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May 31, 2011
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Lesson 96
From: Joe
(1) – We have distributed an amazing number of FREE study guides to the folks who have identified their next exam in an email to Jhoyle@cpareviewforfree.com. These study guides explain how to combine our 2,200 free questions and answers with our subscription service to create a comprehensive CPA Exam review program for $15 per month per part (50 cents per day – try to beat that on eBay).
However, the question we always get is: “Can you explain how your subscription service actually works?” Seems like a reasonable question. So, at the end of this email, I’ll give you a demonstration of one very small part of our subscription service. I hope that proves helpful in understanding how our program will get you through this exam for a whole lot less than $2,500.
(2) – We’ve added something new to the home page of our website (www.CPAreviewforFREE.com). Under our CPA Exam Resources section, we already have three important articles:
--Using CPA Review for FREE to Prepare for the CPA Exam.
--Applying for the CPA Exam
--Structure of the CPA Exam
We believe all of these would be helpful to every candidate.
We have now added a fourth article: “Tips for Success.” Over the years, we have distributed scores of tips for success on our Facebook page. Over the last few days, I have gathered my top 60 or so of these tips. Because we have so many, I posted the first ten this week and I’ll post another batch every week or two until they are all posted.
Go to www.CPAreviewforFREE.com. Go to “CPA Exam Resources” on the home page. Click on “Tips for Success.” I probably wouldn’t sit down and read this material all at once like you might a novel. Most people don’t need 60 tips for success at one time. Instead, every day or two, if you feel the need for some encouragement or a boost of energy, go to the website and read a couple.
We hope they help. As always, we are trying our best to do everything we can possibly do to assist you in getting the 75 points you need to pass the CPA Exam. Hope our Tips for Success makes the journey a bit easier.
(3) – I attended a lovely wedding here in Richmond this past Sunday. It was held in a beautiful church that was constructed in 1848. Because of the US Civil War, there are few buildings standing in Richmond that are so old.
During the ceremony, the pastor talked directly to the young couple. He told them there are certain words that they should say to each other so often, during their lives together, that they wear those words out. “Wear these words out” was kind of the theme of his remarks. To the bride and groom, he suggested the words: “I am sorry” and “I’m so very grateful.” Probably good advice for any newlyweds (or anyone else, for that matter).
I liked that idea of “wearing words out.” So, I started thinking: If I were talking to my CPA Exam candidates, what words would I suggest that they “wear out” over the course of their study.
Here’s my suggestion for words that you might want to wear out over the next few weeks or months as you prepare to pass the CPA Exam.
"I'm tired but I can still study a bit longer.” Too many people obsess over being tired and let it control what they can accomplish. At the first hint of tired, they give up and quit. Successful people get to the point where they are tired and then they keep going. That is one true mark of people who succeed in this life.
“I missed this problem but now I see how it works.” Passing the CPA Exam is all about making progress. If you get a question correct, you really learn nothing. If you miss a question and move on, you really learn nothing. But the most important moment is when you miss a question, read the answer carefully, and figure out how to work it right the next time. Now, that’s success.
“I’m not trying to be perfect; I just want to answer enough questions to pass.” It is very easy to get stuck trying to learn it all. I’ve known way too many people who gave up before they ever took the exam because they couldn’t achieve perfection. Don’t worry about trying to answer every question correctly. Once again, as above, the only important goal is making progress.
“The CPA Exam is a mile wide and an inch deep.” The CPA Exam that you take will try to cover a little bit about everything in the world of accounting, auditing, tax, and the like. As you study, it is much more important to cover all the topics a little bit than to cover any topic in too much depth and detail.
“When I get to the exam, I’m going to watch my time closely.” I’m convinced that, once you have put in your 60-100 hours of preparation for each part, the biggest problem is time management during the exam. If you rush too fast, you’ll make careless mistakes. If you work too slowly, you won’t finish. It is very important, as I said in my previous lesson (Lesson 95 that can be found in the Blog Archives in the right hand navigation), that you get used to working at an appropriate “exam speed.”
Okay, I could probably come up with 25 other sets of words to wear out as you prepare for the CPA Exam but these five form a pretty good foundation. I’m not sure that I wouldn’t write them down and tape them to your wall and read through them each and every day.
Wear those words out.
(4) – Personal note to all 20,000 of our subscribers (yeah, this means YOU). We love having you. We really hope we provide a benefit. I never go anywhere (like a wedding) that I don’t think about things to tell you that might help you pass the CPA Exam.
However, if you ever decide that you are ready to unsubscribe, it is easy to do. Scroll to the bottom of any one of these email lessons. You’ll find a link to unsubscribe. Click on that and follow the directions. You have every right to manage your emails. If you are ready to unsubscribe, go for it.
(5) – Yesterday, while I was dressing for the wedding, I watched the last 10 laps of the Indianapolis 500. If you follow car racing at all, you already know what happened. A young rookie was leading the race going into the last lap. He had a good sized lead and was going to win fairly easily. The announcers were already talking about him being the champion. There was really nothing in his way of winning. As he took the very last turn (he could see the finish line), his car slid into the wall. He wasn’t hurt but he lost the race. He let it get away. He had driven by that wall 199 previous times that day with no problem but on that last time, for no apparent reason, he crashed.
Whenever I talk with people about the CPA Exam, I always tell them to take nothing for granted. If you know the topic, make sure you continue to do the work. If you feel good about an area, make sure you continue to do the work. If you have been studying all day and you are going to work a few more problems, make sure you continue to do the work. If you are actually taking the CPA exam and you have been working for nearly 3 or 4 hours, make sure you continue to do the work.
It is easy to lose your focus. It is easy to start day dreaming or just start thinking of something else. It is easy to get distracted. Things are always happening that catch your attention. When you are studying, your mind should be on one thing and one thing only: How do I get this particular question in front of me answered correctly? When you are taking the exam itself, your mind should be on one thing and one thing only: How do I get this one particular question in front of me answered correctly?
My assumption is that most people actually study enough hours to pass the exam. However, during those hours, it is easy to get distracted and wind up accomplishing nothing. You don’t just need 60-100 hours per part; you need 60-100 hours of concentrated study per part. Make sure you continue to do the work.
My assumption is that most people who take the CPA Exam actually have enough knowledge in their heads to pass. However, during the exam itself, it is easy to get distracted and wind up making mistakes. Don’t worry about the lights, the seat, the computer screen, the noise, the heat, the cold, the other people. When you are taking the CPA Exam only one thing matters: How do I get this particular question in front of me answered correctly?
