Always Work to Get Better

> October 1, 2009
>
> CPA Review for FREE
>
> www.CPAreviewforFREE.com
> Always Work To Get Better
>
> 65 Weeks of Operation and 5,724,577 Page Views (without a penny spent on
> marketing)
>
> Lesson 48
>
> From: Joe
>
> (1) - Wow, I must have gotten a gazillion (maybe two gazillion) requests
> for the 20 FAR questions and answers that I offered last week so you could
> test your strengths and weaknesses. Enjoyed touching base with so many of
> you. I'll leave the offer open for another few days if you are
> interested. Just send the request to Jhoyle@cpareviewforfree.com.
>
>
> (2) - I also received a number of questions about the top 100 folks in the
> Accounting Profession. If you want to see the entire list, it is at
> http://m1e.net/c?109775336-WuOKNpIp53.Jk%404653719-A9yIlwNwjJ01c You will
> need to register but that is a pretty easy process.
>
>
> (3) - Last week, we had a 32.8 percent jump in the number of visitors to
> our website!!! In our 65 weeks of existence, that was by far our biggest
> single week jump. Thanks to everyone who has been so kind as to pass
> along a good word about www.CPAreviewforFREE.com to friends and neighbors.
> We spend nothing on advertising or marketing so without you folks we would
> be out of business.
>
>
> (4) - Got a couple of wonderful notes this week from excited candidates:
>
> From MR: "I absolutely love your site! It got me through FAR and I'm
> studying for AUD now. I have told every CPA candidate that I know, about
> your site! I just wanted to thank you for such a great study tool and at
> no cost!! Thank you for your efforts in helping all of us succeed!"
>
> From SN: "I would like to share with you the good news - I passed REG
> which was my last section with an 84 (thank God) in the August 2009
> window. Now I am done with all the 4 parts of the CPA exam. THANK YOU for
> making cpareviewforfree.com available for CPA candidates like myself. I
> used your website diligently for both BEC and REG. They were very helpful
> and I am very grateful to you for providing such a great website at no
> additional cost."
>
> From JD: "This website has really helped me lot. I cleared my BEC in the
> last window and am now working on FAR. Credit for my confidence and
> passing goes only to your CPAreviewforfree practice tests and your email
> tutorials. Thanks a lot."
>
> We are delighted to help!!!
>
>
> (5) - During each semester, I give three tests and then a final exam. On
> Monday of this week, I gave back the first test of the semester to all my
> students. I had grades that ranged from 100 to 49. I am always
> fascinated to see how college students react to getting their first grade.
> Some are all smiles while others sit quietly and look miserable.
>
> I don't want bad grades; I genuinely want them to learn the material. We
> all understand the goal.
>
> So, after handing back the tests, I talk with them about what I want to
> see from them starting right now. I want those who liked their grade to
> take some time to think about what they did that got them a good grade and
> then make a pledge to keep doing it. In addition, though, as they
> reflect, I want them to think about what specific adjustments might help
> to ensure that they will continue to do well.
>
> Keep pushing and make adjustments where needed. Good motto.
>
> I don't want the students who did well to get over-confident - that often
> leads them to get lazy and careless. They got a good grade. Now is NOT the
> time to get complacent. Don't rest on one good grade. What does it take
> to do well and what does it take to do even better?
>
> But, I also encourage the students who were disappointed in their grade to
> think about what improvements they should make. A bad grade is just a bad
> grade. It is not a tattoo; it is not permanent. You are not marked for
> life. They still have plenty of time to do well BUT the first test tells
> them that they need to make some changes.
>
> Doing the same thing and expecting different results makes no sense.
>
> They need to study more
> Or, they need to study better
>
> I challenge them to come up with a specific plan to get better. Analyze
> what went wrong and how they are going to be different from now on.
>
> In the end, I want the A students to remain A students and I want the B,
> C, D, and F students to become A students.
>
> Studying for the CPA Exam is a lot like studying for an accounting class
> in college. You have good days when you feel like you can lick the world
> and bad days where you feel incredibly dumb. But you need to use both
> days to keep getting better.
>
> On those days when you feel smart, ask yourself: what am I doing today
> that is helping me learn and understand this material so well? Break your
> study time down and see if you can notice anything that you are doing
> unique. At the very least, let the success of the day help you to build
> success. On those days, you can just feel that you are getting closer to
> passing.
