What Are Your Plans TODAY
www.CPAreviewforFREE.com
Lesson 37
From: Joe
(1) - Just a quick reminder. It is Father's Day on Sunday. If you are lucky enough that your father is still alive, make sure to give him a big hug. Never pass up those chances. Some things (well, a few things) are even more important than the CPA Exam.
(2) - In less than a year, we have gone over 3.5 million page views. Great job!!! You guys are the best!!! You have spread the word about www.CPAreviewforFREE.com. We could not do this without you. Give yourselves a big pat on the back.
(3) - It is raining and cool here in Richmond, Virginia today. It is a great day to add some points to your CPA Exam score. (Of course, I would assert that every day is a great day to add some points.)
Which raises some important questions. When you got out of bed this morning:
--How many points did you plan to add to your score today?
--How many minutes or hours did you plan to spend studying today?
--What times did you have blocked off to study today?
--Specifically, what were you planning to do in your studies today to add the desired points?
If you have followed these email lessons for long, you know how much I stress putting in the time. You have heard me say, more than once, Hours Equal Points.
However, it is not just hours alone that make good things happen. It is Hours plus Planning. Humans often waste too much time being disorganized. I'll take an organized hour of study over a disorganized two hours any day.
If you are keeping a list, Hours and Planning go on the good side and Procrastination and Disorganization go on the bad side.
And, you can get organized by simply answering a couple of questions each night before you go to bed as you look toward the following day: how much time do I want to study, when am I going to study, what am I going to do during this study time???
Simple questions but they make all the difference in the world.
Once you have those questions answered, you are set but only if you have the self-discipline to stick with the plan. In fact, I think my real equation should be:
Hours plus Planning plus Self-Discipline = A Passing Grade
Two simple questions: look at your watch-what time is it right now? How much time have you spent on the CPA Exam so far TODAY? If you don't plan, time gets away from you.
Here's the most important equation you can learn for the CPA Exam.
Hours plus Planning plus Self-Discipline = A Passing Grade
(4) - I received several wonderfully nice emails over the last week or so. Always brightens up my day.
"I want to thank you for offering this FREE site....thought the only free commodity in the world was air until a friend introduced me to your site. I used it and continue to use it to assist with preparing for
the CPA exam. As a mother of 2, I do not have time to go to class and spend the funds but I can study when my kids go to bed....about an hour or 2 so I fall into the category of those who need at least 60 days before taking any part."
"Thanks for always believing in us (the CPA candidates) Mr. Hoyle. God bless you for making a site that I can go on every night and do problems! I WILL PASS--I KNOW IT!! Keep up the good work!"
"Thanks for the opportunity and the wonderfully constructed questions on your website. It has been a great tool in my preparation along with the inspirational stories (excellent)."
"I used CPAreviewforFREE.com to study for my last two exams. I had consistently been failing BEC with low 70s. I started doing your questions, and passed with 75 and Audit with 77. I was going to lose my credit for REG if I didn't pass these last two. Whew! What a relief! I have been studying for two years and I finally did it. I studied so much. I spent hours every night through tax season because I had no choice. Anyway, your questions are different than those at (big review program) so I'm sure just seeing different ones helped a lot. Thanks for your very supportive and uplifting emails. That in itself made a difference to me and helped me to never give up."
(5) - As always, please understand that you can unsubscribe from these emails just by scrolling to the bottom and clicking on the appropriate button. I love writing them and I hope you enjoy reading them. However, your time is valuable. When you are ready to leave, please feel free to do so.
(6) - Remember that all CPAreviewforFREE.com questions and answers can be downloaded for a small fee. You are certainly welcome to work them online for free. However, if you want a paper copy that you can carry around with you, just go to "Store" in the upper right hand corner of www.CPAreviewforFREE.com.
(7) - June is a "dark month" in that the CPA Exam is not given at this time. Everyone who is currently studying is getting ready for July and/or August. No one is taking the exam tomorrow. Usually, people start out strong in their studies and over time find it more and more difficult to put in the time especially when the exam is still weeks away. They begin to fade.