Studying for the CPA Exam is not a game. It is not for play. It deserves your undivided attention. You don’t want to lose the race just because you failed to do something that you had done before and should have been able to do again.
(6) – I want to close today by giving you a full-scale illustration of our Subscription Service. As we’ve said, it costs $15 per month per part. Let’s look at FAR. If you subscribe to the FAR material, what do you get for your $15?
--You get 10 examples of our illustrations of what we believe task-based simulations look like.
--You get a study guide to show how to combine our free questions and our subscription service to create a comprehensive program (this is the study guide you can get for free by sending a note to Jhoyle@cpareviewforfree.com).
--For FAR, you get content information divided into 23 different topic areas – everything from consolidations to earnings per share and inventory to government accounting. Those topic areas contain hundreds of slides presenting the information we believe you need to know to pass that part of the CPA Exam.
What does this content information look like? I decided to select accounts receivable as my illustration because it is one of the shortest topics and won’t use up so much space in your email box.
So, quite literally, here is our content material for Accounts Receivable within the FAR part of the CPA Exam as covered by our subscription service
SLIDE ONE
Accounts Receivables
Accounts receivable is normally reported as a current asset because collection is expected within one year. It reflects amounts owed to a company by its customers.
Accounts receivable should be disclosed in the balance sheet at net realizable value (the cash expected – the total amount owed to the company less the estimated amount of uncollectibles). Receivables from company officers, employees, and affiliate companies should be separately disclosed.
SLIDE TWO
Cash discounts (such as 2/10, n/30) give a discount if the customer pays within a certain period of time. In this example, a 2 percent discount can be taken if payment is made in 10 days but any remaining amount must be paid in total in 30 days.
When a discount is offered, account receivable can be recorded by either the net method or the gross method.
SLIDE THREE
Net method. The seller (and the buyer if that company so chooses) reports the transaction at the net amount (after the discount) which assumes the discount will be taken. A $100 sale is recorded at only $98 if a 2 percent discount is available. If paid in time, cash is debited for $98 and the $98 account receivable is removed. However, the $2 discount might not be taken so that the entire $100 is collected. In that case, the extra $2 collection is recorded as interest.
SLIDE FOUR
Gross method. The seller (and, possibly, buyer) reports these transactions at the gross amount which assumes the discount will not be taken. A $100 sale is recorded at $100. The only problem is that the $2 discount might still be taken so that only $98 is collected. The $2 reduction is recorded as a sales discount by the seller. “Sales discounts” reduce Sales on the income statement.
SLIDE FIVE
Bad Debts. Bad Debt Expense is reported on the income statement and the Allowance for Bad Debts is reported on the balance sheet as a reduction to Accounts Receivable.
The allowance method of recording bad debts is used in US GAAP because it matches the expense with the timing of the revenue. An alternative, the direct method, does not recognize any expense until an account proves uncollectible. This method is not allowed under US GAAP.
SLIDE SIX
The allowance method estimates the amount of uncollectible accounts based on past experience and present industry, company, and economic conditions. Bad debt expense is recognized in the same period as the sale. Because the actual bad accounts have not yet been identified, a contra valuation account (an Allowance for Bad Debts – which might also be called something like an Allowance for Doubtful Accounts) is established for the amount of the receivables estimated to be uncollectible.
SLIDE SEVEN
The adjusting entry to record Bad Debt Expense for the period and establish the proper balance in the Allowance for Bad Debts is made at the end of each period.
Bad Debt Expense estimated amount
Allowance for Bad Debts estimated amount
SLIDE EIGHT
When an account actually proves to be uncollectible (the customer dies, moves away, files for bankruptcy or just refuses to pay), the account is written off. However, the expense has already been recognized in the previous estimation entry and should not be recorded again.
Allowance for Bad Debts uncollectible amount
Accounts Receivable uncollectible amount
If this account is ever collected in the future, the above entry is reversed to reinstate the balance before collection is recorded.
SLIDE NINE
One key element of this reporting is left to be shown. How does the company estimate the amount of its bad debts in the first entry shown previously? There are two methods to determine the annual charge to bad debt.
(1) Percentage of sales method
(2) Percentage of receivable method (or a variation – the aging method)
SLIDE TEN
Regardless of the method being used, at the end of each period, the reporting company will have a bad debt expense account with a balance that is zero because no estimation has yet been recorded for the period.
It will also have an Allowance for Bad Debts but that account will have a remaining balance that can either be a debit or a credit. The Allowance balance is its beginning balance for the period less the amount of accounts written off during the period (but plus any accounts that were written back on the books because of latter collection).
SLIDE ELEVEN
PERCENTAGE OF SALES METHOD
Multiply the appropriate percentage times the sales balance for the period. This is the balance that should be reported for Bad Debt Expense.
Because the Bad Debt Expense account has a zero balance, the amount determined by the computation is added directly to Bad Debt Expense (and also to the Allowance for Bad Debts). If the estimation is for $36,000, then the adjusting entry is for $36,000. Bad Debt Expense will equal the estimation. The Allowance for Bad Debts will be its previous balance as adjusted by this final entry.
SLIDE TWELVE
PERCENTAGE OF RECEIVABLES METHOD
Multiply the appropriate percentage times the accounts receivable balance at the end of the period. This is the balance that should be reported as a credit for the Allowance for Bad Debts.
That contra account already has a balance that may be either a debit or a credit. The adjusting entry records the amount needed to bring this previous account balance to the new estimation. If a $3,000 credit was in the allowance account and the estimation is now $40,000, then the adjusting entry is for $37,000. If a $1,000 debit was in the allowance account and the estimation is now $40,000, then the adjusting entry is for $41,000.
SLIDE THIRTEEN
Pledging of receivables. Pledging is an agreement whereby a company’s accounts receivable are used as collat¬eral for loans. Customers whose accounts have been pledged are not aware of this situation so their payments are still remitted to the original company. The pledged accounts merely serve as security to a lender. The only accounting issue relating to pledging is that of adequate disclosure. The accounts receivable, which remain assets of the borrowing entity, continue to be shown as current assets on its balance sheet but must be identified as having been pledged.
SLIDE FOURTEEN
Factoring of receivables. Factoring is the sale of receivables to a buyer known as a factor. The transfer of receivables “without recourse” means that the factor (the buyer) assumes the risk of loss from any noncollection. Thus, once this type of factoring arrangement is com¬pleted, the seller has no further involvement with the accounts. The receivables are removed from the books of the seller and the difference between the cash received and the car¬rying value of those receivables is recognized as a gain or loss.
