78 Weeks of Operation and 7,865,448 Page Views (without a penny spent on marketing)
Lesson 59
From: Joe
(A) - Thanks to everyone who has helped to make 2009 such a wonderfully special year for all of us here at CPA Review for FREE. I just checked and our number
of hits last week was 126 percent higher than during the same week in 2008. Great growth with nothing spent on advertising. And, over the course of 2009,
we averaged (this is the average number not the highest number) 128,092 page views per week. That is adding a lot of points to a lot of CPA Exam scores.
Now, if we can just grow as fast in 2010!!! And, we can with your help. Please tell anyone that you know who is thinking about the CPA Exam that we are
here to help them pass. All of our questions and answers are available for FREE (yes, F R E E) at www.CPAreviewforFREE.com.
(B) – Our daily tips on Facebook have been going wonderfully well. If you have not had a chance yet, go to www.facebook.com and become a fan. Just search
for CPAreviewforFREE. You can read the 27 tips that we have sent out to our fans in the last 27 days. Figure out which one you think is best and let us
know. I really would be interested in knowing what kind of tip is the most helpful.
(C) – Don’t forget that you can download all of our questions and answers for just a small fee. At www.CPAreviewforFREE.com, check out the Store. Having
the questions in a hard copy can be very helpful if you don’t have easy access to the Internet at all times.
(1)---I recently read an article about Walt Disney, the man who created the company that bears his name. (I am probably one of the few people on this list
who is old enough to remember when Mr. Disney himself served as the weekly host of the television program “The Wonderful World of Disney.”)
In this article, the writer talked about how Walt Disney had created his company and then turned it into a gigantic success in both movies and amusement parks.
The writer mentioned one of Mr. Disney’s favorite made-up words: “stick-to-it-ivity” which was described as “his word for tenacity, for perseverance.”
I know that as we enter a brand new year, it may be time for a bit of “stick-to-it-ivity.” Not a bad time to make this YOUR word for 2010.
The pass rate on each part of the CPA Exam is roughly 50 percent. Unfortunately, if my math is correct, that means that the failure rate on each part of the
CPA Exam is also roughly 50 percent.
Thus, I am sure that—as we exit 2009—some of you on this list were disappointed by the CPA Exam this past year. But, as we enter 2010, that is all in the
past. It’s in the past – forget about it. Make it your New Year’s resolution to have the exam behind you by this time next year.
To any of you who were disappointed this year with your results, let me assure you that I fully believe that you can and will pass the CPA Exam. I mean that
truly. If you did not get the scores that you wanted in 2009, that can only mean one of two things:
(a) that you have not yet been able to invest the time that you needed and/or
(b) that you have not yet been able to set up a study routine that will work for you.
With adequate time and the proper approach, you can pass!
So, it may be time for some stick-to-it-ivity. Don’t let the CPA Exam get the best of you. It is easy when you are frustrated to shake your head and say “I
quit.” Quitting is the easiest thing to do in life. Well, DON’T DO IT! You are ready for some tenacity; it is time for some perseverance.
I’m sure there is a bit of an ache in your heart if you scores were not quite there in 2009 but stick to the task. No one has ever won anything important in
life by quitting. Sure, take some time off if necessary and put the exam out of your mind but don’t walk away forever. You may be just so very close to
passing. You may not believe how close you are to getting that passing grade.
If you have not yet passed the CPA Examination, it is time for you to have a bit of stick-to-it-ivity. I realize that it is not easy but don’t let the CPA
Exam get the best of you. Every success in life is sweet but a success that requires tenacity and perseverance is ever so much sweeter. It is those
successes that add zest to life.
Stick-to-it-ivity. Walt Disney would be proud of you.
(2) – I don’t spend much time watching television but I do know that they are playing a lot of football games over the next few days and weeks. In both the
colleges and the pros, they are playing to see who will become the champions. That has to be a big thrill—to go all the way through a long season and get to
the end of year with a chance to be the champion.
I once heard a coach say about football players: “Everyone wants to be the star quarterback during the football games in November and December but it is the
person who is able to work in the heat of July and August who actually achieves that goal.”
That may well be true about football but I know for certain that it is also very true about the CPA Exam. Most people think you pass the CPA Exam when you
walk into the exam site and start answering questions. Wrong, completely wrong. That is not where the passing grade comes from. You pass the CPA Exam during
the weeks and months leading up to the test day, each time that you sit down at a desk and do the real work. Each time that you work a question and carefully
read the answer.
