Thursday, September 30, 2010

Have an Incentive to Study!

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September 29, 2010

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Lesson 80

From: Joe


(a) – VERY SPECIAL ANNOUNCEMENT: SUBSCRIPTION SERVICE FOR REGULATION IS NOW AVAILABLE. As most of you know, we started offering a subscription service for FAR several weeks ago and quite a number of you have taken advantage of that program and its 620 slides.

Now, for Regulation, we have created over 880 slides that you can view over the Internet that tells you exactly what we believe you need to know—this material covers the basics in law and tax and gets you ready to make 75 and pass that part of the CPA Exam.

As with FAR, a subscription for Regulation will be $15 per month or $30 for three months. What else can you possibly get for $15 per month? That’s 50 cents per day to get over 880 slides explaining the topics covered in the Regulation part of the CPA Exam. That’s less than 2 cents per slide for a month.

Of course, our 2,100 free questions and answers will always stay free. The subscription service provides the content you need to supplement those questions and answers.

--To gain access, go to www.CPAreviewforFREE.com. Click on “Store” at the top right of the home page, click on “here” under the “Essential Content,” log into your account (or register if you have not registered previously), and Click on “Paid Content.” Then, purchase one month of online access for $15 or 3 months for $30.

--When you subscribe – read my study program first. You certainly can proceed in any manner that you wish but I would prefer for you to see how I envisioned this program before you get started.

--And, one final thing, we've listened to our users and now offer our content in a printable form! If you have already purchased the online subscription but would like to print out the content, you can upgrade your subscription and purchase the printable version under "Paid Content" after logging into your account. OR, if you have never purchased the Essential content, you can purchase the online subscription and print it as needed.


(b) – I think one of the things that is most helpful when you are preparing for the CPA Exam is to hear about other people JUST LIKE YOU who have passed the exam. That is very reassuring. We’ve gotten a gazillion emails recently from candidates. Wish I had space to print them all. Here are just a few that were emailed in or posted on our Facebook page:

From DT: "I want to thank you for your help in passing the exam. I just found out my final grade this morning and it was all thanks to your site. Prior to using CPA review for free I purchased a $1600 review package. Your site was better than anything I could have purchased. Thanks again!!!!!”

From SL: “Your subscription content for FAR helped me pass on my first try! I GOT AN 81!!!”

From LQ: "Just found out I passed BEC! I did the questions on CPA Review for Free only. I went into an old college textbook just to cover 2 topics I felt weak in. But this site was primarily the source to get me over 75! Thank you"

From LP: "Thanks for this site and all of your encouragement! I received my last score yesterday and passed with three 99's and an 89 on BEC! I took all four parts in four months, so if anyone reading this site has the opportunity to study full time in between graduation and starting work, I encourage them to do so =)"

From OO: “Thank you CPAreviewforFREE. I passed Audit with 82. I used your questions for my final review. Your tips and motivational e-mails are really helpful and much appreciated.”

From RK: “Thank you! I just got my results for FAR and I passed with an 88%! Using CPA review for free was a wonderful resource for me. The multiple choice questions helped me learn the ground rules for each subject. I made flash cards just like you suggested to help review those concepts. I will now be studying for REG (my last test) and hopefully I will be sending you another thank you note around Christmas time with more successful results. I would also like to add that it has been 19 years since I received my accounting degree. I am saying this to encourage others who may have taken some time to pursue other goals. It takes incredible perseverance but it's highly possible to pass. And I think it's going to be worth it.”

From PL: “I recently passed all four parts of the CPA exam. I found your site after I took the first two sections, so I only had the benefit of it for the last two. The practice questions really helped me study. I only wish I had discovered them earlier. I heartily endorse your website and your advice to study at least one hour per day and take as many practice tests as you can.”

