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Lesson 85
From: Joe
(a) – We should go over 20 million page views in the next few days – WOW!!!!
(1) – The 2010 CPA Exam is officially over and we are going to use the next few weeks to switch everything on our site over to the 2011 CPA Exam. Here are some of the changes we want you to notice.
--We have added a bunch of IFRS multiple-choice questions for FAR in our free question and answer database. Probably the 2011 change that has been the most talked about is the addition of some IFRS questions in FAR. We have tried to pick out the questions that we believe are most likely to be used to test IFRS. You can do those questions (right now) at www.CPAreviewforFREE.com.
--As I type, we are in the process of moving our free Business Structure questions and answers from BEC to REG. The examiners decided that those subject areas (corporations and partnerships) were better suited under Regulation.
--We have added a whole bunch of free Corporate Governance questions and answers to our BEC database. The examiners moved Business Structure to REG and replaced it in BEC with Corporate Governance. Those questions and answers are now ready to go.
--In our subscription services for FAR and REG, we have removed all of the old-style simulations and replaced them with brand new task-based simulation questions and answers. We will soon have 10 or so task-based simulations in each of the subscription areas. On the CPA Exam, instead of having two very long simulations that include both research and written communications, each part of the CPA Exam (except BEC) will have 6-7 shorter task-based simulations. Research will still be tested here but the written communications questions will all move to BEC.
--In our subscription services for FAR and REG, we have updated our study programs to incorporate the changes that are being made.
Okay, that is the progress at the moment. We have more to do and I’ll give you that information in my next email less.
Our goal is quite simple: we want to do whatever is necessary to be the biggest CPA Exam Review program in the country by the end of 2011.
(2) – That is our goal for 2011. What is your goal for 2011? Where do you want to be one year from today? As I sometimes tell my students, you don’t need a map if you don’t know where you want to go. Life doesn’t happen as you want it by chance. What would you like to accomplish over the next year?
Hopefully, one of your goals is to get the CPA Exam passed, done, and out of your life.
--Whether you went to a big school or a tiny one, that is a reasonable goal. It just takes work.
--Whether you made a 4.0 in college or just barely passed, that is still a reasonable goal. It just takes work.
--Whether you were the smartest student in your class or the one who just squeaked by, that is still a reasonable goal. It just takes work.
Success doesn’t come by accident.
How soon do you want to pass the CPA Exam? What is reasonable?
Which part do you want to pass next?
How much time is it going to take?
What study materials will you use (hopefully, www.CPAreviewforFREE.com)?
The country (and I suppose the world) seem to be in a rut right now. It needs more people like you to get up and start accomplishing something. The world doesn’t get stronger by having its best and brightest people sit around and whine about our problems. It gets stronger by doing. Figure out what you want to do over the next 365 days and get on with the journey. If you know where you want to go, you can make it happen.
(3) – As always, we love the mail we get.
From KS: Just received my final CPA exam grade--passed FAR with a score of 91. I used your pay content almost exclusively for preparation. I had the XXXX review series, but it was overkill, and the book was way too thick to possibly get through (since I am also working full-time, am married and have two children). So thanks! Your review materials are spot on and prepared me well. I will keep spreading the word about your site!
From JK: I just wanted to say thank you for all of the information on your site! I found out this week that I passed FAR with an 83 after studying with the subscription review slides and free questions on your site. It is such a great resource and I have been using the site instead of doing a review program. Many people at work are surprised when I say I'm not going to a review class, but I really believe that your site is helpful in passing the test. Thank you again.
From Z: Just wanted to let you know that I passed FAR!! Got my scores in today. I made exactly what was needed to pass, a 75. I wanted to take a moment of your time to thank you for your encouraging emails and suggestions. I applied several of your techniques. I actually wrote out on a piece of paper that “every question I do gets me closer to a 75” and that has helped a lot. It truly worked out!
From NW: Before I unsubscribe, I want to thank you for your site – it helped me pass the CPA exam! Every time when I had trouble figuring out a concept, I checked out your site and learned the concept from a different perspective. I LOVED your thorough explanations, much better than the XXXX. I also enjoyed your encouraging periodic newsletters/e-mails. Those fun and positive messages kept me on track! Thank you SO very much!
From OP: Just a word to say thanks so much for your help in passing the CPA exam. I received notice that I passed the 4th part this week, but now I must retake REG in Jan 2011 because the 18 months time limit passed and I lost credit for REG that I initially took and passed in 01/09. Anyway, I am very thankful for all your timeless efforts to help old guys like myself to achieve their desires to excel. I am 58 now and began this endeavor around August 2008. After passing this last "hurdle" and fulfilling my experience requirement, I will launch my "new" career as a CPA!
Now--Picture your email right here – that’s what I want – to hear from YOU about how you used www.CPAreviewforFREE.com and passed that exam!!
(4) – My semester has just ended and I am in the middle of final exams. Last week one of the students came to me because she was disappointed with her grade. She had worked very hard throughout the semester but her test grades were not as good as she hoped they would be. She wanted some advice on how she could do better on the final exam.
I eventually wrote her a note with some advice. I thought that advice might be helpful to you even though you are not taking a final exam in “Introduction to Financial Accounting.”
To my student:
On a test, there are typically one (or more) out of several possible reasons for missing a question.