SLIDE FIFTEEN
Another possibility is factoring “with recourse” where a monetary amount must be returned to the buyer if a specified amount is not collected from the receivables. In recording the transfer of the receivables, the seller must take into account any anticipated repayment amount. For example, if cash of $100,000 is guaranteed but the seller only anticipates that the buyer will collect $98,000, a $2,000 liability is recorded by the seller at the time of sale. The accounts receivable are removed from the seller’s books and this liability is recognized; the cash received is also recorded and the difference is a gain or loss.
SLIDE SIXTEEN
Several Important Ratios Involving Current Assets
Solvency ratios or amounts—Any ratio or computation that measures an entity's short-term viability by its ability to pay its debts as they come due.
---Acid-test (quick) ratio—It is the sum of the quick assets (cash, receivables, and short-term investments) divided by the total of the current liabilities.
---Current ratio—It is computed by taking the total of all current assets (the quick assets plus inventory, prepayments, and supplies) and dividing it by the total of current liabilities
---Working capital—It is computed by taking the total of the current assets and subtracting the current liabilities
SLIDE SEVENTEEN
Operational efficiency ratios or amounts—A ratio or computation that measures an entity's ability to make good use of its assets
---Receivable turnover—It measures how rapidly cash is collected from credit sales. It is computed by taking the net credit sales for a period divided by the average of the net receivables for the same period.
---Number of days’ sales in receivables—The average length of time receivables are out¬standing, which reflects the efficiency of credit and collection policies. It is the receivable balance divided by average credit sales per day.
SLIDE EIGHTEEN
Now that you have gone through all of these slides for accounts receivable, go back to our free questions and answers and work all of the questions provided under “Accounts Receivable.” This should help you get to the point where you can pass Accounts Receivable. Once you can pass the topics, you can pass FAR.
Take good notes, especially for any questions that you miss. A good note is one that takes 10 words or less and explains anything that you might have missed that would prevent you from getting the question correct.
Have a great week!!!
Joe Hoyle
Co-Founder and President
CPA Review for FREE
www.CPAreviewforFREE.com
Tuesday, May 31, 2011
Friday, May 20, 2011
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Friday, May 13, 2011
Auditing Subscription Service Now Available
Try us FIRST before you spend your hard-earned money.
May 12, 2011
CPA Review for FREE
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Over 2,200 FREE CPA Review Questions and Answers Available for YOU
149 Weeks of Operation and 23,661,776 Page Views (without a penny spent on marketing)
Lesson 94
From: Joe
(1) - Our Auditing and Attestation subscription service is now up and running!!! For a mere $15 per month (50 cents per day), you can get
---377 slides of information covering everything you need to know about Auditing and Attestation
---10 task-based simulations covering audit reports, reviews, compilations, internal control, and much more
---a complete 24 step study guide to prepare you to take and pass the Auditing and Attestation section of the CPA Exam.
All for that just 50 cents per day.
We now have a complete CPA Exam review service available for you!!
**Free Questions and Answers**
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--BEC
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**Subscription Service (each part for $15/month)**
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--Financial Accounting & Reporting
--BEC
--Regulation
Trust me - you don’t have to spend $2,500. That is highway robbery. For $15 per month, we can give you thousands of free questions and the content you need to pass AND a study guide to tell you what to do.
Try us first, before you spent thousands. Why not try us for a month and see if you can save thousands?
Okay, I know you want to know more about how the subscription service works. So, send me an email at Jhoyle@cpareviewforfree.com and tell me what part of the exam you plan to take next. I’ll send you the study guide for that part. As we like to say down here in the South, it is not good idea to buy a pig in a poke. We believe in our program and want you to see how our program works. Just send me an email (jhoyle@cpareviewforfree.com and let me know what part you plan to take next and I’ll send you our study guide by return email. You can see how our program is designed.
I’ve been in this business for over 30 years. I designed this program so that you can pass AND pay as close to zero as possible.
--If you are truly wealthy and are dying to spend thousands of dollars, then nothing I can say is going to change your mind. Nothing—that money is burning a hole in your pocket.
--However, if it were me, I’d invest $15 first and try this program for one month. That’s just common sense. At the end of a month, you can give us another $15 or you can give the other guys $2,500 but at least you’ll know what works for you. Come on – accountants should be smart enough to see that trying one month for $15 is a good idea.
**To purchase any of our subscription services:
You must be registered to purchase any of our content. Then, just login to your account at www.CPAreviewforFREE.com and click on “Paid Content” to choose the section and select the package you wish to purchase which is only $15/one month or $30 for three months
(2) – In case you missed it above, send me a note at Jhoyle@cpareviewforfree.com and tell me the part that you are going to take next and I’ll send you our study guide for that part ABSOLUTELY FREE. (Our favorite term around here - “absolutely free.”)
(3) – Recently, I have been posting daily messages on our Facebook page. I just like giving everyone a daily boost of “you can do it – put in the time and energy and make it happen.”)
However, I wrote an entry the other day that I have thought a lot about over the last few days. Here’s what I had to say:
“If you don’t dream enough, work becomes work – pure drudgery. However, if you dream about what you want to accomplish, work becomes a real joy. So, dream about passing the CPA Exam. If you don’t enjoy studying, maybe you are not dreaming enough. From Oliver Wright: ‘I got more thrill out of flying before I had ever been in the air at all – while lying in bed thinking how exciting it would be to fly.’”
I’ve had a terribly busy spring schedule and, in all honesty, work has really started to feel like drudgery to me. I can do it but there’s no real spark there. There’s not been enough excitement. I have just gone through the motions to get it done. I find that a whine and moan a lot. Not enough joy.
So, after I wrote that entry above, I decided that I probably was speaking to me more than to anyone else.
Since then, I have really worked on dreaming about what I want to see happen.
--I dream about having really efficient days where I just seem to work without stopping and everything goes well. I dream about having the energy to get up and get things done.
--I dream about finishing projects and saying to myself “I did it. I made it happen.”
--I dream about doing a good job and that wonderful, wonderful feeling of accomplishment.
--I dream about looking up one day and smiling and saying “it worked out just like I hoped it would.”
I have a request. Stop reading and ask yourself a couple of questions.
--Over the last few weeks would you say that your study for the CPA Exam has been drudgery or a joy?
--Over the last few weeks do you find yourself whining more than you’d like to admit?