>
> On those days when you don't feel smart, think about what is holding you
> back.
> --Are you distracted?
> --Are you working on material that you have not yet covered well?
> --Are you taking time to learn from each of your mistakes?
> --Do you need to take a short break to clear your mind and get back on the
> right track?
> --Do you need to try another room? Is there a television or music that
> is keeping you from focusing?
>
> But, if you are just making mistakes, you have one primary mission: "I
> missed this question. The next time I see this question or one like it, I
> want to be able to get it correct. What do I need to do right now so that
> I can get this question right the next time?"
>
> To me, that may be the single most important question you ever ask
> yourself as you study to take the CPA Exam: What do I need to do right now
> so that I can get this question right the next time?"
>
> Whether you are having a good day or a bad day, if you can answer that
> question often enough, you'll pass the CPA Exam. Don't get discouraged
> when you miss a question. Yes, I know it disheartening to think the
> answer is A and find out that it is really B. But, don't kick the table
> or get upset with yourself -that does no good. Instead ask yourself:
> "The next time I see this type of question, how will I know that the
> answer is B."
>
> In college, the goal is to learn the material, to gain an understanding.
> On the CPA Exam, the only goal is to learn to answer questions correctly.
> That comes from going through a litany: read the question and try to
> answer it, read the official answer, figure out--what do I need to do to
> get it right the next time.
>
>
> (6) - My typical reminder - if you wish to unsubscribe, just scroll to the
> bottom of this email and you'll find a link that'll get you off our
> mailing. That is entirely up to you. If we can help at all, please stay.
>
>
> (7) - My wife as well as another friend strongly recommended that I read
> the book "Pillars of the Earth" by Ken Follett. I knew that the book was
> a very popular, epic historical novel that a lot of people loved.
> However, it is 974 pages long. But, I finally started reading it
> yesterday. In the Preface, the author talks about the fact that he had
> written six "thriller" novels that had been quite popular before he
> decided to write a more serious piece of literature. Interestingly, a lot
> of people warned him about being "overambitious" and trying "to reach
> beyond his ability." They discouraged him from even trying for greatness.
>
> Well, that is just silly. Why shouldn't a person be ambitious? Why
> shouldn't a person try to stretch themselves to see what they can really
> accomplish? If he had listened to his friends, he would still be a
> relatively obscure writer of "thriller" novels. But, because he had the
> ambition to take on a massive task (writing a 974 page novel is incredibly
> difficult), he has become an internationally famous author. In fact, one
> of the reviews of this book puts it very well: "with this book, Follett
> risks all and comes out a clear winner."
>
> I fully understand that when you decide to take the CPA Exam, it is a sign
> that you are taking a risk. You are reaching for a new goal in life. You
> are risking a lot of time and energy knowing that you can fail.
>
> Remember, if it were easy, passing would not seem so wonderful.
>
> There is nothing wrong with having a lot of ambition; there is nothing
> wrong with stretching yourself to see just how successful you can really
> be. If you never stretch yourself, if you never shoot for the stars,
> you'll just live in a rut. Who wants to live in a rut?
>
> If you are wondering whether you should have taken on the task of trying
> to pass the CPA Exam, well, I'm here to tell you that the answer is a very
> loud "YES." I know there are times you shake your head and ask "why did I
> ever think I could pass the CPA Exam?" Sure, we all have those days.
> But, you already know the answer-because you wanted to stretch yourself
> and become better. You wanted to succeed. You wanted to achieve your
> dreams. You wanted to do something special. And, there are no better
> reasons for taking the CPA Exam than those.
>
> Interestingly, Follett started this book by writing five days per week.
> He soon realized that he could never finish the book at that pace so he
> started writing six days per week. But, even then, he couldn't write fast
> enough so he pulled out all the stops and started writing seven days each
> week. As a writer myself, I cannot begin to tell you how stressful that
> can be. However, he did it and he kept doing in-day in and day out. It
> took him several years but he managed to write all 974 pages and now
> people all over the world think he is a genius.
>
> Ambition + Effort = Success
>
> He did it and so can you.
>
>
> (8) - Practice - there is always time, each day for a bit more practice.
> Every question you work moves you closer to success.