The first is that you don't read the question very well and don't even know what is being asked or the information that is available. You never get a good handle on the question. In the helter skelter of a test, students often start to "guess" at what the question wants before they have finished the first sentence. They are so pumped up that they want to get on with the job of answering the question before they even read the question. They'll often come back and say "I don't know how I could possibly have missed that. I knew that material and still got the question wrong."
And the most likely answer is that they never really understood what the question was asking. So, after you read the question, repeat it back to yourself. What am I supposed to determine? And, then ask yourself what information is needed to answer that question. Once you know the question, you should start thinking about the information you must obtain to address that question.
The second reason for mistakes is that accounting tests are often quantitative tests where you have a bunch of numbers or other information presented in a very random fashion. Those numbers and that other information must be processed in a particular order. You must provide order for the chaos. Somehow, students often never get the numbers and information ordered correctly. The information remains confused in the person’s head and the person can just not get things lined up to arrive at an answer. So, as you are studying, think about how the information is put together to arrive at a proper answer. Answers tend to be built: do this and then do this and then do this and you have the correct answer.
Students will say “I know I need this and this and this but I don’t see how they all go together—how do I put them together?” That is not a question you should be asking yourself during the test; that is a question you need to answer prior to the test.
The third reason for missing goes back to the learning process. The best way to learn something is to miss it and then have to figure out what went wrong. You need to work as many practice problems as you can and every time you miss one you need to get obsessed with figuring out what went wrong. There is absolutely no reason to practice if you are not going to learn from your mistakes. Too many students say “shucks” when they miss a question and then find a spot within the question that they missed and move on. To say “oh, it is six at that point rather than seven” doesn’t mean you know how to work the question. So, always ask yourself “if this question were asked again but the numbers were changed slightly and rearranged a bit, could I get it right the next time?” In many ways, that is the ultimate preparation question. Until your answer to that question is “absolutely yes,” you cannot move on -- you must still learn how to answer that question.
It takes patience and it takes perseverance but you must read the question carefully, you must understand how the information fits together, and you must learn from your mistakes. If you do that, there is no reason that you can’t knock the top out of that exam.
(5) – If you want to unsubscribe from these email lessons, it is easy. Just scroll to the bottom of this email lesson (or any email lesson) and click on the Unsubcribe link. We are delighted to have you with us. Please stay as long as you wish. Please forward these lessons to your friends, family, strangers, enemies, and creatures from other planets. But, when you are ready to go, you are certainly able to unsubscribe.
(6) – Let’s add some points. Here are four good questions – the chance to add four points to YOUR CPA Exam score.
FAR
A company borrows money on a long-term note payable. In the current year, the company pays the required $23,000 in interest expense. On a statement of cash flows, how is that payment reflected according to IFRS?
A. As an operating activity
B. As a financing activity
C. As either an operating activity or a financing activity
D. As either a financing activity or an investing activity
Answer is C
Under US GAAP, cash paid for interest expense is always reported as an operating activity. IFRS takes a different approach. Cash paid for interest expense can be reported as an operating activity on a statement of cash flows but company management can also show it as a financing activity (since it is directly related to a liability).
BEC
Which of the following is a requirement established by the New York Stock Exchange for the companies that are officially listed on that exchange?
A. A code of conduct must be adopted by the governing board and made public.
B. The company must have both common stock and preferred stock so that investors can have an available option.
C. The company must maintain a reasonable equity position as measured by its debt-to-equity ratio.
D. The company must have a history of paying out a minimum of five percent of its earnings in the form of cash dividends.
Answer is A
To help ensure that companies operate with some level of moral guidance, a code of conduct must be adopted. To help outsiders evaluate the company’s commitment to ethical principles that code of conduct must be made public. Most companies do not have a preferred stock and there are certainly no rules requiring its availability. Investors should judge the financial position and operations of the company for themselves by looking at benchmarks such as the debt-to-equity ratio and the dividend payout. The NYSE has no such requirements about preferred stock, the debt-to-equity ratio, or the dividend payout.
Auditing and Attestation
A CPA firm is planning to do an audit of a reporting entity located in a foreign country and the firm is required to follow the rules established by international auditing standards. What authoritative body establishes those standards?
A. The Public Oversight Board of Europe and Asia
B. The Auditing Development Board of the United Nations
C. The Auditing Standards Group of the World Bank
D. The International Federation of Accountants
Answer is D
The International Federation of Accountants (IFAC) produces international auditing standards. According to its website, “As the global organization for the accountancy profession, IFAC is committed to protecting the public interest by developing high-quality international standards, promoting strong ethical values, encouraging quality practice, and supporting the development of all sectors of the profession around the world.”
Regulation
The Jones Partnership has been in operation for a number of years and is run by Bill Jones and Phil Jones. Tom Smith has also put money into the business but is a silent 20 percent partner. He does not do any work in connection with the business and no one knows that he is a silent partner other that Bill and Phil Jones. Which of the following is true?
A. Tom Smith can only lose the amount of money that he has invested in the partnership.
B. Tom Smith can only be held for responsible for 20 percent of the liabilities of the partnership.
C. Tom Smith can only be held liable by individuals or companies that should have known that he was a partner.
D. Tom Smith has unlimited liability for the debts of the partnership despite serving as a silent partner.
Answer is D
The designation of Smith as a silent partner has no impact on his liability for the debts of a partnership. In a general partnership, all partners have this unlimited risk.
Have a great week – make wonderful things happen!!!!
Joe Hoyle
Co-Founder and President
CPA Review for FREE
www.CPAreviewforFREE.com
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