If you have started to fade a bit and are finding it harder to put in the necessary study time and effort, let me make a couple of suggestions.
---Moderate exercise (I'll let you decide what "moderate" means) will always increase energy. Go out and take a 15 minute walk 3-4 times a week. I know many of you are saying "I just don't have time to go for a walk." Well, my response is: "MAKE TIME!!" Prepare a sandwich and then go for a walk at lunch. As soon as dinner is over and before you start anything else, go for a quick stroll. You will just feel better and if you feel better, you'll accomplish more. Give me 15 minutes 3-4 times per week and your chances to pass go way up.
---Change where you study. If you study at the same desk and chair day in and day out, the atmosphere starts to get tiring. At least once a week, at least for one day, study some place completely different. You want to keep from getting into a rut and a different room can help.
---Give yourself rewards. For example, if you like chocolate, buy yourself some of your favorite brand. Then, promise yourself a piece of chocolate when you finish 30 questions and answers. Don't make it dependent on getting them right or wrong because that gets depressing if you miss questions. You want to reward yourself for just doing the work.
---Figure out what time of day you feel strongest and try to study at that time. Unfortunately, many people wind up studying when they are already tired and worn out at the end of the day. I'm convinced that we all have strong periods of time during each day and it is helpful to study at those times.
---One day a week, if you can, study with a friend. It is helpful to share this experience. It provides a different perspective. Even if you just sit for an hour asking questions back and forth, it is a more active way of preparing and will make you feel better. I'm not a big believer in studying together every day but once a week is a nice change.
---At least once a week, do something that is fun. Go swimming, go to a movie, go to an amusement park. Studying can get to be drudgery. Miserable people don't do well. You want to have something fun to look forward to. When I was studying for the exam, I liked going to movies. For two hours, you are in a dark room and you cannot study. You've paid your money so you just cannot get up and leave. I always walked out of each movie feeling refreshed and ready to get back to work.
---If possible, try to avoid whining about all the work. I know some people think that whining is a good release. I tend to believe whining just makes the misery more real. Listen to the things you say about the CPA Exam and try to make as many of them as positive as possible. Keep a list so you can gauge how much whining you are doing.
It is easy to start feeling like you are pushing a huge boulder up a steep hill. That is not helpful. Suffering does not add points. Experiment with ways to make the experience more palatable. If you feel better, you will do better.
(8) - Time for a bit of practice. I am getting ready to add these questions to our database but, before I do, I will run them past you folks.
BEC
A company is producing wagons. The company expects to produce 10,000 wagons this year and take three hours of direct labor to complete each one. The direct labor is supposed to cost $15 per hour. The company actually works 31,000 hours but only produces 9,800 wagons. The labor cost is $496,000 or $16 per hour. In a standard cost accounting system, what is the labor rate variance?
A - $29,400 unfavorable
B - $30,000 unfavorable
C - $30,600 unfavorable
D - $31,000 unfavorable
Answer is D
Company employees were paid a rate $1 per hour over the standard ($16 per hour less $15 per hour). The company employees worked a total of 31,000 hours. For each of those hours, the employee was paid $1 over standard. The labor rate variance is unfavorable (company paid more than standard) and equals $31,000 ($1 per hour for 31,000 hours).
Regulation
Morris Ronaldo runs a small sole proprietorship that has one truck that is used solely in the business. It had a cost of $70,000 but a tax basis of only $19,000. However, it has a fair value of $22,000. It is traded for a similar truck with a list sales price of $80,000. To make the sale, the dealer reduced the price by $24,000 as a trade-in allowance for the old truck. What is the basis of the new truck for federal income tax purposes?
A - $75,000
B - $76,000
C - $77,000
D - $78,000
Answer is A
This is a trade of like-kind assets. For tax purposes, the basis of the new property equals the basis given up. The old truck has a tax basis of $19,000. In addition, the company pays cash of $56,000. That is the $80,000 price less the $24,000 trade-in allowance. The company gives up a basis of $19,000 and cash of $56,000. The amount surrendered is the total tax basis surrendered or $75,000 ($19,000 plus $56,000). That is the basis for the new property received in the trade.
