pushed for time now, that I cannot add even 15 minutes per day."
Well, let me ask you this question. If I said that I would give you $1 million just as soon as you passed the final part of the CPA Exam, what would happen?????
The answer is simple. If the reward is big enough, YOU will make time. You would stop sleeping as much; you would take a shorter lunch break; you would stay on email less; you would cut out all unnecessary activities so you could study. If the reward is big enough, everyone will pass.
So, do not come back and tell me that you just cannot find the time. Everyone makes time for what they really want to do. I am not asking for hours. I am only asking you to add 15 minutes per day. There just has to be some way to squeeze out a few extra minutes during the day.
That is my challenge to each person on our email list for this week: I want 15 minutes more in study time each and every day. Make it happen. Don't make excuses; make it happen. You will be surprised by how much luckier you start to get when you start to work a bit harder. We can accomplish ever so much by just putting things into priority and working a bit more efficiently and adding those 15 minutes.
(2) – Here are a few quick practice questions that I want to load up on www.CPAreviewforFREE.com but I will let you have a crack at them first.
Financial Accounting and Reporting
The Impala Company has revenues of $300,000 and expenses of $200,000 for the most recent year. However, to date, no recording has been made of the company's investments in marketable securities. During the current year, the company held trading securities that went up in value by $3,000. In the same period, the company held available for sale securities that went up in value by $2,000. Assume that the fair value option has not been elected. Which of the following statements is true for the current year?
A – Net income was $100,000 and comprehensive income was $105,000.
B – Net income was $105,000 and comprehensive income was $105,000.
C – Net income was $103,000 and comprehensive income was $105,000.
D – Net income was $102,000 and comprehensive income was $105,000.
Answer is C
Changes in the value of trading securities are put directly into net income. The $3,000 appreciation of value for these securities increases reported net income immediately from $100,000 to $103,000. Changes in value of available for sale securities are put into accumulated other comprehensive income in the stockholders' equity section of the balance sheet. Hence, the $2,000 increase in value does not impact net income. However, in calculating comprehensive income, that $2,000 is included which moves net income of $103,000 up to a comprehensive income figure of $105,000.
BEC
A company produces 10 different products in 10 different plants. From the items produced in Plant 8, the company makes sales of $900,000. Variable costs are $300,000 in that plant and the fixed costs are $700,000. Because the plant is losing $100,000 per year, company officials close it at the start of the current year and lease the building to a competitor for a flat $360,000 per year ($30,000 per month). How does this decision impact the company's overall net income for this year?
A – Net income will go up by $660,000.
B – Net income will go up by $700,000.
C – Net income will go down by $40,000.
D – Net income will go down by $240,000.
Answer is D
Currently, the company is losing $100,000 from Plant 8. Unless stated otherwise, the fixed costs will not be eliminated by closing the plant. Such costs include property taxes and insurance that are often unaffected by revenues and other variables. After closing, revenues will be $360,000 from the lease but the fixed expenses of $700,000 will remain so that the company will lose $340,000. Going from a loss of $100,000 to a loss of $340,000 reduces the company's net income by $240,000.
Auditing and Attestation
Xavier, CPA is currently auditing the financial statements of the Polk Corporation. At the moment, Xavier is assessing the control risk surrounding the recognition of sales revenue. The CPA has become concerned that revenues are understated. The CPA thinks the company may be shipping merchandise to false customers with no sales invoice (or other record) being prepared. If true, company employees are using this scheme to steal goods from the company. In assessing the possibility of this problem, which of the following is the auditor most likely to do?
A – Take a sample of sales invoices and match those documents to the appropriate bill of lading or other shipping document.
B – Take a sample of receiving reports and match those documents to the appropriate sales invoice.
C – Take a sample of cash receipts and match those payments to the appropriate sales invoice.
D – Take a sample of bills of lading (or other shipping document) and match those documents to the appropriate sales invoice.
Answer is D
The company is shipping merchandise but may not be preparing a sales invoice. The auditor should look for shipping documents (usually a bill of lading) and then make sure that a sales invoice was subsequently prepared for each. The auditor typically goes from the event that is known to happen to the event that might not have happened. Here, the shipment was made but the auditor is afraid that the sales invoice was never produced.
Regulation
In Year One, Nancy Dru's husband died. They had three children, two of which were still dependents. Nancy does not remarry and the two children remain as her dependents living with her until Year Five. What is her filing status for federal income tax purposes?
A – She is head of houseful for Years One through Four.
B – She is a qualifying widow (surviving spouse) for Years One through Four.
C – She is a qualifying widow (surviving spouse) for Years Two and Three and head of household for Year Four.
D – She is a qualifying widow (surviving spouse) for Year One and head of household for Years Two through Four.
Answer is C
In the year of death, the couple files a joint return as long as they would have been able to file a joint return at the time of death. Because of the dependent children, she can then file as a qualifying widow for the next two years. After that time, she can file as head of household as long as the children are dependents or unmarried and continue to live with her.
Okay, start finding those extra 15 minutes each day to study for the CPA Exam. That is your assignment for this week.
Joe Hoyle
Co-Founder
CPAreviewforFREE
www.CPAreviewforFREE.com
PASS THAT EXAM -- YOU CAN DO IT!!!!
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