--Over the last few weeks have you tried to avoid studying at all costs?
--Over the last few weeks when you have studied have you wanted to quit almost as soon as you started?
If the answer to these questions all tend to be in the “I’m sick to death of studying” mode, then maybe it is time for you to start dreaming. Every morning when you get up, take an extra minute or two and dream:
--Dream that you study and you are perfectly focused and just seem to learn every piece of information that you cover. It is all just very clear.
--Dream that you go to take the CPA Exam and you feel the exaltation as you realize that you know most of the questions. You catch the tricks and understand what they want.
--Most of all, dream about getting your scores and seeing four grades of 75 or above. Dream about how good that is going to feel. Dream about telling your mother, father, husband, wife, son, daughter, boss, coworkers, etc. Dream about that wonderful sense of accomplishment. Dream about yelling out “I DID IT!!!!”
I think you’ll find that having dreams of what you want to do will reenergize your spirits. We are all human. We all get sick of this stuff. It is easy to forget why you got started in the first place. Take five minutes a day – take five minutes every day – and dream about success, victory, and accomplishment. Dream great dreams!!!!
Speaking strictly for me, it really has helped. I feel better about my work and feel better about the whole process of working.
Motivation seeps away pretty quickly if you don’t stop to refill the tanks. Dreaming will help.
(4) – We are delighted to have everyone of you on this email service (and on our Facebook page). Please stay as long as you wish. I’ve been writing these lessons now for about 15 years; I’m pretty sure I can write them for another 15. However, if you ever decide you are ready to unsubscribe, just go to the bottom of this email (or any other email from us) and click on the “unsubscribe” button. Our goal is to help and motivate. Our goal is not to fill up your email box.
(5) – Okay, practice time. Let’s see if we can add some points – ABSOLUTELY FREE!!!
FAR
Living plants and animals are referred to as biological assets for accounting purposes. Assume a company has a large fruit orchard. Under IFRS, how should this asset be reported on a company’s balance sheet?
A. Fair value
B. Fair value less estimated cost to sell
C. Historical cost
D. Historical cost less accumulated depreciaton
Answer is B
Under US GAAP, the orchard would be reported at historical cost less accumulated depreciation like most other long-lived assets. But, under IFRS, biological assets are reported at fair value less the estimated cost that it would take to sell them.
Auditing & Attestation
An auditor must make an assessment of control risk as part of the process to determine how much substantive testing must be done to reduce overall audit risk to an acceptably low level. Which of the following is not one of the five components that make up internal control?
A. Checks and balances
B. Monitoring
C. Control environment
D. Risk assessment.
Answer is A
The five components of internal control are (1) control environment—the organization’s commitment to having a strong internal control, (2) risk assessment—the organization’s ability to anticipate problems and work to prevent them in advance, (3) control activities-the policies and procedures in place to help ensure that the organization’s systems are working as intended by management, (4) information and communication-the organization’s ability to gather significant data and get it to the people who need it in a timely fashion, and (5) monitoring—the assessment of internal control by the organization over time to ensure that internal control properly adapts as changes are needed.
BEC
What is meant by the term “economic profit?”
A. It is just a different way of saying net income.
B. It is the amount of profit being earned in excess of a normal profit.
C. It is equivalent to gross margin.
D. It is the same as return on assets.
Answer is B.
Economic profit is any profit earned in excess of a normal amount of profit. In economics, it is important because it is assumed that additional competition will be drawn to areas where an economic profit can be earned so that, in the long run, it will be eliminated by the added competition. In fact, the term is also referred to as “excess profits” which is more self-explanatory.
Regulation
A company owes a bank $10,000. The company cannot pay. Jones is a surety on the debt for $6,000. Smith is also a co-surety on the same debt for $6,000. The bank releases Jones without reservation of rights against Smith. For what amount is Smith now obligated to the bank in connection with this debt?
A. Zero
B. $3,000
C. $5,000
D. $6,000
Answer is B
Initially, each co-surety is liable in for the amount that each has personally guaranteed. However, when the bank released one co-surety without reservation of rights against the other, the remaining co-surety is also released, but only to the extent that his right of contribution is affected. In other words, Smith has lost the right to step into the bank's shoes against Jones for contribution of $3,000, so is released to that extent.
Joe Hoyle
Co-Founder
CPA Review for FREE
www.CPAreviewforFREE.com
May 12, 2011
CPA Review for FREE
www.CPAreviewforFREE.com
Over 2,200 FREE CPA Review Questions and Answers Available for YOU
149 Weeks of Operation and 23,661,776 Page Views (without a penny spent on marketing)
Lesson 94
From: Joe
(1) - Our Auditing and Attestation subscription service is now up and running!!! For a mere $15 per month (50 cents per day), you can get
---377 slides of information covering everything you need to know about Auditing and Attestation
---10 task-based simulations covering audit reports, reviews, compilations, internal control, and much more
---a complete 24 step study guide to prepare you to take and pass the Auditing and Attestation section of the CPA Exam.
All for that just 50 cents per day.
We now have a complete CPA Exam review service available for you!!
**Free Questions and Answers**
--Auditing and Attestation
--Financial Accounting & Reporting
--BEC
--Regulation
**Subscription Service (each part for $15/month)**
--Auditing and Attestation
--Financial Accounting & Reporting
--BEC
--Regulation
Trust me - you don’t have to spend $2,500. That is highway robbery. For $15 per month, we can give you thousands of free questions and the content you need to pass AND a study guide to tell you what to do.
Try us first, before you spent thousands. Why not try us for a month and see if you can save thousands?
Okay, I know you want to know more about how the subscription service works. So, send me an email at Jhoyle@cpareviewforfree.com and tell me what part of the exam you plan to take next. I’ll send you the study guide for that part. As we like to say down here in the South, it is not good idea to buy a pig in a poke. We believe in our program and want you to see how our program works. Just send me an email (jhoyle@cpareviewforfree.com and let me know what part you plan to take next and I’ll send you our study guide by return email. You can see how our program is designed.
I’ve been in this business for over 30 years. I designed this program so that you can pass AND pay as close to zero as possible.
--If you are truly wealthy and are dying to spend thousands of dollars, then nothing I can say is going to change your mind. Nothing—that money is burning a hole in your pocket.
--However, if it were me, I’d invest $15 first and try this program for one month. That’s just common sense. At the end of a month, you can give us another $15 or you can give the other guys $2,500 but at least you’ll know what works for you. Come on – accountants should be smart enough to see that trying one month for $15 is a good idea.