Financial Accounting
Ronald Morrisson runs a small sole proprietorship that has one truck that is used solely in the business. It had a cost of $70,000 but a book value of only $19,000 after years of depreciation. However, it has a fair value of $22,000. It is traded for a similar truck with list sales price of $80,000. To make the sale, the dealer reduced the price by $24,000 because of the trade in of the old truck. What is the reported cost of the new truck according to US GAAP?
A - $75,000
B - $76,000
C - $77,000
D - $78,000
Answer is D
For financial reporting purposes, an exchange is reported by taking off the old book value and putting on the fair value of the assets surrendered to create the trade. The fair value of the old truck is $22,000. The cash surrendered is $56,000, the $80,000 sales price less the $24,000 trade-in allowance. If the company gives up assets of $22,000 and $56,000, the new asset is recorded at its cost of $78,000.
Auditing and Attestation
Clemmons CPA is performing an audit of a company and is required to follow the regulations of the PCAOB. At the end of the engagement, audit documentation must be kept to demonstrate how the audit opinion was derived. How long is this retention period?
A - 3 years
B - 5 years
C - 7 years
D - 10 years
Answer is C
The PCAOB wanted auditors to retain audit documentation for a sufficient period of time so that information would be available as long as necessary to support the opinion that was rendered. This retention period was set at 7 years.
Again - tell you father how much you appreciate him!!!
"The only sin is mediocrity." Martha Graham (good words to live by).
Joe
Thursday, June 18, 2009
Monday, June 8, 2009
Don't Get Stuck In Your Own Dreams
Don't Get Stuck In Your Own Dreams
www.CPAreviewforFREE.com
Lesson 36
From: Joe
(1) - I was watching the Tony Awards last night on television. They are given each year for the best plays on Broadway in New York City. I had seen a couple of the plays so I was interested to see what won.
During the program, they had a short tribute to Natasha Richardson, a relatively young actress who died last winter in (I think it was) a skiing accident. They said that one of Ms. Richardson's favorite lines was "Stop dreaming and do it!!!"
A lot of us, certainly including me, talk about how wonderful it is to have dreams. And, yes, it is great to have large and bold dreams. We need those for life. But she was absolutely right. Sometimes, we get stuck in our dreams and have more enjoyment from the dream than we do from the reality.
You need reality if you are going to pass the CPA Exam and not just dream about passing.
I hear these all the time:
---I really really want to make an A in Intermediate Accounting.
---Well, what have you done so far to achieve that dream?
---Nothing so far but I plan to really start work sometime in the next week or so.
---I really really want to pass the CPA Exam.
---Well, that is great. How much studying have you done?
---Not much so far. I've spent my time buying books and note cards and getting all my materials ready.
---I really really want to knock out the first part of the CPA Exam soon.
---Well, that's a good goal. How much of the material have you gotten covered so far?
---Not much yet. I always used to cram in college so I'm kind of waiting until the exam date gets closer before I get down to serious work.
If you ask these people, they could probably talk your ear off about how much they want to succeed, how they think about achieving their goals all the time. They really love those dreams. They don't really want to pass; they just want to dream about passing.
And, I understand. There is something exciting about planning to win. There is something stimulating about envisioning the winning score and the glory of being the champion. However, at some point, you have to switch over from dreams to reality. That usually means doing some hard work and doing it on a very consistent basis.
Dreams are fun. Hard work can be tedious.
Dreams feel good. Hard work can be very uncomfortable.
Dreams can get you excited. Hard work is best done at a slow and meticulous pace.
But, dreams along GET YOU NOTHING.
I love dreams and I always encourage everyone to dream. At some point, though, dreams can be addictive and lead to nothing. You have to break through and push yourself to actually achieve success.
If you are having trouble moving toward your goal of passing the CPA Exam, it may well be that you are stuck in your own dreams. The dream of passing the exam is all you need. And, it is a lot more fun than doing the serious work to get those points.
Stop dreaming and DO IT!!!
