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)
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(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."