Don't Just Try--Do It

Lesson 15
Getting Better

From: Joe

(a) - We have hundreds and thousands of new visitors to our site
(www.CPAreviewforFREE.com) each week. So, if you are new, let me make
a couple of suggestions.
--On the homepage, click on "Resources" in the upper-right hand corner.
That will lead you to FAQs and Articles. I really would read all of
that, especially if you are just trying to get started toward passing
the CPA Exam.
--When you register on our site, make sure that the box is checked to
get additional CPA Exam information-that will put you on our list to get
these emails that we send out every week or two.
--Get started. A lot of people spend forever planning and never get
around to starting. The best thing you can do is go to a topic and
immediately start answering questions.
--For every question that you miss, take good notes to help you get the
question correct the next time you see it. You will need some easy and
simple way to review. Efficiency is very important. Keep the notes
short and have them focus on the questions you miss.

(b) - Whenever we start getting close to the end of a testing window, I
am always aware that a lot of people are getting ready to go into the
testing site. GOOD LUCK and always remember the C's:
--Stay calm
--Stay confident
--Maintain concentration

And, although it doesn't start with a C, watch your time very closely.

Finally, remember that you don't have to be perfect. You only have to
score 75 and that doesn't necessarily mean that you even need to get 75
percent of the questions correct because of the way they weight the
questions.


(c) - As always, if you need to unsubscribe, go to the bottom of this
email and click on the appropriate link and it will remove your name.
We love having each of you folks; we like helping people to pass the CPA
Exam but, if you need to leave, you certainly have that right.


(1) - I want you to stop for a moment in your preparation and do
something for me. I want you to think about how well you are preparing
for the CPA Exam. Think about the time you are spending and how well
you are spending those hours. Think about the whole process that you
are going through at the moment.

Now, I want you to rate yourself on a scale of 1 to 10. One being that
you are really not making any progress and ten being that you are
absolutely as efficient as possible. So, let's say you are a 4 or a 7
or a 5. My guess is that you roughly know how well you are doing. Most
people certainly do.

Now, finally, I want you to make a list of the things that you could do
this week to become one point better. Just one point better. In other
words, if you are a 5 as a CPA review student, what would it take to
become a six? What would you have to change to get one point better?

Notice, I'm not asking you to become a ten. I think people mess up by
seeking perfection and then being disappointed when they don't get
there. So, make a list of 3-5 things that you might be able to do that
would move your ranking up one point. I think that is a very makeable
and helpful objective. Getting better.

For example,
--could you add 15 more minutes of study by getting up 15 minutes
earlier in the morning or go to bed 15 minutes later? That alone is
nearly two hours per week.
--could you carry your note cards with you wherever you go so you can
study at free moments during your day?
--could you cut down on the amount of television you watch (or even turn
the television off completely)?

I truly believe that the secret to success is to work to get better but
first you must (a) decide where you are and (b) determine what might
help you get better.

Once you have your list, do them for one week to see what helps and what
doesn't help. Notice that I did not say that you should "try" to do
them. I don't want you to try to do them; I want you to do them. "I'll
try to do them" is code for "I probably won't do them."

I was in an office building last week waiting for a meeting to begin.
On one of the desks was a book of sayings which I picked up and began to
leaf through. It was a book of quotes and the first one that I noticed
was from Yoda, the little character from Star Wars. My first comment to
myself was a cynical one: "Oh great, now I'm getting advice from a
muppet." But here is what Yoda had to say: "Do, or do not. There is
no 'try.'"

That hit home.

I've taught in college now for 38 years. I have had conversations with
thousands of students who were not living up to their potential.
Thinking back, I realize that their normal response is always: "I'll
try to do better."

Trying to do better implies that it is out of your hands.
I'm not asking you to pass the exam; I'm asking you to prepare
better-spend more time, be a little more efficient. Do it - don't try
to do it.
Don't respond with: "I'll try." In fact, don't respond at all. Just
do it!!!!

Your goal for this week is to become one point better in your
preparation for the CPA Exam. Decide what you need to do to make that
happen and then DO IT!!!!


(2) - Here are a couple of quick practice questions that I'm getting
ready to load up on CPA Review for FREE. Remember that we have about
2,000 free (free) questions available for you at
www.cpareviewforfree.com.


