You Have a Wonderful Opportunity

You Have a Wonderful Opportunity

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Lesson 57

From: Joe


(1) – FACEBOOK We have now sent out 10 tips in our 30 Tips in 30 Days program on Facebook. After the 30 days are up, I’d like to continue to do something
similar 2-3 times per week. Or maybe we’ll just go for a 60 Tips in 60 Days program.

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me) because we are adding fans at a very nice pace.

(If you have any trouble signing up because you are not a Facebook person, hit reply and we’ll have our Facebook expert contact you about getting started.)


(2) – Whenever you get ready to stop receiving these weekly email lessons, you can unsubscribe by scrolling to the bottom of any lesson. Click on the link and
you’ll be off.

However, if it were up to us, we’d just as soon have you stay. We are well over 10,000 subscribers and I can hardly wait to have 20,000 or even 100,000. The
cost is the same for us. So, stay for as long as you wish.

And, tell your friends. In fact, if you are looking for just the perfect holiday gift for a loved one, remember that a subscription to our email lessons
might just be the thing that would brighten up that person’s life. Plus, the cost is excellent (free).


(3) – My wife was working last Saturday so I took my two daughters to see the movie: The Princess and the Frog. Okay, it is a cartoon so it probably is not
going to rival The Godfather. But, it did have an excellent message: “You can do anything that you set your mind on.” The heroine was a child who was very
poor but wanted to start a restaurant of her own and that was the message her father kept pushing. So, she worked double and triple shifts to make that dream
come true.

Well, in all honesty, I do not know that you can do every single thing that you set your mind on. There are a few dreams (a friend of mine dreams of swimming
in the Olympics, for example) that are a bit unlikely. However, I will tell you exactly what I do believe:

--If you don’t want something badly enough to set your mind on it, you don’t really want it.
--If you don’t want something badly enough to do the work, you don’t really want it.
--If you don’t want something badly enough, you are probably not going to get it.

So, the question I would pose to you, today, on December 14, 2009, is: how badly do you want to pass the CPA Exam? Simply question but the answer can be
complicated. Everyone will say that they are dying to pass but that is just “lip service” – how badly do you really want to pass?

I can tell you two ways that you can find out for yourself.

First, there are times every day when you can study or you can do something that is more interesting.
You can study or you can watch television.
You can study or you can read a magazine.
You can study or you can go to a movie.
Count how often each day “You can study” wins. If it is 80 percent or more of the time, then you are probably serious about passing the CPA Exam. It doesn’t
have to be 100 percent of the time but it ought to be a solid majority. Study needs to win very frequently.

When faced with temptation, if you choose to study most of the time that is a great sign that you really have set your mind on passing.

Second, I have said often in these email lessons that you should plan out how many hours per day (on the average) that you want to study. Are you able to
study one hour each day, 90 minutes each day, two hours each day or what? In your life, what is a reasonable goal?

Then, of course, keep track of the number of days that you are able to hit that goal. Again, it doesn’t have to be 100 percent of the time but if you are not
able to meet the hourly goal at least 70-80 percent of the time, it may be that you just think you want to pass the CPA Exam but you have not really set your
mind on passing.

“You can do anything that you set your mind on.”


(4) – Over the years in these email lessons, I have written several times about Thomas Edison, one of the most successful people in history and, apparently,
one of the hardest working people in history (hmm, could there be a connection?).

Someone must have read those previous lessons and remembered them because I received the following Thomas Edison quote in an email:
“Opportunity is missed by most people because it is dressed in overalls and looks like work.”

I love the idea that the CPA Exam represents an “opportunity.” I often hear the CPA Exam described in negative terms such as “painful,” “torturous,” “cruel,”
and the like. But that makes the whole process seem like drudgery. And, I think you are so much better off if you can adopt a different mindset.

Participating in the Olympics would be an opportunity.
Playing in the Super Bowl would be an opportunity.
Taking the field in the World Series would be an opportunity.

So, why is the CPA Exam not an “opportunity” – it gives you the chance to pit yourself against the best known accounting exam in the history of the world. It
is an exam that you can pass but only if you do your best. It is an exam that is recognized throughout the world as the pinnacle of achievement in the
accounting profession.

Yeah, it really does qualify as an opportunity.

But, as Edison says, people often miss their greatest opportunities because they “look like work.” I know we all love to play and have fun but some of the
greatest thrills in my life have come from taking on a challenging opportunity—one that required the best of me every day, one that required me to put in some
serious work.

Work on your mindset. Every single morning ask yourself to describe the CPA Exam in just one word. That is not a bad exercise. That one word may not
always be “opportunity” depending on how you are feeling on that day but, hopefully, you will view it as an opportunity on most days.

