Forget Luck - It Takes Work and Belief

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August 25, 2009

CPA Review for FREE
Forget Luck – It Takes Work and Belief

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60 Weeks of Operation/No Marketing/ 5,040,926 Page Views (and that’s an awful lot of added points)

Lesson 44

From: Joe

(1) – It has been a great week here at CPA Review for FREE (www.CPAreviewforFREE.com).

---First, the number of our visitors last week was 9.7 percent higher than in any of our previous 59 weeks. That is a lot of growth in just one week.

---Second, we crossed over 5 million page views. I am so pleased by the number of people who are using our questions and answers to pass the CPA Exam. I went back and checked and the very first week we were in business we had 1,920 page views. Now, we have averaged nearly 85,000 page views per week for our entire time in existence. We could not have achieved that type of success without you guys spreading the word. Thanks!!!!

---Third, we got a whole bunch of wonderful emails from you folks. Here are just a couple. As I always say: if these folks can do it, so can you!!! They did not do a single thing that you cannot do. As you read these emails, picture yourself writing them. It is always great to have a real sense of what success is going to feel like. You want to have that taste of success.


From DC: I just found out that I passed FAR with a score of 94! You were one of the first people that I wanted to tell because I owe it in large part to you. In studying for it, I used CPA Review for Free (which was so helpful!). I also took “big name CPA Review program” (mainly because my company paid for it), but I still found that your questions hit more areas or explained them in a better way, and definitely would not have been as prepared without them. Your weekly emails are so great, especially when I don't think I can study anymore. I'm taking Audit on Monday, so hopefully that goes as well!


From US: I am very very happy to inform you that I cleared Regulation exam with an 84 score. Thanks a trillion to CPAReviewforfree for the wonderful guidance I got. This time, as I was busy with my office work, I did not find much time to work online. Hence, I paid for your pdf print version and got the whole set of questions printed. I read them while flying to the US from Mumbai. On reaching the US, for the 3 days before the exam, I went through each and every question of CPAReviewforfree very carefully. On the actual exam, the MCQs were very tough - testing our basic understanding of the concepts - and I spent a good amount of time on them. I was left with just 50 minutes to complete the simulations. I hurried through them and the last communication question was answered in under 5 minutes. I was worried and felt helpless at the end of the exam. Honestly, I kept my fingers crossed as to the result as the MCQs were tough and I had not done full justice to the
simulation questions. I still got a score of 84! That shows that I had done very well in the MCQ! That could not have happened without CPAReviewforfree.com. Once again, thanks a lot.


From KH: Wanted to pass on some news I just got back about the CPA exam. So far I have taken BEC and REG and I just found out that I passed both! I felt okay with BEC, but I left REG feeling very unsure, especially with the simulations. As you can expect, I was incredibly relieved to see my score tonight. I got an 86 in BEC and a 95 in REG (never would have predicted that) - now I am thinking that I could have studied a few less hours and spent some time enjoying the July 4th weekend. I am taking FAR on Saturday and AUD on the 28th. These scores have given me a lot more motivation to push through this last week and a half. As always, thank you for all of your help, especially through cpareviewforfree. Your emails always serve as inspiration, and the explanations to questions on your website are very informative.


Okay, such notes should inspire everyone to work just a bit harder and knock out that exam. They did it—so can you.


(2) – One of my all-time favorite quotes comes from Thomas Jefferson (although I have seen it attributed to other folks – I’m not 100 percent sure who actually said it first):

“I'm a great believer in luck, and I find the harder I work, the more I have of it.”

The harder I work; the luckier I get. How could anything seem more true?

I started my fall classes Monday (yesterday) here at the University of Richmond. I have 64 students, 62 of whom are new to my classes. Students really do want to do well but they often seem bewildered by how to achieve success in class.

I want to do well; I’m just not sure how is a constant comment.

Students often seem to believe that there is some secret ingredient for success. If they only were lucky enough to know that secret, they would be at the top of the class.

Therefore, my goal in our first meeting is to convince them that everyone can do well (even in Intermediate Accounting II). If I cannot convince them that they can do well, I may well have lost them for the semester. “I’ve taught this class for nearly 40 years. I’m convinced that you and everyone else in this room can make an A if you do a few relatively simple things. You need to put in a reasonable amount of time, you need to focus on your goal, you need to prepare/study, you need to practice what we go over, and you need consistency.”

And, then, I stop and ask “Okay, who doesn’t have one or more of those five? Speak up now.

reasonable time,
focus,
preparation,
practice, and
consistency.”

Not surprisingly, every student knows they really do have those five—all of them. It is now their job to make use of them. I never tell them that they have to be brilliant. That’s not even interesting to me. There are not many brilliant people in the world and I’m not too sure how truly successful they are.

I just need those five. The things you need for success are in your own hands.