(2)
(A) - As always, do not forget that you can unsubscribe from this service at any time that you wish. Our weekly emails go to thousands and thousands of CPA Exam candidates each week located around the world. We are delighted to have you as part of that community. Do understand, though, that you can unsubscribe by simply scrolling to the end of this email and clicking on the appropriate link.
(B) - We just ended our 49th week of operation on www.CPAreviewforFREE.com. When we got started last summer, we had no money for advertising so we just hoped people would hear about us through word-of-mouth. When we started, my dream was that we would have one million page views in our first year. That seemed like an incredibly high number without advertising. That just seemed like a huge number of points to help add to the scores of our candidates. Well, last week, we moved over 3.4 million page views. So, I guess you could say that I underestimated a bit. Thanks to everyone who has told others about www.CPAreviewforFREE.com. We could not be doing this without you.
(C) - Just a reminder that all of our questions and answers are free. However, if you want to buy and download a copy so that you can put them in your brief case and take them with you, just go to www.CPAreviewforFREE.com and click on Store.
(D) - Thanks to everyone who sent in information that I can share with college students at my speech this Saturday on the CPA Exam. I always appreciate your assistance.
(3) - Questions. I give presentations around Virginia about the CPA Exam and, of course, I help run www.CPAreviewforFREE.com. I get a lot of questions. So, I thought I would list some of the most prevalent questions and my typical answers.
Question: Should I take the CPA Exam right out of college?
Joe's Response: There are certainly some advantages in taking the CPA Exam soon after college. First, you are used to studying. Second, you are used to taking tests. Third, you have (or should have) a lot of knowledge already in your head from the college classes. However, I've known a lot of students who graduated from college and took the CPA Exam because everyone told them to and then failed miserably. Sometimes those candidates were so discouraged that they never took the exam again. Be a little careful before you rush to take the CPA Exam right out of college.
I believe you should know two things before you decide to take the exam. First, you really need to know why YOU want to pass the CPA Exam. Not your neighbor or your friend or your mom or your spouse. Why do YOU want to pass the CPA Exam? It is hard to do all of that work if you don't have a good reason. You need an anchor and that anchor is your reason for wanting to pass. Be sure you know that.
Second, you need to be able to put in enough hours. It is virtually impossible to pass the exam if you don't study enough. If you can put in 60-100 hours per part, you should be ready.
Be honest with yourself: Why do you want to pass? Will you be able to put in the necessary hours? Those questions are both really important. Until you can answer both of those, you probably should wait on taking the CPA Exam.
Question: Don't I need to take a CPA Review course and pay a couple thousand to them?
Joe's Ideas: I am obviously biased but I am always shocked by people who have a need for money and are still willing to give two or three thousand dollars away without first trying to save the money. With that kind of logic, it is no wonder that we are in a recession. If it were me, I'd try CPA Review for Free for 4 weeks and then make a decision. I firmly believe you can pass without giving away your money and I would sure as heck take a shot at it if it were my money.
Question: What's the major reason that people fail the CPA Exam?
Joe's Gut Reaction: Failure to put in enough hours, without a doubt. The exam is built to reward hours of study. It is very difficult to pass if you have studied 20 hours and the guy beside of you has spent 75 hours. It is not the money or the teacher or much else - it is the hours.
Question: Okay, well, what is the most likely reason that a person can do enough study and still fail?
Joe's Thoughts: This is just speculation on my part but I imagine that it is time management problems at the site. You can be an absolute genius but if you don't finish more than 3/4 of the exam, it is not likely that you are going to pass. You can know everything about everything but it is tough to get enough questions right if you rush through the questions like the room is on fire and finish 90 minutes early. There are no guarantees but if you (a) put in enough hours and (b) manage your time well, you should have a very good chance to pass.
Question: How many parts should I take in one window?
Joe's Feelings: That depends entirely on how much time you have to study. If you can put in a legitimate three hours per day, it is going to take you 20 days to study 60 hours. So, taking an exam every 20 days is certainly possible. On the other hand, if you can only average one hour per day, it will take 60 days to get in 60 hours and you probably can only take one test per window.