>
> FAR (from my Intermediate Accounting class for tomorrow)
>
> On December 31, Year One, the Reinhardt Company owns a tractor and leases
> it to the Smith Company. The tractor has a life of five years but the
> lease is only for four years. Which of the following statements is NOT
> true for the Reinhardt Company?
>
> A - If this is a sales-type lease, profit will be recognized immediately
> with interest revenue then recognized over the next four years.
> B - If this is a direct financing lease, no profit is recognized
> immediately but interest revenue is recognized over the next four years.
> C - Based on the information, this might be an operating lease or it might
> be a capital lease.
> D - Reinhardt must base the computation of interest revenue on the imputed
> interest rate built into the contract.
>
> Answer is C
>
> Because the lease is for 75 percent or more of the asset's life (4 out of
> 5 years or 80 percent) it must be reported as capital lease. There is no
> choice. For the lessor, all capital leases are either direct financing
> leases (the lessor is not a dealer or manufacturer) or sales type leases
> (the lessor is a dealer or manufacturer). In a direct financing lease,
> all of the profit is recognized as interest over the life of the lease.
> In a sales-type lease, the normal profit margin on a sale is recognized
> immediately with all remaining profit recognized as interest over the life
> of the control. In either case, the interest is the imputed rate built
> into the contract by the lessor when the lease payments were calculated.
>
>
> Regulation
>
> John Smoak owns a business that he operates as a sole proprietor. He has
> an asset that he uses solely in this business with a tax basis of $34,000
> but a fair value of $39,000. He trades this asset for like-kind property
> that he will also use in his business. The new asset has a fair value of
> only $36,000 so Smoak also receives cash of $3,000. What gain does Smoak
> recognize for income tax purposes as a result of this exchange?
>
> A - Zero
> B - $2,000
> C - $3,000
> D - $5,000
>
> Answer is C
>
> Like-kind exchanges are normally tax-free. However, when boot (the cash)
> is received, there is a tax effect that must be recognized. The tax
> effect is the lower of the boot received (cash of $3,000) or the gain on
> the exchange. The taxpayer gave up a tax basis of $34,000 and received
> fair value of $39,000 ($36,000 plus $3,000) so the taxpayer had a gain of
> the $5,000 difference. The $3,000 is less and is taxable.
>
>
> Auditing & Attestation
>
> A small CPA firm audits the financial statements of the Richmond Company
> and provides an unqualified audit report. A few weeks later, members of
> the firm realize that a disgruntled employee (who had since resigned) had
> not observed the taking of Richmond's physical inventory count. He
> claimed to have been there but was actually not present. What should the
> firm do first?
>
> A - Apply alternative procedures to see if sufficient evidence can be
> obtained to substantiate the inventory balance.
> B - Recall the audit report.
> C - Contact every member of the board of directors of the Richmond
> Company.
> D - Issue an adverse audit opinion.
>
> Answer is A
>
> Because of the missed observation, the firm does not have sufficient
> evident to provide an unqualified opinion. The firm does not know whether
> a material misstatement exists in this balance. If possible, the firm
> needs to ascertain the likelihood of a problem with the inventory balance.
> Alternative procedures may be available that will allow the firm to gain
> the support that is needed as a basis for the unqualified opinion.
>
>
> BEC
>
> A company begins producing widgets this year and manufacturers 30,000 and
> sells 25,000. Direct material cost $130,000 and direct labor cost
> $90,000. Factory overhead was $140,000: $80,000 variable and $60,000
> fixed. Selling and administrative expenses were $200,000: $90,000
> variable and $110,000 fixed. For internal reporting purposes, the company
> uses variable (direct) costing. What is the ending amount of finished
> goods?
>
> A - $48,000
> B - $50,000
> C - $60,000
> D - $65,000
>
> Answer is B
>
> Direct (variable) costing only considers variable manufacturing cost in
> determining the cost of inventory. To produce 30,000 units, the variable
> manufacturing costs were $300,000 (direct material of $130,000, direct
> labor of $90,000, and variable factory overhead of $80,000). That is $10
> per unit. The company produced 30,000 units but only sold 25,000 so 5,000
> units were left. At $10 each, that is a total cost (according to variable
> costing) of $50,000.
>
> Have a great week - keep making those adjustments in order to move right
> toward your goal.
>
>
> Joe Hoyle
>
> Co-Founder
> CPA Review for FREE
>