**To purchase any of our subscription services:
You must be registered to purchase any of our content. Then, just login to your account at www.CPAreviewforFREE.com and click on “Paid Content” to choose the section and select the package you wish to purchase which is only $15/one month or $30 for three months
(2) – In case you missed it above, send me a note at Jhoyle@cpareviewforfree.com and tell me the part that you are going to take next and I’ll send you our study guide for that part ABSOLUTELY FREE. (Our favorite term around here - “absolutely free.”)
(3) – Recently, I have been posting daily messages on our Facebook page. I just like giving everyone a daily boost of “you can do it – put in the time and energy and make it happen.”)
However, I wrote an entry the other day that I have thought a lot about over the last few days. Here’s what I had to say:
“If you don’t dream enough, work becomes work – pure drudgery. However, if you dream about what you want to accomplish, work becomes a real joy. So, dream about passing the CPA Exam. If you don’t enjoy studying, maybe you are not dreaming enough. From Oliver Wright: ‘I got more thrill out of flying before I had ever been in the air at all – while lying in bed thinking how exciting it would be to fly.’”
I’ve had a terribly busy spring schedule and, in all honesty, work has really started to feel like drudgery to me. I can do it but there’s no real spark there. There’s not been enough excitement. I have just gone through the motions to get it done. I find that a whine and moan a lot. Not enough joy.
So, after I wrote that entry above, I decided that I probably was speaking to me more than to anyone else.
Since then, I have really worked on dreaming about what I want to see happen.
--I dream about having really efficient days where I just seem to work without stopping and everything goes well. I dream about having the energy to get up and get things done.
--I dream about finishing projects and saying to myself “I did it. I made it happen.”
--I dream about doing a good job and that wonderful, wonderful feeling of accomplishment.
--I dream about looking up one day and smiling and saying “it worked out just like I hoped it would.”
I have a request. Stop reading and ask yourself a couple of questions.
--Over the last few weeks would you say that your study for the CPA Exam has been drudgery or a joy?
--Over the last few weeks do you find yourself whining more than you’d like to admit?
--Over the last few weeks have you tried to avoid studying at all costs?
--Over the last few weeks when you have studied have you wanted to quit almost as soon as you started?
If the answer to these questions all tend to be in the “I’m sick to death of studying” mode, then maybe it is time for you to start dreaming. Every morning when you get up, take an extra minute or two and dream:
--Dream that you study and you are perfectly focused and just seem to learn every piece of information that you cover. It is all just very clear.
--Dream that you go to take the CPA Exam and you feel the exaltation as you realize that you know most of the questions. You catch the tricks and understand what they want.
--Most of all, dream about getting your scores and seeing four grades of 75 or above. Dream about how good that is going to feel. Dream about telling your mother, father, husband, wife, son, daughter, boss, coworkers, etc. Dream about that wonderful sense of accomplishment. Dream about yelling out “I DID IT!!!!”
I think you’ll find that having dreams of what you want to do will reenergize your spirits. We are all human. We all get sick of this stuff. It is easy to forget why you got started in the first place. Take five minutes a day – take five minutes every day – and dream about success, victory, and accomplishment. Dream great dreams!!!!
Speaking strictly for me, it really has helped. I feel better about my work and feel better about the whole process of working.
Motivation seeps away pretty quickly if you don’t stop to refill the tanks. Dreaming will help.
(4) – We are delighted to have everyone of you on this email service (and on our Facebook page). Please stay as long as you wish. I’ve been writing these lessons now for about 15 years; I’m pretty sure I can write them for another 15. However, if you ever decide you are ready to unsubscribe, just go to the bottom of this email (or any other email from us) and click on the “unsubscribe” button. Our goal is to help and motivate. Our goal is not to fill up your email box.
(5) – Okay, practice time. Let’s see if we can add some points – ABSOLUTELY FREE!!!
FAR
Living plants and animals are referred to as biological assets for accounting purposes. Assume a company has a large fruit orchard. Under IFRS, how should this asset be reported on a company’s balance sheet?
A. Fair value
B. Fair value less estimated cost to sell
C. Historical cost
D. Historical cost less accumulated depreciaton
Answer is B
Under US GAAP, the orchard would be reported at historical cost less accumulated depreciation like most other long-lived assets. But, under IFRS, biological assets are reported at fair value less the estimated cost that it would take to sell them.
Auditing & Attestation
An auditor must make an assessment of control risk as part of the process to determine how much substantive testing must be done to reduce overall audit risk to an acceptably low level. Which of the following is not one of the five components that make up internal control?
A. Checks and balances
B. Monitoring
C. Control environment
D. Risk assessment.
Answer is A
The five components of internal control are (1) control environment—the organization’s commitment to having a strong internal control, (2) risk assessment—the organization’s ability to anticipate problems and work to prevent them in advance, (3) control activities-the policies and procedures in place to help ensure that the organization’s systems are working as intended by management, (4) information and communication-the organization’s ability to gather significant data and get it to the people who need it in a timely fashion, and (5) monitoring—the assessment of internal control by the organization over time to ensure that internal control properly adapts as changes are needed.
BEC
What is meant by the term “economic profit?”
A. It is just a different way of saying net income.
B. It is the amount of profit being earned in excess of a normal profit.
C. It is equivalent to gross margin.
D. It is the same as return on assets.
Answer is B.
Economic profit is any profit earned in excess of a normal amount of profit. In economics, it is important because it is assumed that additional competition will be drawn to areas where an economic profit can be earned so that, in the long run, it will be eliminated by the added competition. In fact, the term is also referred to as “excess profits” which is more self-explanatory.
Regulation
A company owes a bank $10,000. The company cannot pay. Jones is a surety on the debt for $6,000. Smith is also a co-surety on the same debt for $6,000. The bank releases Jones without reservation of rights against Smith. For what amount is Smith now obligated to the bank in connection with this debt?
A. Zero
B. $3,000
C. $5,000
D. $6,000
Answer is B
Initially, each co-surety is liable in for the amount that each has personally guaranteed. However, when the bank released one co-surety without reservation of rights against the other, the remaining co-surety is also released, but only to the extent that his right of contribution is affected. In other words, Smith has lost the right to step into the bank's shoes against Jones for contribution of $3,000, so is released to that extent.
Joe Hoyle
Co-Founder
CPA Review for FREE
www.CPAreviewforFREE.com
Thursday, May 12, 2011
Auditing & Attestation subscription service is now up and running!!!