From MK: “I just wanted to let you know that I passed FAR with a 95! I found out this morning and still cannot believe that it's finally over. When I walked out of the exam, I thought that there was no possible way that I passed - the exam questions concentrated on only a few areas vs. covering the surface of everything; I had multiple questions that were very similar/identical to one another; and I had a lot of very obscure questions. But I guess I wasn't the only one that felt this way. That being said, I wanted to say thank you for everything you have done. Whenever I started to doubt myself, think that I couldn't study for one more minute, or that there was no way that I could pass, I would read one of your inspirational emails. Your emails would restore my confidence and help me think 'I CAN DO THIS!'. I would then sit down and go through all of your questions, read the explanations, and slowly a light would come on. Thus, I do not think that I would have passed
without your fabulous questions and touching emails. Bottom line, thank you for taking the time to care, you truly are a hero and an inspiration to us all.”

From ME: “I would like to express my deepest appreciation to your website and to you as its creator. I received my FAR score a few days ago, 82. I finally passed after three unsuccessful attempts (66, 72, and 73)! First time I used a (big course) review (big mistake!), it did not help me at all, but the software expired...lost time and money. The FAR exam was a very big challenge for me. English is my second language. I earned a degree in Accounting, but did not deeply understand a lot of the transactions and events. The questions provided on "CPA for Free" web site explain a lot of very complicated topics from a different point of view compared to other CPA review courses. You have absolutely excellent questions for a lot of financial accounting concepts, such as different types of leases, income tax calculating, governmental and non-for-profit organization, etc. I tried to complete at least 1 quiz each lunch break every day. I enjoyed your inspiring e-mails and
used it as guidance for my preparation.”

Okay – make it your goal to write me a letter just like these within the next year!!! That is a reasonable goal – one that you can accomplish!!! Go for it.


(1) – Larry Bird was one of the greatest basketball players to ever play the game. He just had the knack. We often think that people like that are just born with great talent but Larry Bird once said: “When I was young, I never wanted to leave the court until I got things exactly correct.”

Most of us have exactly the opposite attitude—we cannot wait to get finished. We hurry up so we can quit. We are dying to finish so we get to stop. But notice what Bird says “I never WANTED to leave the court until I got things exactly correct.”

How would your study be different each day if you started by saying “I don’t want to quit this topic until I can get the questions correct.” “I don’t want to stop working on leases until I know how to do capitalized leases.”

What is your attitude?
Is it: “I hate it but I have to study” or “I am going to force myself to sit here until I learn this stuff” or “this is painful but I must study.”

Those are such negative attitudes. That just cannot be helpful. No wonder people hate to study if that is how they feel. Who wants to feel like that?

But just imagine -- what if your attitude was “I want to sit here and figure out how to do earnings per share” or “I never learned bonds in college but I really do want to know how they work” or “I want to be an accountant because I like accounting so I am looking forward to learning more accounting tonight.”

I think society causes us a problem because there is a general feeling that working to learn is painful, dull, and boring. No -- watching television is painful, dull, and boring – learning stuff makes us smarter and helps us to know more. That should be exciting. That should feel good.

Let me make a suggestion. If you are having trouble putting in the time that you need, step back and assess your attitude. How do you view upcoming study sessions? If you think of them as misery to be endured then you are talking yourself into failure. If you can convince yourself that studying and learning are actually interesting endeavors, you will have taken a great first step toward getting those 75 points that you need to pass.


(2) – As always if you wish to unsubscribe from these email lessons, scroll to the bottom of this lesson and click on unsubscribe. We’ll miss you but you honestly do have that right.


(3) – I was listening to NPR (national public radio) a few weeks back and they were talking and some expert made an astute comment: “incentives make a difference.” His comment was based on a story of how to get people to do what you want them to do. He made the obvious comment that we all have incentives for what we do. If you make those incentives the right one, people will do amazing things. If you make that incentive wrong, people will do virtually nothing. It is not you that is holding yourself down but the incentives that you have set.

If you have followed these lessons for long, you already know that I tend to push focusing on today because that is the only day where you can make a difference in your grade. So, what is your incentive for studying today? I think that is a great question. I think that is a question you should address every day. I think that can make a big difference in your progress. Why do you want to study today?

