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November 2, 2010
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Lesson 82
From: Joe
(1) – The big news in the world of the CPA Exam is that the exam will start to be given internationally in 2011.
I’ve pieced together two parts of their announcement to provide the basic information:
Beginning in the second half of 2011, candidates who qualify will be allowed to schedule their CPA Exam at select international locations. Initially, the CPA Examination will be offered in Japan, Bahrain, Kuwait, Lebanon and the United Arab Emirates. The international exam will be the same as the one offered in the U.S., using the same computerized format and administered in English. As in the U.S., the purpose of taking the examination will be to qualify for licensure as a CPA through U.S. state boards of accountancy.
It is my understanding that additional locations in additional countries will become available over time.
If you want more information, the AICPA has a Frequently Asked Questions site which can be accessed here
http://m1e.net/c?122902087-aSuUx1nMRL016%405871928-wo.JUcjMWFsYw
(2) – As probably everyone knows, the CPA Exam will be making several significant changes in 2011. Here are two of the most important:
--Each FAR, Regulation, and Auditing and Attestation exam will go from having two simulations to having 6-7 shorter task-based simulations.
--Written communications will drop out of FAR, Regulation, and Auditing and Attestation and only appear as three written communications questions in BEC.
Thus, as you can imagine, there is significant interest in (a) the new task-based simulations and (b) written communications questions (for BEC).
Consequently, over the past month, we have created 30 brand new task-based simulations (10 for FAR, 10 for Regulation, and 10 for Auditing and Attestation) and 35 written communications questions for BEC. We have tried to make these as picture perfect as we could get. The AICPA only gives hints about their actual appearance so we have tried to imagine what they are going to look like. I have been really pleased with the results. Over the next month or so, we will be loading all of these into our subscription service.
Currently, our subscription service is open for FAR and Regulation. Each is a mere $15 per month (50 cents per day). For that, you get access to a study guide and hundreds of content slides. Over the next few weeks, we will also open up subscription services for Auditing and Attestation and BEC. And, then, we will load in all of our new task-based simulations and written communications questions and answers.
However, always keep in mind that our 2,100 multiple-choice questions and answers continue and will always be free, free, free, and (free).
(3) – If you live in the United States, it is election day – go out and vote. It is one important way to keep democracy strong.
(4) – When we started CPAreviewforFREE, my first dream was to have 10 million page views in a single calendar year. I figured it would take us five years at a minimum. We are now early in our third year of operation. For 2010 alone, we went over 10 million page views during the month of October. I couldn’t believe it – thanks to you folks, we have been more successful than I could ever have dreamed/hoped/anticipated.
(5) – I drove by an exercise facility yesterday that had this sign upfront: “It is 60 days until New Year’s. Why not get a head start and make your resolutions today?” I always wonder how much better we really want to be if we only make improvement resolutions on one day out of each year. Doesn’t that just allow us to be lazy and under-productive the rest of the time? Why can’t we make “new week resolutions” at the start of each week? Or, even “new day resolutions” when we first awake each morning?
If you really want to make a change to get better, shouldn’t that be a conversation you have with yourself more often than once a year? No wonder so few new year’s resolutions are kept – if you only think about improvement once a year, you can’t be very serious about it.
So, let’s change that. When it comes to preparing for the CPA Exam, what changes do you want to make over the next three days? That’s a pretty good time period. You know what you have been doing in the past as you ready yourself to take that exam. What improvements would you like to see happen in your preparation over the next three days?
--You could study more hours.
--You could study in a different way – more problems, for example.
--You could study at times you are now wasting
You don’t have to wait for New Year’s Day to make a change.
It is so hard to make improvements if you don’t stop to assess what you have been doing and how you would like to see things be different.
One specific change that I would like to see you consider is your attitude. Usually, when people start studying, they have an “I really want this” feeling. They have an “I can do it” attitude. Those types of attitudes can give you fuel to push your study forward at the beginning. However, it is easy to get caught up in the day-to-day work and let your attitude lag. Don’t do that!!! Getting up in the morning and saying to yourself “I AM going to pass that exam!!” provides an ongoing push. If you find that you are beginning to slow down, if you are beginning to wear out, if you are getting tired of this, perhaps it is your attitude that you need to consider. Let that be your November 2 resolution: I’ll push myself more; I’m remind myself of why I want to pass; I’ll envision the excitement of getting that passing score.