I must admit that I would like the idea of getting the exam finished so I could get on with life. That appeals to me. I typically like to see people take at least two parts per window. However, I think everyone has to remember that there is no one right answer to that question. How much time do you have to spend studying?
Question: Which part should I take first?
Joe's Best Guess: That's actually an easy question. I am always in favor of taking the part that you like best first. It is a good idea to do a part where you will not mind spending the time and, hopefully, are most likely to pass. I am an accountant; I like numbers; I would start with FAR. However, each person is different. Think about the parts and go for the one that you like best.
If you have questions for Joe, send them in. If I can give a legitimate and reasonable answer, I'll be glad to let you know what I think.
(4) - Here are a few practice questions to get your mind thinking today. If you go to www.CPAreviewforFREE.com, you will find that we have 2,000 well written questions and answers that should give you the 75 points you need for success on the CPA Exam. Most of them look kind of like the ones here.
Financial Accounting
On January 1, Year One, Company P has land with a cost of $100,000 and a fair value of $130,000. On the same date, Company S has land with a cost of $80,000 and a fair value of $90,000. On that date, Company P bought Company S and paid enough money that goodwill was recognized. One year later, on December 31, Year One, Company P has land with a cost of $120,000 and a fair value of $160,000. On the same date, Company S has land with a cost of $100,000 and a fair value of $130,000. What is the balance in the consolidated land account on December 31, Year One?
A - $220,000
B - $230,000
C - $250,000
D - $290,000
Answer is B
When Company P bought Company S, it paid an additional $10,000 because Company S's land had cost $80,000 but was actually worth $90,000. This cost paid by Company P in acquiring Company S is viewed as another cost paid for this land. At the end of Year One, the land held by Company P now has a cost of $120,000. Land held by Company S has a cost of $100,000. Company P has the additional cost of $10,000 because of its acquisition of Company S. The consolidated balance for land is $120,000 + $100,000 + $10,000 or $230,000. The information about goodwill simply indicates that Company P was not able to buy Company S at a bargain purchase price.
Auditing and Attestation
Jones and Winehouse CPAs are doing an audit and are currently carrying out analytical procedures. The age of accounts receivable is computed and compared to the prior year. The age has increased by a large amount. Which of the following is the independent auditor least likely to say as a result of uncovering this information.
A - The client may have loosened up its credit terms so that a larger bad debt expense is needed than in the past.
B - The client may have started selling its accounts receivable to a bank so that a loss should be recognized.
C - Economic times might have gotten worse so we need to look more closely to make sure all bad accounts have been written off.
D - Someone inside of the company might have begun lapping as a way of stealing money.
Answer is B
When receivables are sold before they are collected (they certainly would not be sold after they were collected), the age should get shorter. The company is getting its money faster as a result of the sale. Thus, B is a possible answer if the average age had gotten shorter. However, if the age gets higher, it could be that the credit terms have been loosened so that customers with less money are able to buy on credit. They typically take longer to pay with more risk of becoming uncollectible. When economic times are bad, people also tend to pay more slowly and the number of bad accounts goes up. And, in lapping, money from a customer is stolen. Several days later, to keep the customer from finding out that the money was never recorded by the company, money from a second customer is diverted into the account of the first customer. The period in between makes the age of the accounts longer.
Regulation
Walker Ambrose owns three acres of land in Tennessee with a cost of $70,000 and a fair value of $110,000. The state of Tennessee condemns the land and takes ownership so that a road can be built through the property. The state pays Ambrose $114,000 for the land it took. Ambrose takes this money and buys similar land four miles away for $111,000. What is the tax effect of these events?
A - No taxable gain or loss.
B - Ambrose has a taxable gain of $44,000.
C - Ambrose has a taxable gain of $3,000.
D - Ambrose has a taxable gain of $4,000.