Those five--reasonable time, focus, preparation, practice, and consistency—are what it really takes. But you start losing points really fast if you let one (or more) of those get away from you. If you start cutting corners, the points begin to fall. If you start taking things for granted, you lose ground.

In my classes, I want everyone to make an A which means I want everyone to have all five.
In CPAreviewforFREE, I want everyone to pass the exam which means I want everyone to have all five.

Do you have those five? Sure, you certainly have the potential to do all five. There is nothing standing in your way to having all five.

Forget luck – if you will give me those five things, and then use CPA Review for FREE in the manner that I suggest, I believe you can pass and you can do so for absolutely no money at all.


(3) – Remember that you can always unsubscribe from these email lessons at any time you wish just by scrolling to the bottom of any lesson and clicking on the unsubscribe button. We have over 8,000 subscribers and we love having you but, when you are ready to go, feel free to unsubscribe.


(4) – A lot of people take the CPA Exam at the end of August. If you know someone, other than yourself, who is getting ready to take the exam, call them up or send them an email and wish them luck. It is easy to get very self-absorbed as you study to pass the CPA Exam. But life always works better if you open your eyes and notice the needs of others and try to help them out. Call someone this evening and tell them “I know you are getting ready for the CPA Exam. You’ve worked hard; I just know you’ll be successful.”

That will make that person feel better and it will make you feel better also.


(5) – Speaking of luck (I must be in a mood to point up that you don’t need luck, you just need to utilize the talents you have).

A few weeks back I went to see the relatively new Harry Potter movie. (For those of you who don’t know, Harry Potter is a boy wizard who goes to school at a wizard school). There was one scene that I found very interesting. Harry has a friend who plays on a sports team and plays rather poorly. He gets depressed about it and plays worse. He is so nervous about doing well that he gets all tight and does poorly in the first couple of games. We’ve probably all felt that way.

Harry has a vial of Liquid Luck (remember, he is a boy wizard). Right before the big sports match of the season, Harry pretends to pour the liquid luck into a glass that his friend is about to drink. The friend thinks he has consumed the liquid luck. The friend immediately goes out and plays the match of a lifetime. He is the star of the game and helps his team win. He goes from being a poor player to being a star. He is convinced that he has been lucky because of the potion. His success was all because of Liquid Luck.

But, of course, Harry Potter had fooled him. He had NOT really poured the liquid luck into the glass. The friend just thought he had.

So, luck had absolutely nothing to do with his success. Once, he believed in himself then that belief drove him to succeed. Simple concept.

This is just a quick comment. I am not going to beat this to death. If you believe in yourself, you have the chance to leap tall buildings with a single bound. However, if you truly have doubts, if you don’t really believe in yourself, your challenge is going to be so much harder. It is hard to win if you think you will lose.

Let’s do a quick test. And, you have to tell the truth. If I were to look you in the eyes and ask “on a scale of 1 to 10, how confident are you that you are going to pass the CPA Exam by this time next year?” what would you answer? Would you say that you are very confident—a 9 or a 10? Or, would you say that you are full of fear and trepidation and are closer to a 2 or 3?

How can you improve your odds? Improve that number.

This just may be the advice that you can use to add some serious points to your CPA Exam score. How can you raise your self-confidence level by JUST ONE POINT? Just that change in self-confidence will help amazingly. That could be so very important to you. If you are a 5, how could you become a six?

Well, you don’t get more confident by wishing it so. I’m sorry; it doesn’t work that way. If you are setting there, saying “geez, I really do want to have more self-confidence” that is nice but it probably doesn’t add a point.

You get more confident by doing stuff. You get more into the rhythm, you see how things tie together.
The more you work; the stronger you get. If you really want more confidence, go back to my previous list of the Big Five:

reasonable time,
focus,
preparation,
practice, and
consistency

Now, pick one of these five, and for the next week, work hard to get better at doing that one thing. Spend more time each day or work more days in the week or whenever you practice do 10 percent more questions than you used to do. Pick one of these five and get better at it this week.

At the end of just one week, if you have managed to get better at one of those Big Five, I would be willing to bet that your confidence level will be higher. Okay, you won’t go from a 1 to a 10. But, in just one week, by working on that one thing and getting better at it, you can (and will) go up in confidence.

And, as Harry Potter’s friend discovered, just adding some confidence, really does make all the difference in the world.


(6) – Time to Practice: Let’s see how you do on a couple of practice problems.


FAR

A company’s income statement shows salary expense for the current year of $400,000. The company also reported salary payable of $13,000 as of the beginning of the year but $28,000 at the end. If the company uses the direct method of reporting operating activity cash flows, what is reported in connection with this salary?