How you perform on the eventual test day is no more than the result of what you can do right now. If you do the work now, you can pass when you walk into the
exam site; if you don’t work now, your chances go way down.
I’m not sure who is going to win any of the football games over the next few days but I would be willing to bet that the ones who practiced hardest back in the
summer really have a great chance.
I’m also not sure who is going to pass the CPA Exam but I would be willing to bet it is those people who are studying the hardest, day in and day out, right
now, that have the greatest chance.
So, forget about taking the CPA Exam—focus all of your attention on January 1, 2010. What are you going to accomplish in the next 24 hours. That is what
really counts.
(3) - We have roughly 10,000 people currently on our subscription list who get these email lessons about every 7-10 days. They come from all parts of the
globe, people just like you, people working to pass the CPA Exam. We would love to add more folks to our list. We enjoy having the opportunity to be of
service. We do this to help people and we would like to help even more if possible. So, if this lesson has been forwarded to you and you would like to join
all of these other candidates who receive our lessons automatically each week, we would love to add you. There is no obligation; these lessons are genuinely
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(4) – Let’s start the new year off with a bit of practice.
FAR
The City of Dylan buys $100,000 in supplies for cash and then uses $70,000 during the current year in one of its governmental funds (the police department, for
example). Which of the following statements is true in connection with the preparation of fund-based financial statements?
A – Under the consumption method, expenditures are $70,000 while under the purchases method expenditures are $70,000.
B – Under the consumption method, expenditures are $100,000 while under the purchases method expenditures are $100,000.
C – Under the consumption method, expenditures are $70,000 while under the purchases method expenditures are $100,000.
D – Under the consumption method, expenditures are $100,000 while under the purchases method expenditures are $70,000.
Answer is C
Under the consumption method, only the amount of supplies or prepaid expenses that are consumed ($70,000) are reported on fund-based statements as
expenditures. Under the purchases method, the entire amount of supplies or prepaid expenses that are purchased ($100,000) are reported on fund-based
statements as expenditures.
Auditing
A CPA firm is performing an audit engagement and it currently beginning to assess the amount of control risk. Which of the following is not viewed as one of
the components of a company’s internal control?
A – Control environment
B – Risk assessment
C – Control activities
D – Design and formulation
Answer is D
The components of internal control are control environment (policies and procedures that show the company’s overall commitment to good internal control), risk
assessment (policies and procedures to identify areas within operations where the most risk exists so that extra preventative measures can be taken),
information and communication systems (policies and procedures to ensure that information is gathered and communicated properly), control activities (policies
and procedures to ensure that operations are carried out in the way intended by management), and monitoring (policies and procedures involving the ongoing
assessment of internal control).
Regulation
Company S has 100,000 shares of voting common stock outstanding and no preferred stock. Company P wants to acquire control over Company S and would like to
acquire enough shares so that a consolidated tax return can also be filed? How many shares must Company P acquire so that a consolidated tax return is
allowed?
A – 50,001
B – 80,000
C – 90,000
D – 100,000
Answer is B
For tax purposes, a consolidated return can be filed if the acquiring corporation acquires at least 80 percent of the voting power and 80 percent of each class
of nonvoting stock of the other corporation. In tax rules, which are different than used for financial reporting purposes, 80 percent ownership is the
minimum level where two companies are basically viewed as one entity.
BEC
A company manufactures widgets. A widget takes 2 pounds of material at $9 per pound and 3 hours of labor at $16 per hour. Factory overhead is applied at
the rate of $6 per direct labor hour. The company wants to have a gross profit percentage of 30 percent. What should the company set as its sales price
for each widget?
A - $109.20
B - $115.40
C - $118.60
D - $120.00
Answer is D
Each widget has a total cost of $84.00. That is direct material of $18 (2 times $9), direct labor of $48 (3 times $16), and factory overhead of $18 (3 times
$6). Because the company wants a gross profit percentage of 30 percent, the sales prices (SP) should be: SP – 84 = .30SP. Or, with rearrangement: .70
SP = 84. By dividing both sides by .70, SP = 120. That is the sales price to get that gross profit percentage.
Have a great 2010!!!!!
Joe Hoyle
President
www.CPAreviewforFREE.com
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