I watched a bit of the World Series this past week. San Francisco just barely got into the playoffs and then they were not expected to go too far. However, the players seemed to have this great “we can do this” attitude that pushed them on to become the world champions. When the last out was made last night, I enjoyed watching how thrilled those young men were. They ran and jumped and piled up together.
There is something wonderfully exciting about taking on a true challenge and then making victory happen. That is exactly what I want you to experience. That same thrill will be yours when you get those passing scores.
So, what is your resolution for today?
(6) – Speaking of passing the CPA Exam and having that wonderful feeling, here are a few recent emails. This is exactly the thrill that I’m talking about. I want this to be YOU.
From IB: “Almost 18 years after finishing school, I'm finally a CPA! For one reason or another, I never sat for the exam until this year. You and your website made me believe that obtaining my CPA was truly an achievable goal, and you set out a plan to accomplish that goal. Using your website primarily (but also some secondary reference materials from Wiley), I was able to pass all 4 sections of the exam the first time over a period of 4 months. I cannot tell you how happy I am, after all this time, to finally be able to add those 3 initials after my name, and I have to thank you for your generosity in supplying such an outstanding (free!) resource to CPA candidates. Your site was especially valuable to me as someone who has been unemployed for almost a year...I couldn't have done it any other way. Thank you so much, Joe, for everything you've made available to us. Take care, and best of luck with everything you choose to do.”
From NV: “Thank You! Thank You! Thank You! I have finally cleared all four parts of the CPA Exam. Your free questions have helped me understand the concepts much better. If not for your site I would have been still taking these tests again and again. You are God sent! Once again thank you for helping me pass the CPA exam.
From MS: “I want to say thank you, thank you, thank you! I have finally passed all 4 parts of the CPA exam and will receive my license in the State of Ohio today October 22, 2010. I first took the CPA exam back when it was on paper and you took all parts over two days! I think I took an 8-10 year break from taking the exam and began taking it again when it was computerized. I went back to school to obtain a MBA and finally passed FAR and BEC in January 2009. I strictly used your website CPAreviewforFree and some flash cards I purchased online. I was totally exhilarated. I then took Auditing and Reg later in 2009 and failed both of them. As 2010 rolled around I realized my time to pass the other two parts was winding down before I would lose credit for the 1st two parts. I again strictly did self study using your website and the flashcards. I took Auditing in May of 2010 and received a score of 68. I was very disappointed with myself and realized I had to commit myself more! I spent the summer practicing you 500 plus questions from the website and even creating a MS word file of the answers explanations. I took Reg on Aug 5th and only had 3 weeks to study Auditing taking that on Aug 30th. I scored an 80 on the Reg exam and an 82 on the Auditing (which by the way is my least favorite part). I owe it all to your many questions that I had access to for free. I really appreciate your dedication in helping CPA candidates pass the CPA exam!”
(7) – If you would like to unsubscribe from these emails, you can scroll down to the bottom of this email and click on the appropriate link. I have been busy writing task-based simulations so I have not been sending out email lessons as often as I want. However, I do plan to get back to my normal routine of a lesson every week or two. Hope you’ll stay with us.
(8) – We have a Facebook account for CPAreviewforFREE so I’m on Facebook every day or two. I am absolutely amazed by how much time some people spend on Facebook. It not only eats up their time; it must also eat up their attention and their mental energy.
What eats up your time?
--Facebook
--Twitter
--YouTube
--Email
--Television
There must be a million things that will suck up the minutes in your day.
Okay, I’m not going to tell you to give up email or Facebook or the like. I don’t want you to become miserable. But, I do have a challenge for you. On a piece of paper (right now), list out the top four non-productive things that eat up your time. You know what they are. It is those things that you choose to do rather than study. They are always calling to you to come play.
Here’s my challenge. With those four, try to cut down your usage by half. So, instead of checking your email every hour, do it every two hours. Instead of posting something on Facebook every two hours, make it every four hours (no matter how exciting the current message is). Instead of watching two hours of television per night, stop at one hour.
I think you’ll be amazed at how much time starts to open up for study. You want to get control over the distracters in your life. Yeah, they are all interesting but they are really just distracters that keep you from making serious accomplishments with your life. They are the type of things that keep you from showing your true talents; they are the type of things that hold you back from greatness.