Try us FIRST before you spend your hard-earned money.
May 12, 2011
CPA Review for FREE
www.CPAreviewforFREE.com
Over 2,200 FREE CPA Review Questions and Answers Available for YOU
149 Weeks of Operation and 23,661,776 Page Views (without a penny spent on marketing)
Lesson 94
From: Joe
(1) - Our Auditing and Attestation subscription service is now up and running!!! For a mere $15 per month (50 cents per day), you can get
---377 slides of information covering everything you need to know about Auditing and Attestation
---10 task-based simulations covering audit reports, reviews, compilations, internal control, and much more
---a complete 24 step study guide to prepare you to take and pass the Auditing and Attestation section of the CPA Exam.
All for that just 50 cents per day.
We now have a complete CPA Exam review service available for you!!
**Free Questions and Answers**
--Auditing and Attestation
--Financial Accounting & Reporting
--BEC
--Regulation
**Subscription Service (each part for $15/month)**
--Auditing and Attestation
--Financial Accounting & Reporting
--BEC
--Regulation
Trust me - you don’t have to spend $2,500. That is highway robbery. For $15 per month, we can give you thousands of free questions and the content you need to pass AND a study guide to tell you what to do.
Try us first, before you spent thousands. Why not try us for a month and see if you can save thousands?
Okay, I know you want to know more about how the subscription service works. So, send me an email at Jhoyle@cpareviewforfree.com and tell me what part of the exam you plan to take next. I’ll send you the study guide for that part. As we like to say down here in the South, it is not good idea to buy a pig in a poke. We believe in our program and want you to see how our program works. Just send me an email (jhoyle@cpareviewforfree.com and let me know what part you plan to take next and I’ll send you our study guide by return email. You can see how our program is designed.
I’ve been in this business for over 30 years. I designed this program so that you can pass AND pay as close to zero as possible.
--If you are truly wealthy and are dying to spend thousands of dollars, then nothing I can say is going to change your mind. Nothing—that money is burning a hole in your pocket.
--However, if it were me, I’d invest $15 first and try this program for one month. That’s just common sense. At the end of a month, you can give us another $15 or you can give the other guys $2,500 but at least you’ll know what works for you. Come on – accountants should be smart enough to see that trying one month for $15 is a good idea.
**To purchase any of our subscription services:
You must be registered to purchase any of our content. Then, just login to your account at www.CPAreviewforFREE.com and click on “Paid Content” to choose the section and select the package you wish to purchase which is only $15/one month or $30 for three months
(2) – In case you missed it above, send me a note at Jhoyle@cpareviewforfree.com and tell me the part that you are going to take next and I’ll send you our study guide for that part ABSOLUTELY FREE. (Our favorite term around here - “absolutely free.”)
(3) – Recently, I have been posting daily messages on our Facebook page. I just like giving everyone a daily boost of “you can do it – put in the time and energy and make it happen.”)
However, I wrote an entry the other day that I have thought a lot about over the last few days. Here’s what I had to say:
“If you don’t dream enough, work becomes work – pure drudgery. However, if you dream about what you want to accomplish, work becomes a real joy. So, dream about passing the CPA Exam. If you don’t enjoy studying, maybe you are not dreaming enough. From Oliver Wright: ‘I got more thrill out of flying before I had ever been in the air at all – while lying in bed thinking how exciting it would be to fly.’”
I’ve had a terribly busy spring schedule and, in all honesty, work has really started to feel like drudgery to me. I can do it but there’s no real spark there. There’s not been enough excitement. I have just gone through the motions to get it done. I find that I whine and moan a lot. Not enough joy.
So, after I wrote that entry above, I decided that I probably was speaking to me more than to anyone else.
Since then, I have really worked on dreaming about what I want to see happen.
--I dream about having really efficient days where I just seem to work without stopping and everything goes well. I dream about having the energy to get up and get things done.
--I dream about finishing projects and saying to myself “I did it. I made it happen.”
--I dream about doing a good job and that wonderful, wonderful feeling of accomplishment.
--I dream about looking up one day and smiling and saying “it worked out just like I hoped it would.”
I have a request. Stop reading and ask yourself a couple of questions.
--Over the last few weeks would you say that your study for the CPA Exam has been drudgery or a joy?
--Over the last few weeks do you find yourself whining more than you’d like to admit?
--Over the last few weeks have you tried to avoid studying at all costs?
--Over the last few weeks when you have studied have you wanted to quit almost as soon as you started?
If the answer to these questions all tend to be in the “I’m sick to death of studying” mode, then maybe it is time for you to start dreaming. Every morning when you get up, take an extra minute or two and dream:
--Dream that you study and you are perfectly focused and just seem to learn every piece of information that you cover. It is all just very clear.
--Dream that you go to take the CPA Exam and you feel the exaltation as you realize that you know most of the questions. You catch the tricks and understand what they want.
--Most of all, dream about getting your scores and seeing four grades of 75 or above. Dream about how good that is going to feel. Dream about telling your mother, father, husband, wife, son, daughter, boss, coworkers, etc. Dream about that wonderful sense of accomplishment. Dream about yelling out “I DID IT!!!!”
I think you’ll find that having dreams of what you want to do will re-energize your spirits. We are all human. We all get sick of this stuff. It is easy to forget why you got started in the first place. Take five minutes a day – take five minutes every day – and dream about success, victory, and accomplishment. Dream great dreams!!!!
Speaking strictly for me, it really has helped. I feel better about my work and feel better about the whole process of working.
Motivation seeps away pretty quickly if you don’t stop to refill the tanks. Dreaming will help.
(4) – We are delighted to have everyone of you on this email service (and on our Facebook page). Please stay as long as you wish. I’ve been writing these lessons now for about 15 years; I’m pretty sure I can write them for another 15. However, if you ever decide you are ready to unsubscribe, just go to the bottom of this email (or any other email from us) and click on the “unsubscribe” button. Our goal is to help and motivate. Our goal is not to fill up your email box.
(5) – Okay, practice time. Let’s see if we can add some points – ABSOLUTELY FREE!!!
FAR
Living plants and animals are referred to as biological assets for accounting purposes. Assume a company has a large fruit orchard. Under IFRS, how should this asset be reported on a company’s balance sheet?
A. Fair value
B. Fair value less estimated cost to sell
C. Historical cost
D. Historical cost less accumulated depreciation
Answer is B
Under US GAAP, the orchard would be reported at historical cost less accumulated depreciation like most other long-lived assets. But, under IFRS, biological assets are reported at fair value less the estimated cost that it would take to sell them.