Of course, there are the obvious answers: I want to pass the CPA Exam, I want to be a professional accountant, I want to be recognized as a Certified Public Accountant. Those are good but none of them focus your attention on today. Those are big picture incentives. I want to focus on today.

So, before you start studying, think of an incentive for today. Personalize them as much as you can. You are trying to push yourself to have a great today.
--If I answer 40 questions today on www.CPAreviewforFREE.com, I’ll buy myself an ice cream cone.
--If I study for two hours without taking a break, I’ll go for a swim in the pool.
--If I prepare 35 flash cards, I’ll spend ten minutes emailing by friends.

Each person is different. There are incentives that will push you to accomplish much. The secret is to figure out what they are. Every day, when you start to study, consider setting a goal with an incentive. Because incentives really do make a difference.


(4) – Practice – always a good time to answer some questions. The first one comes from my intermediate accounting class today.

FAR

The Winslet Company issues a four-year $80,000, 5 percent serial bond on January 1, Year One. Each December 31, starting on December 31, Year One, the company will pay $20,000 plus interest of 5 percent on the unpaid face value for that year. The bond is issued for 90 percent of face value ($72,000) to yield an annual rate of 8 percent. What is the interest expense to be recognized for Year Two?

A - $4,301
B - $4,621
C - $5,901
D - $6,221


Answer is A

Interest expense the first year is $72,000 times 8 percent or $5,760. However, the company pays interest of only $4,000 ($80,000 times 5 percent). The unpaid portion of the interest ($5,760 - $4,000 or $1,760) must be compounded (added to the principal balance). In addition, a $20,000 payment is also made on the face value. That reduces the liability. Therefore, the liability balance for Year Two is $72,000 + $1,760 - $20,000 or $53,760. At 8 percent, the interest for the second year is $4,301 ($53,760 times 8 percent).


Regulation

The Asimov Corporation has revenues of $300,000, ordinary and necessary expenses of $200,000, a long-term capital gain of $4,000, and a short-term capital loss of $5,000. What is its taxable income?

A - $97,000
B - $99,000
C - $100,000
D - $104,000


Answer is C

This corporation has a net capital-loss for the year of $1,000. However, corporations are not allowed to deduct capital losses. Therefore, the only tax effects come from the revenues and the expenses that net to $100,000. The $1,000 net loss can be carried back for three years and forward for five years to reduce taxable capital gains.


Auditing

Auditors are examining the financial statements for the Haynesworth Corporation. The company maintains a checking account with the Second National Bank. The auditors request and get a bank cut-off statement to verify the checks that cleared in the first few days of the subsequent year. Which of the following is the most likely reason for carrying out this procedure?

A – The company is trying to overstate its cash balance.
B – The company is trying to understate its liability balance.
C – The company is trying to overstate its revenue balance.
D – The company is trying to understate its expense balance.


Answer is B.

If the checks clear in a reasonable period of time, there is no problem at all. If they do not clear in a reasonable period of time, it means the payment was recorded but possibly was not sent to the recipient. Why would that be? What is the possible benefit of recording a payment but not mailing the check? The company gets to reduce its liability balance so that it reports a lower amount of liabilities without actually losing any of its cash.


BEC

The Acme Washing Company was owned by the Winslow Group. It was sold to a team of five of Acme’s vice-presidents for a total price for $34.6 million. The vice-presidents put up $600,000 in cash and borrowed the remainder from a group of three banks. The assets of Acme were pledged as security for the loan. Which of the following terms is used to describe this transaction?

A – Reverse acquisition
B – Pooling of interests
C – Leveraged buyout
D – Congeneric merger


Answer is C

A leveraged buyout is a transaction that is mostly financed by taking on debt with little money being contributed by the owners. Here, they only put up $600,000 to buy a $34.6 million company. Pooling of interests is an old accounting term that is no longer used for new acquisitions. A congeneric merger a type of merger where two companies operate in related industries but do not offer the same products.


Okay, go out and focus on today and let’s start adding some points and move up to that 75 point level.