You don’t need to eliminate the distracters but you really do need to (1) be aware of them and (2) control them enough that you can cut the time you give them in half. The less distraction in your life, the more likely it is that you will pour your energy into passing the CPA Exam. And, if you do that, you can pass.
(9) – Let’s add some points. Let’s do some practice. Read each question below. If you get it right, then you know this area—so move on. If you miss it, read the answer very carefully so you can be successful the next time you see a similar question.
FAR
The Redstone Corporation ended Year One with sales of $800,000, bad debt expense of $30,000, accounts receivable of $200,000, and an allowance for doubtful accounts (credit balance) of $10,000. In Year Two, the company made another $900,000 in sales on credit but collected only $600,000 in cash from those accounts. During the year, one customer who owed $13,000 declared bankruptcy and that account was written off as uncollectible. At the end of Year Two, the company’s accountants believed that 2 percent of ending receivables will eventually prove to be uncollectible. What is bad debt expense?
A. $9,740
B. $12,000
C. $12,740
D. $13,000
Answer is C
At the end of Year Two, the allowance for doubtful accounts has a $3,000 debit balance ($10,000 beginning balance less the $13,000 account written off as uncollectible). Accounts receivable is now $487,000 ($200,000 beginning balance plus $900,000 in sales less $600,000 in collections less the $13,000 account written off). The company estimates that 2 percent of receivables will prove uncollectible. That amount is $9,740 or 2 percent of $487,000. The allowance has a $3,000 debit balance but needs a $9,740 credit balance. To reach the desired figure, an expense of $12,740 is recognized for the period.
Auditing and Attestation
The CPA firm of Toe and Nail is performing an audit of the annual financial statements produced by the North Wilderness Corporation. The audit team is currently testing the accounts receivable balance for evidence of any material misstatements. One of the staff members of the audit firm was assigned to look through the subsidiary ledger for amounts due from officers. What was the most likely objective of this work?
A. Determine that the accounts receivable balance is properly reduced to net realizable value.
B. Determine that the reported accounts receivable balance represents all of the amounts owed to North Wilderness as of the balance sheet date and that no accounts have been omitted.
C. North Wilderness holds ownership of all of the reported accounts receivable at the balance sheet date.
D. The accounts receivable are properly presented in the financial statements.
Answer is D
Officers are viewed as related parties and, thus, those balances need to be disclosed as part of a proper presentation. The staff auditor is looking for evidence that any such receivables exist but have not been separately disclosed by the reporting company.
Regulation
Mr. and Mrs. William Singler are married and plan to file a joint tax return. This year, an investment in land that cost the taxpayers $100,000 (but that is currently worth $310,000) is traded for another investment in land that is worth approximately $340,000. To conclude the trade, the taxpayers also had to pay cash of $29,000. What is the taxable gain or loss on this exchange?
A. No taxable gain or loss
B. $29,000 gain
C. $210,000 gain
D. $211,000 gain
Answer is A
This is an exchange of like-kind property. In a like-kind exchange, a gain is only reported for tax purposes if boot (nonlike-kind property, such as cash) is also received. Here, the boot is paid. As a like-kind exchange with no boot being received, there is no taxable gain or loss.
BEC
The San Francisco Corporation is highly automated with many transactions from its subsidiaries around the world processed immediately through the company’s computer system. Company officials have become concerned about the possibility of a disaster such as an earthquake knocking out its computer system. A disaster recovery corporation was invited to visit the company and put forth a proposal. This outside vendor talked about creating a hot site for the company. What is meant by a hot site?
A. It is a facility owned by the vendor that is a fully equipped data center and can be up and running in a matter of hours by bringing in trained personnel.
B. It is a space that is rented so that it can become a data center but no actual hardware or software is in place—only specified plans for obtaining these items are available.
C. It is a functioning data center that mirrors all work done by the company so that operations can be switched over immediately if need be.
D. It is a site within the company where all of the data records are kept in a disaster proof location.
Answer is A.
A hot site is in a separate location from the company’s data center and has all of the hardware and software needed to begin operations. A plan for getting needed personnel is on file. If a disaster occurs, the personnel are brought in as quickly as possible so that computer operations can begin running within a matter of hours.
Have a great week. Make that resolution.
Joe Hoyle
President – CPA review for FREE
www.CPAreviewforFREE.com
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