Auditing & Attestation
An auditor must make an assessment of control risk as part of the process to determine how much substantive testing must be done to reduce overall audit risk to an acceptably low level. Which of the following is not one of the five components that make up internal control?
A. Checks and balances
B. Monitoring
C. Control environment
D. Risk assessment.
Answer is A
The five components of internal control are (1) control environment—the organization’s commitment to having a strong internal control, (2) risk assessment—the organization’s ability to anticipate problems and work to prevent them in advance, (3) control activities-the policies and procedures in place to help ensure that the organization’s systems are working as intended by management, (4) information and communication-the organization’s ability to gather significant data and get it to the people who need it in a timely fashion, and (5) monitoring—the assessment of internal control by the organization over time to ensure that internal control properly adapts as changes are needed.
BEC
What is meant by the term “economic profit?”
A. It is just a different way of saying net income.
B. It is the amount of profit being earned in excess of a normal profit.
C. It is equivalent to gross margin.
D. It is the same as return on assets.
Answer is B.
Economic profit is any profit earned in excess of a normal amount of profit. In economics, it is important because it is assumed that additional competition will be drawn to areas where an economic profit can be earned so that, in the long run, it will be eliminated by the added competition. In fact, the term is also referred to as “excess profits” which is more self-explanatory.
Regulation
A company owes a bank $10,000. The company cannot pay. Jones is a surety on the debt for $6,000. Smith is also a co-surety on the same debt for $6,000. The bank releases Jones without reservation of rights against Smith. For what amount is Smith now obligated to the bank in connection with this debt?
A. Zero
B. $3,000
C. $5,000
D. $6,000
Answer is B
Initially, each co-surety is liable in for the amount that each has personally guaranteed. However, when the bank released one co-surety without reservation of rights against the other, the remaining co-surety is also released, but only to the extent that his right of contribution is affected. In other words, Smith has lost the right to step into the bank's shoes against Jones for contribution of $3,000, so is released to that extent.
Joe Hoyle
Co-Founder
CPA Review for FREE
www.CPAreviewforFREE.com
May 12, 2011
CPA Review for FREE
www.CPAreviewforFREE.com
Over 2,200 FREE CPA Review Questions and Answers Available for YOU
149 Weeks of Operation and 23,661,776 Page Views (without a penny spent on marketing)
Lesson 94
From: Joe
(1) - Our Auditing and Attestation subscription service is now up and running!!! For a mere $15 per month (50 cents per day), you can get
---377 slides of information covering everything you need to know about Auditing and Attestation
---10 task-based simulations covering audit reports, reviews, compilations, internal control, and much more
---a complete 24 step study guide to prepare you to take and pass the Auditing and Attestation section of the CPA Exam.
All for that just 50 cents per day.
We now have a complete CPA Exam review service available for you!!
**Free Questions and Answers**
--Auditing and Attestation
--Financial Accounting & Reporting
--BEC
--Regulation
**Subscription Service (each part for $15/month)**
--Auditing and Attestation
--Financial Accounting & Reporting
--BEC
--Regulation
Trust me - you don’t have to spend $2,500. That is highway robbery. For $15 per month, we can give you thousands of free questions and the content you need to pass AND a study guide to tell you what to do.
Try us first, before you spent thousands. Why not try us for a month and see if you can save thousands?
Okay, I know you want to know more about how the subscription service works. So, send me an email at Jhoyle@cpareviewforfree.com and tell me what part of the exam you plan to take next. I’ll send you the study guide for that part. As we like to say down here in the South, it is not good idea to buy a pig in a poke. We believe in our program and want you to see how our program works. Just send me an email (jhoyle@cpareviewforfree.com and let me know what part you plan to take next and I’ll send you our study guide by return email. You can see how our program is designed.
I’ve been in this business for over 30 years. I designed this program so that you can pass AND pay as close to zero as possible.
--If you are truly wealthy and are dying to spend thousands of dollars, then nothing I can say is going to change your mind. Nothing—that money is burning a hole in your pocket.
--However, if it were me, I’d invest $15 first and try this program for one month. That’s just common sense. At the end of a month, you can give us another $15 or you can give the other guys $2,500 but at least you’ll know what works for you. Come on – accountants should be smart enough to see that trying one month for $15 is a good idea.
**To purchase any of our subscription services:
You must be registered to purchase any of our content. Then, just login to your account at www.CPAreviewforFREE.com and click on “Paid Content” to choose the section and select the package you wish to purchase which is only $15/one month or $30 for three months
(2) – In case you missed it above, send me a note at Jhoyle@cpareviewforfree.com and tell me the part that you are going to take next and I’ll send you our study guide for that part ABSOLUTELY FREE. (Our favorite term around here - “absolutely free.”)
(3) – Recently, I have been posting daily messages on our Facebook page. I just like giving everyone a daily boost of “you can do it – put in the time and energy and make it happen.”)
However, I wrote an entry the other day that I have thought a lot about over the last few days. Here’s what I had to say:
“If you don’t dream enough, work becomes work – pure drudgery. However, if you dream about what you want to accomplish, work becomes a real joy. So, dream about passing the CPA Exam. If you don’t enjoy studying, maybe you are not dreaming enough. From Oliver Wright: ‘I got more thrill out of flying before I had ever been in the air at all – while lying in bed thinking how exciting it would be to fly.’”
I’ve had a terribly busy spring schedule and, in all honesty, work has really started to feel like drudgery to me. I can do it but there’s no real spark there. There’s not been enough excitement. I have just gone through the motions to get it done. I find that I whine and moan a lot. Not enough joy.
So, after I wrote that entry above, I decided that I probably was speaking to me more than to anyone else.
Since then, I have really worked on dreaming about what I want to see happen.
--I dream about having really efficient days where I just seem to work without stopping and everything goes well. I dream about having the energy to get up and get things done.
--I dream about finishing projects and saying to myself “I did it. I made it happen.”
--I dream about doing a good job and that wonderful, wonderful feeling of accomplishment.
--I dream about looking up one day and smiling and saying “it worked out just like I hoped it would.”
I have a request. Stop reading and ask yourself a couple of questions.
--Over the last few weeks would you say that your study for the CPA Exam has been drudgery or a joy?
--Over the last few weeks do you find yourself whining more than you’d like to admit?
--Over the last few weeks have you tried to avoid studying at all costs?