That is always a good start to any day.


(5) – Now for a little practice. Work these questions today and see how you do. Wait 7 days and try them again. Obviously, what you want is a higher
score the second time. That is what you want: progress.

Good luck – go get them!!!

FAR

You buy two investments in equity securities. Each one cost $7,000 and each one goes up to $10,000 in value by the end of the year. One was a trading
security and one was available-for-sale. Each company declared a cash dividend on December 1 of the current year, payable to owners on record as of December
26. You received two dividend checks of $400 each on January 8 of the following year. Which of the following statements is true? (Assume that you have
not chosen to account for the available-for-sale security as if it were a trading security.)

A – Your net income goes up a total of $3,000 because of each investment.
B – Your net income goes up a total of $3,400 because of each investment.
C – Your net income goes up $3,400 because of the trading security but $400 because of the available-for-sale security.
D – Your net income goes up $3,000 because of the trading security but is unchanged because of the available-for-sale security.


Answer is C

The dividend received on both investments is recognized as revenue in the current period because the date of record (December 26) is in the current period. In
addition, the $3,000 increase in value of the trading security is also recognized within net income (for a total of $3,400). However, the increase in value
of the available-for-sale security is reported within accumulated other comprehensive income that appears in stockholders’ equity and not within net income.
Only the dividend affects net income in connection with the available-for-sale security.


Auditing and Attestation

A CPA firm is auditing the financial statements prepared by the Lion Corporation for the year ending December 31, Year One. The auditors are concerned that a
number of accounts payable were not included in the year-end liabilities. Which of the following audit procedures would help the auditors make certain that
the accounts payable balance is not understated?

A – Confirm a sample of the year-end accounts payable balances.
B – Review the cause for the cash disbursements made in the first month or two of Year Two.
C – Compare the balances in accounts payable to receiving reports created by the company.
D – Check the math and extensions on the accounts payable balances recorded during the last month of Year One.


Answer is B

A, C, and D involve the examination of balances that were already recorded prior to the end of Year One. However, that is not the problem that is suspected
by the auditors. The auditors are concerned about payable balances that were omitted in Year One. Only answer B looks at transactions that might not have
been recorded appropriately in Year One. The auditors will look at cash disbursements in Year Two and determine when the liability was created and whether it
was recorded in the correct time period.


Regulation

James Miller operates a wine shop as a sole proprietorship. On a Wednesday evening, he holds a meeting with several of his suppliers. The meeting lasts for
several hours as they discuss various wines that will become available during the following year. After the meeting, Miller takes the entire group to a
local minor league baseball game and pays for the entire event. How much of this cost can he deduct for income tax purposes?

A – Zero
B – Twenty percent
C – Fifty percent
D – All of it


Answer is C

Fifty percent of entertainment expenses can be deducted for tax purposes as long as it is directly related or associated with the active conduct of the
taxpayer’s trade or business. This rule is met if the entertainment precedes or follows a substantial business discussion. That rule is met in this
situation.


BEC

Lenit Corporation recently acquired widgets from a company in the country of Becktle where the currency is the romtag. Each romtag is currently worth $.40
and Lenit must pay 100,000 romtags in 60 days (value of $40,000). The treasurer for Lenit believes that the value of the romtag is going to go up over the
next 60 days so that a more valuable currency will have to be paid and money will be lost. What action is the treasurer most likely to take?

A - Acquire a forward exchange contract that allows the company to buy 100,000 romtags in 60 days for exactly $.41.
B - Sell the widgets in the U. S. as quickly as possible even if they must be sold at a loss.
C - Buy the next batch of widgets in some other country.
D - Begin production of widgets in the U. S.


Answer is A.

The fluctuation of currency values is always a concern but one that can be managed through a hedging arrangement. The company has a 100,000 romtag payable.
To create a hedge, the company needs to establish a 100,000 romtag receivable. The forward exchange contract is set up here so that the company will get
100,000 romtags in 60 days. That is a receivable. Any change in the value of the romtag will cause equal and offsetting changes in the receivable and the
payable. Thus, a gain on one cancels out a loss on the other. The company does have to pay $41,000 for the romtags that will be received which is $1,000
more than the current value of the liability. That is the cost of establishing the hedge. The company knows that amount and has judged it to be more
reasonable than the uncertainty of waiting to see what paying 100,000 romtags will cost the company in 60 days.


Have a great week
Work hard
Accomplish everything you set out to do.


Joe Hoyle
www.youtube.com/watch?v=LjwHxVbZq1o

Co-Founder
CPA Review for FREE