Answer is C
This is an involuntary conversion since the property was sold without the owner's consent. More money was received then the tax basis of this property so there was a gain of $44,000 ($114,000 less $70,000). Part of the money was then used to buy similar replacement property. In an involuntary conversion, the taxable gain is the lower of the actual gain on the transaction ($44,000) or the money left over after the replacement ($3,000 or $114,000 less $111,000). Thus, if all of the money is used in buying a replacement, there is no taxable gain. Here, $3,000 was left and that was less than the $44,000 gain.
BEC
In information technology, what is a LAN?
A - A computer network across more than one continent.
B - A computer network between groups of a similar type such as customers
C - A computer network that contains data subject to random access.
D - A computer network within a single building or relatively small geographic area.
Answer is D
A local area network (LAN) is a privately owned network that allows people within a small geographical region (possibly a single building) so that the employees of a company can perform specified operating activities.
Here is a quote that I like from Dale Carnegie. I think it tells us a lot about accomplishment: "Do the hard jobs first. The easy jobs will take care of themselves."
www.CPAreviewforFREE.com
Lesson 36
From: Joe
(1) - I was watching the Tony Awards last night on television. They are given each year for the best plays on Broadway in New York City. I had seen a couple of the plays so I was interested to see what won.
During the program, they had a short tribute to Natasha Richardson, a relatively young actress who died last winter in (I think it was) a skiing accident. They said that one of Ms. Richardson's favorite lines was "Stop dreaming and do it!!!"
A lot of us, certainly including me, talk about how wonderful it is to have dreams. And, yes, it is great to have large and bold dreams. We need those for life. But she was absolutely right. Sometimes, we get stuck in our dreams and have more enjoyment from the dream than we do from the reality.
You need reality if you are going to pass the CPA Exam and not just dream about passing.
I hear these all the time:
---I really really want to make an A in Intermediate Accounting.
---Well, what have you done so far to achieve that dream?
---Nothing so far but I plan to really start work sometime in the next week or so.
---I really really want to pass the CPA Exam.
---Well, that is great. How much studying have you done?
---Not much so far. I've spent my time buying books and note cards and getting all my materials ready.
---I really really want to knock out the first part of the CPA Exam soon.
---Well, that's a good goal. How much of the material have you gotten covered so far?
---Not much yet. I always used to cram in college so I'm kind of waiting until the exam date gets closer before I get down to serious work.
If you ask these people, they could probably talk your ear off about how much they want to succeed, how they think about achieving their goals all the time. They really love those dreams. They don't really want to pass; they just want to dream about passing.
And, I understand. There is something exciting about planning to win. There is something stimulating about envisioning the winning score and the glory of being the champion. However, at some point, you have to switch over from dreams to reality. That usually means doing some hard work and doing it on a very consistent basis.
Dreams are fun. Hard work can be tedious.
Dreams feel good. Hard work can be very uncomfortable.
Dreams can get you excited. Hard work is best done at a slow and meticulous pace.
But, dreams along GET YOU NOTHING.
I love dreams and I always encourage everyone to dream. At some point, though, dreams can be addictive and lead to nothing. You have to break through and push yourself to actually achieve success.
If you are having trouble moving toward your goal of passing the CPA Exam, it may well be that you are stuck in your own dreams. The dream of passing the exam is all you need. And, it is a lot more fun than doing the serious work to get those points.
Stop dreaming and DO IT!!!
(2)
(A) - As always, do not forget that you can unsubscribe from this service at any time that you wish. Our weekly emails go to thousands and thousands of CPA Exam candidates each week located around the world. We are delighted to have you as part of that community. Do understand, though, that you can unsubscribe by simply scrolling to the end of this email and clicking on the appropriate link.
(B) - We just ended our 49th week of operation on www.CPAreviewforFREE.com. When we got started last summer, we had no money for advertising so we just hoped people would hear about us through word-of-mouth. When we started, my dream was that we would have one million page views in our first year. That seemed like an incredibly high number without advertising. That just seemed like a huge number of points to help add to the scores of our candidates. Well, last week, we moved over 3.4 million page views. So, I guess you could say that I underestimated a bit. Thanks to everyone who has told others about www.CPAreviewforFREE.com. We could not be doing this without you.