Auditing & Attestation

An auditor assesses inherent risk in an engagement. An auditor assesses
control risk in an engagement. Then, based on those two assessments,
the auditor does enough substantive testing to reduce detection risk so
that overall audit risk drops to an acceptably low level. That is the
structure of an audit. In assessing control risk, the auditor starts by
learning the design of the control system and then considers whether to
perform tests of individual controls. If the design of the control
system is viewed as weak, which of the following is most likely to be
true?
A - The auditor will be likely to test the controls because of the
weakness.
B - The auditor is likely to do additional substantive testing.
C - The auditor will likely reduce the assessment of inherent risk.
D - An unqualified opinion cannot be issued.

Answer is B

When the design of internal control is weak, there is no reason to do
any testing of those controls. Properly operating within a weak system
does not make it any less weak. Instead, the auditor will probably
assess control risk as high which is likely to force the auditor to do
additional (or better) substantive testing in order to compensate for
this problem. Detection risk has to be quite low to make up for the
weakness in internal control. The assessment of inherent risk is
independent from the assessment of control risk and is not affected.
Finally, as long as the auditor eventually reduces overall audit risk to
an appropriately low level, an unqualified opinion can be given even
though the control system is weak.


Financial Accounting and Reporting (we are discussing pensions currently
in intermediate accounting).

A company has a defined benefit pension plan. On January 1, Year Ten,
the company amends a contractual provision within the plan. This change
causes the projected benefit obligation to go up by $700,000. At that
time, the vested employees are expected to work another five years on
the average. On the Year Ten financial statements, what is the
reporting of this $700,000 prior service cost?

A - $700,000 is reported within pension expense B - $580,000 is reported
as a pension asset and $120,000 is reported within other accumulated
comprehensive income within stockholders' equity.
C- $700,000 is reported within other accumulated comprehensive income
within stockholders' equity.
D - $580,000 is reported within other accumulated comprehensive income
within stockholders' equity and $120,000 is reported as pension expense.

Answer is D

Prior service cost from amending the contractual provisions of a defined
benefit plan are initially reported within accumulated other
comprehensive income. This amount is gradually moved into pension
expense over the remaining working life of the employees at the date of
amendment. At the end of the first year, $140,000 ($700,000/5 years) is
moved from stockholders' equity to pension expense.


Regulation

Which of the following moving expenses can an individual taxpayer not
take as a deduction to arrive at adjusted gross income?

A - The taxpayer took a job in a city 80 miles away but did not move for
the first 15 months so that her eldest son could graduate from his local
high school.
B - The taxpayer commuted 12 miles to get to his job but took another
job that required a commute of 55 miles so he moved to be closer.
C - The taxpayer moved to take a job in a city 100 miles away but
retired after only working for 42 weeks.
D - The taxpayer took a job in a city 120 miles away and sold his house
to move into an apartment at the new location.

Answer is B

There are several tests that must be met before moving expenses can be
deducted. For example, the taxpayer must normally move within a year of
taking the new job unless circumstances arose that prevent the move in
that time period. The son finishing high school is one of those
circumstances. The taxpayer must also work at least 39 weeks in the
general area of the new location. Moving must be a change in the
taxpayer's main home, which can be a house, apartment, condominium,
houseboat, or the like. Finally, the new job must be a commute of 50 or
more miles farther than the previous commute. In B, the commute is only
43 miles farther (55 miles minus 12 miles) and does not qualify.


BEC

A company started production on 110 widgets. Due to an abnormal loss, 8
of the widgets had to be thrown away after they were finished. Another
12 of the widgets were not complete at the end of the year. These units
were 100 percent complete as to direct materials but only 50 percent
complete as to conversion costs. The company spent $2,200 on direct
materials, $832 on direct labor, and $520 on factory overhead. What
amount of cost was moved into finished goods for the year?

A - $2,970
B - $3,025
C - $3,118
D - $3,234

Answer is A

The company had 110 units: 8 were lost, 12 were not completed, so the
remaining 90 must have been completed. Because the loss of 8 units was
viewed as abnormal, their cost is computed and then moved into a loss
account on the income statement. The number of units of direct material
is 110 (90 completed, 8 lost that were completed, and 12 in-process that
were completed as to direct material). The direct material cost per
unit was $2,200/110 units or $20 each. The number of units of
conversion cost (direct labor and factory overhead) is 104 (90
completed, 8 lost that were completed, and 12 that were 50 percent
complete as to conversion costs). The conversion cost per unit is
$1,352/104 units or $13 each. Because 90 units were completed (and not
lost through an abnormal loss), cost transferred from work-in-process to
finished goods is 90 times $33 ($20 plus $13) or $2,970. (Notice that
you don't have to use either a weighted-average approach or a FIFO
approach because
there is no beginning work-in-process.)


Delighted to have you with us. Work this week on getting better as a
student.

Don't try - do it