A – An addition of $15,000 to net income
B – A subtraction of $15,000 from net income
C – Salary paid to employees of $415,000.
D – Salary paid to employees of $385,000

Answer is D

If the company uses the indirect method, net income is adjusted for changes in operational assets and liabilities such as the salary payable. Since the liability went up, the company paid less and the answer would be A because of the cash savings. However, if (as is the case here) the company uses the direct method, the actual amount of cash paid or collected is shown. The expense was $400,000 but the related liability went up by $15,000. Thus, less was actually paid. The company only paid cash to its employees during the year of $385,000.


Regulation

Vikontra Corporation is having financial difficulties and is not paying its bills as they come due. The company owes Jack Winslow $11,000. He wants to push the company into Chapter7 bankruptcy by filing an involuntary petition. Which of the following is true?

A—If Vikontra has less than 12 creditors, then Jack Winslow alone can force the company into bankruptcy by filing an involuntary petition.
B—If Vikontra has 12 or more creditors, then Jack Winslow alone can force the company into bankruptcy by filing an involuntary petition.
C—If Vikontra has less than 12 creditors, then Jack Winslow alone can force the company into bankruptcy but the debt must be larger.
D—If Vikontra has 12 or more creditors, then Jack Winslow alone can force the company into bankruptcy but the debt must be larger.

Answer is C

If there are less than 12 creditors (Answers A and C), then only one creditor needs to sign the petition but that person must have a debt of $13,475. If there are 12 or more creditors (Answers B and D), then three creditors must sign but, again, the total of those debts must be at least $13,475. The $13,475 figure goes up slightly every three years, the next time in 2010. Notice, though, that the exact amount of that standard is not relevant to this question. The speculation is that the CPA Exam avoids asking questions that will change as the numbers change over time.


Auditing & Attestation

The CPA firm of Terry & Francona is auditing the financial statements of Fenway International Corporation. Fenway owns a number of unique investments where the market value is difficult to determine. The CPA firm hires a specialist in investment analysis to help determine the market value of these assets. Which of the following statements is true?

A—This investment analyst must be independent of the client company.
B—The hiring of this analyst means that the firm must provide a qualified audit opinion.
C—The hiring of this analyst means that the firm must add an extra paragraph to the end of the audit report to alert readers to the work of the specialist.
D—The firm must assess the qualifications of the specialist as part of the audit process.

Answer is D

The CPA firm is required to ensure that the specialist is truly capable of making the assessments that are being asked. The qualifications must be assessed carefully. If the analyst is not independent, the CPA firm can still make use of the information provided by the specialist but should consider carefully the impact of the relationship with the client in making that assessment. Finally, use of a specialist is a normal audit technique and does not require any change in the audit report. However, the CPA firm does have the right to make mention that a specialist was used if that information is viewed as helpful.


BEC

Able, Baker, and Cannon are partners. Able gets 70 percent of the profits and losses and has a capital balance of $100,000. Baker gets 20 percent of the profits and losses and has a capital balance of $60,000. Cannon gets 10 percent of the profits and losses and has a capital balance of $10,000. The partnership has $170,000 in assets but no liabilities. The partnership is being liquidated. Assets of $70,000 are sold for $40,000 in cash. Which of the partners gets this available cash?

A – Able gets $28,000, Baker gets $8,000, and Cannon gets $4,000
B – Able gets $13,333, Baker gets $13,333, and Cannon gets $13,334
C – Able gets $6,667 and Baker gets $33,333
D – Able gets $20,000 and Baker gets $20,000

Answer is C

The actual sale of these assets created a $30,000 loss ($70,000 less $40,000). That loss is assigned 70 percent to Able ($21,000 bringing the capital down to $79,000), 20 percent to Baker ($6,000 bringing the capital down to $54,000), and 10 percent to Cannon ($3,000 bringing the capital down to $7,000). To decide what to do with the available cash, the partnership must assume that the remaining $100,000 in assets ($170,000 less $70,000) are a total loss. In that case, this $100,000 anticipated loss is assigned 70 percent to Able ($70,000 bringing the capital down to $9,000), 20 percent to Baker ($20,000 bringing the capital down to $34,000), and 10 percent to Cannon ($10,000 bringing the capital down to a negative $3,000). Then, finally, the remaining negative $3,000 balance in Cannon’s capital must be divided between Able and Baker based on their relative profit and loss ratios or 70/90 of the $3,000 to Able or $2,333 and 20/90 of the $3,000 to Baker or $667. This
final allocation reduces Able’s capital from $9,000 to $6,667 and Baker’s capital from $34,000 to $33,333. That is how the available cash is distributed.


And, now a final quote from Thomas Jefferson that really does, in my mind, apply to all of you folks taking the CPA Exam in the final few days of August:

“Nothing gives one person so much advantage over another as to remain always cool and unruffled under all circumstances.”

Joe Hoyle

Co-Founder
CPA Review for FREE