(C) - Just a reminder that all of our questions and answers are free. However, if you want to buy and download a copy so that you can put them in your brief case and take them with you, just go to www.CPAreviewforFREE.com and click on Store.
(D) - Thanks to everyone who sent in information that I can share with college students at my speech this Saturday on the CPA Exam. I always appreciate your assistance.
(3) - Questions. I give presentations around Virginia about the CPA Exam and, of course, I help run www.CPAreviewforFREE.com. I get a lot of questions. So, I thought I would list some of the most prevalent questions and my typical answers.
Question: Should I take the CPA Exam right out of college?
Joe's Response: There are certainly some advantages in taking the CPA Exam soon after college. First, you are used to studying. Second, you are used to taking tests. Third, you have (or should have) a lot of knowledge already in your head from the college classes. However, I've known a lot of students who graduated from college and took the CPA Exam because everyone told them to and then failed miserably. Sometimes those candidates were so discouraged that they never took the exam again. Be a little careful before you rush to take the CPA Exam right out of college.
I believe you should know two things before you decide to take the exam. First, you really need to know why YOU want to pass the CPA Exam. Not your neighbor or your friend or your mom or your spouse. Why do YOU want to pass the CPA Exam? It is hard to do all of that work if you don't have a good reason. You need an anchor and that anchor is your reason for wanting to pass. Be sure you know that.
Second, you need to be able to put in enough hours. It is virtually impossible to pass the exam if you don't study enough. If you can put in 60-100 hours per part, you should be ready.
Be honest with yourself: Why do you want to pass? Will you be able to put in the necessary hours? Those questions are both really important. Until you can answer both of those, you probably should wait on taking the CPA Exam.
Question: Don't I need to take a CPA Review course and pay a couple thousand to them?
Joe's Ideas: I am obviously biased but I am always shocked by people who have a need for money and are still willing to give two or three thousand dollars away without first trying to save the money. With that kind of logic, it is no wonder that we are in a recession. If it were me, I'd try CPA Review for Free for 4 weeks and then make a decision. I firmly believe you can pass without giving away your money and I would sure as heck take a shot at it if it were my money.
Question: What's the major reason that people fail the CPA Exam?
Joe's Gut Reaction: Failure to put in enough hours, without a doubt. The exam is built to reward hours of study. It is very difficult to pass if you have studied 20 hours and the guy beside of you has spent 75 hours. It is not the money or the teacher or much else - it is the hours.
Question: Okay, well, what is the most likely reason that a person can do enough study and still fail?
Joe's Thoughts: This is just speculation on my part but I imagine that it is time management problems at the site. You can be an absolute genius but if you don't finish more than 3/4 of the exam, it is not likely that you are going to pass. You can know everything about everything but it is tough to get enough questions right if you rush through the questions like the room is on fire and finish 90 minutes early. There are no guarantees but if you (a) put in enough hours and (b) manage your time well, you should have a very good chance to pass.
Question: How many parts should I take in one window?
Joe's Feelings: That depends entirely on how much time you have to study. If you can put in a legitimate three hours per day, it is going to take you 20 days to study 60 hours. So, taking an exam every 20 days is certainly possible. On the other hand, if you can only average one hour per day, it will take 60 days to get in 60 hours and you probably can only take one test per window.
I must admit that I would like the idea of getting the exam finished so I could get on with life. That appeals to me. I typically like to see people take at least two parts per window. However, I think everyone has to remember that there is no one right answer to that question. How much time do you have to spend studying?
Question: Which part should I take first?
Joe's Best Guess: That's actually an easy question. I am always in favor of taking the part that you like best first. It is a good idea to do a part where you will not mind spending the time and, hopefully, are most likely to pass. I am an accountant; I like numbers; I would start with FAR. However, each person is different. Think about the parts and go for the one that you like best.
If you have questions for Joe, send them in. If I can give a legitimate and reasonable answer, I'll be glad to let you know what I think.
(4) - Here are a few practice questions to get your mind thinking today. If you go to www.CPAreviewforFREE.com, you will find that we have 2,000 well written questions and answers that should give you the 75 points you need for success on the CPA Exam. Most of them look kind of like the ones here.
Financial Accounting
On January 1, Year One, Company P has land with a cost of $100,000 and a fair value of $130,000. On the same date, Company S has land with a cost of $80,000 and a fair value of $90,000. On that date, Company P bought Company S and paid enough money that goodwill was recognized. One year later, on December 31, Year One, Company P has land with a cost of $120,000 and a fair value of $160,000. On the same date, Company S has land with a cost of $100,000 and a fair value of $130,000. What is the balance in the consolidated land account on December 31, Year One?
A - $220,000
B - $230,000
C - $250,000
D - $290,000
Answer is B
When Company P bought Company S, it paid an additional $10,000 because Company S's land had cost $80,000 but was actually worth $90,000. This cost paid by Company P in acquiring Company S is viewed as another cost paid for this land. At the end of Year One, the land held by Company P now has a cost of $120,000. Land held by Company S has a cost of $100,000. Company P has the additional cost of $10,000 because of its acquisition of Company S. The consolidated balance for land is $120,000 + $100,000 + $10,000 or $230,000. The information about goodwill simply indicates that Company P was not able to buy Company S at a bargain purchase price.
Auditing and Attestation
Jones and Winehouse CPAs are doing an audit and are currently carrying out analytical procedures. The age of accounts receivable is computed and compared to the prior year. The age has increased by a large amount. Which of the following is the independent auditor least likely to say as a result of uncovering this information.
A - The client may have loosened up its credit terms so that a larger bad debt expense is needed than in the past.
B - The client may have started selling its accounts receivable to a bank so that a loss should be recognized.
C - Economic times might have gotten worse so we need to look more closely to make sure all bad accounts have been written off.
D - Someone inside of the company might have begun lapping as a way of stealing money.
Answer is B
When receivables are sold before they are collected (they certainly would not be sold after they were collected), the age should get shorter. The company is getting its money faster as a result of the sale. Thus, B is a possible answer if the average age had gotten shorter. However, if the age gets higher, it could be that the credit terms have been loosened so that customers with less money are able to buy on credit. They typically take longer to pay with more risk of becoming uncollectible. When economic times are bad, people also tend to pay more slowly and the number of bad accounts goes up. And, in lapping, money from a customer is stolen. Several days later, to keep the customer from finding out that the money was never recorded by the company, money from a second customer is diverted into the account of the first customer. The period in between makes the age of the accounts longer.
Regulation
Walker Ambrose owns three acres of land in Tennessee with a cost of $70,000 and a fair value of $110,000. The state of Tennessee condemns the land and takes ownership so that a road can be built through the property. The state pays Ambrose $114,000 for the land it took. Ambrose takes this money and buys similar land four miles away for $111,000. What is the tax effect of these events?
A - No taxable gain or loss.
B - Ambrose has a taxable gain of $44,000.
C - Ambrose has a taxable gain of $3,000.
D - Ambrose has a taxable gain of $4,000.
Answer is C
This is an involuntary conversion since the property was sold without the owner's consent. More money was received then the tax basis of this property so there was a gain of $44,000 ($114,000 less $70,000). Part of the money was then used to buy similar replacement property. In an involuntary conversion, the taxable gain is the lower of the actual gain on the transaction ($44,000) or the money left over after the replacement ($3,000 or $114,000 less $111,000). Thus, if all of the money is used in buying a replacement, there is no taxable gain. Here, $3,000 was left and that was less than the $44,000 gain.
BEC
In information technology, what is a LAN?
A - A computer network across more than one continent.
B - A computer network between groups of a similar type such as customers
C - A computer network that contains data subject to random access.
D - A computer network within a single building or relatively small geographic area.
Answer is D
A local area network (LAN) is a privately owned network that allows people within a small geographical region (possibly a single building) so that the employees of a company can perform specified operating activities.
Here is a quote that I like from Dale Carnegie. I think it tells us a lot about accomplishment: "Do the hard jobs first. The easy jobs will take care of themselves."
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