--Over the last few weeks when you have studied have you wanted to quit almost as soon as you started?
If the answer to these questions all tend to be in the “I’m sick to death of studying” mode, then maybe it is time for you to start dreaming. Every morning when you get up, take an extra minute or two and dream:
--Dream that you study and you are perfectly focused and just seem to learn every piece of information that you cover. It is all just very clear.
--Dream that you go to take the CPA Exam and you feel the exaltation as you realize that you know most of the questions. You catch the tricks and understand what they want.
--Most of all, dream about getting your scores and seeing four grades of 75 or above. Dream about how good that is going to feel. Dream about telling your mother, father, husband, wife, son, daughter, boss, coworkers, etc. Dream about that wonderful sense of accomplishment. Dream about yelling out “I DID IT!!!!”
I think you’ll find that having dreams of what you want to do will re-energize your spirits. We are all human. We all get sick of this stuff. It is easy to forget why you got started in the first place. Take five minutes a day – take five minutes every day – and dream about success, victory, and accomplishment. Dream great dreams!!!!
Speaking strictly for me, it really has helped. I feel better about my work and feel better about the whole process of working.
Motivation seeps away pretty quickly if you don’t stop to refill the tanks. Dreaming will help.
(4) – We are delighted to have everyone of you on this email service (and on our Facebook page). Please stay as long as you wish. I’ve been writing these lessons now for about 15 years; I’m pretty sure I can write them for another 15. However, if you ever decide you are ready to unsubscribe, just go to the bottom of this email (or any other email from us) and click on the “unsubscribe” button. Our goal is to help and motivate. Our goal is not to fill up your email box.
(5) – Okay, practice time. Let’s see if we can add some points – ABSOLUTELY FREE!!!
FAR
Living plants and animals are referred to as biological assets for accounting purposes. Assume a company has a large fruit orchard. Under IFRS, how should this asset be reported on a company’s balance sheet?
A. Fair value
B. Fair value less estimated cost to sell
C. Historical cost
D. Historical cost less accumulated depreciation
Answer is B
Under US GAAP, the orchard would be reported at historical cost less accumulated depreciation like most other long-lived assets. But, under IFRS, biological assets are reported at fair value less the estimated cost that it would take to sell them.
Auditing & Attestation
An auditor must make an assessment of control risk as part of the process to determine how much substantive testing must be done to reduce overall audit risk to an acceptably low level. Which of the following is not one of the five components that make up internal control?
A. Checks and balances
B. Monitoring
C. Control environment
D. Risk assessment.
Answer is A
The five components of internal control are (1) control environment—the organization’s commitment to having a strong internal control, (2) risk assessment—the organization’s ability to anticipate problems and work to prevent them in advance, (3) control activities-the policies and procedures in place to help ensure that the organization’s systems are working as intended by management, (4) information and communication-the organization’s ability to gather significant data and get it to the people who need it in a timely fashion, and (5) monitoring—the assessment of internal control by the organization over time to ensure that internal control properly adapts as changes are needed.
BEC
What is meant by the term “economic profit?”
A. It is just a different way of saying net income.
B. It is the amount of profit being earned in excess of a normal profit.
C. It is equivalent to gross margin.
D. It is the same as return on assets.
Answer is B.
Economic profit is any profit earned in excess of a normal amount of profit. In economics, it is important because it is assumed that additional competition will be drawn to areas where an economic profit can be earned so that, in the long run, it will be eliminated by the added competition. In fact, the term is also referred to as “excess profits” which is more self-explanatory.
Regulation
A company owes a bank $10,000. The company cannot pay. Jones is a surety on the debt for $6,000. Smith is also a co-surety on the same debt for $6,000. The bank releases Jones without reservation of rights against Smith. For what amount is Smith now obligated to the bank in connection with this debt?
A. Zero
B. $3,000
C. $5,000
D. $6,000
Answer is B
Initially, each co-surety is liable in for the amount that each has personally guaranteed. However, when the bank released one co-surety without reservation of rights against the other, the remaining co-surety is also released, but only to the extent that his right of contribution is affected. In other words, Smith has lost the right to step into the bank's shoes against Jones for contribution of $3,000, so is released to that extent.
Joe Hoyle
Co-Founder
CPA Review for FREE
www.CPAreviewforFREE.com
Wednesday, May 4, 2011
Break the Chains that are Keeping YOU from Success
May 4, 2011
CPA Review for FREE
www.CPAreviewforFREE.com
Over 2,200 FREE CPA Review Questions and Answers Available for YOU
148 Weeks of Operation and 23,443,043 Page Views (without a penny spent on marketing)
Lesson 93
From: Joe
(1) – Would you like to help www.CPAreviewforFREE.com? We always tell people that we are only able to continue our operations because of the kindness of so many people. How can YOU help so that we can keep our 2,200 questions and answers available for FREE?
The answer is easy: Simply forward this email to a friend, acquaintance, stranger or someone else who might be interested in taking the CPA Exam. That’s the best way you can help us. Forward this email and just say – these email lessons are free and they’ll help you learn more about passing the CPA Exam. After that, it is up to the other person to go on to our website and register and check the box that they want to get CPA Exam information (these email lessons).
Especially in May and June, it is helpful if we can get the word out to college students who are graduating and, thus, starting to do some serious thinking about the CPA Exam. At this time of the year, those are some of our prime targets. They often spent $2,500-$3,000 (that they probably don’t have) before they even know that we exist. The big courses want you to think that you have no alternative. Don’t let that happen.
(2) – By the way, those of you who are teachers might be interested in reading my teaching blog that I created in connection with my Financial Accounting textbook.
http://m1e.net/c?128895165-44nNhN/l.klSs%406419717-DhrtMNOAYMhwE
If you know a teacher, forward the URL.
(3) – I know we have a lot of international candidates who read these email lessons. You may have seen the following announcement from the AICPA on our Facebook page:
International applications for the Uniform CPA Examination are now being accepted by participating state boards of accountancy. Candidates who wish to sit for the Exam in Japan, Bahrain, Kuwait, Lebanon, or the United Arab Emirates should visit NASBA’s website for the updated list of state boards, a breakdown of fees, and the updated Candidate Bulletin:
http://m1e.net/c?128895165-2EWBD3juWEuF6%406419718-02j786rs0vu36
If you’re unsure of your eligibility or would like more information, the AICPA Exam website’s International Examination FAQs provide a good starting point:
http://m1e.net/c?128895165-voKD1BqEZuT02%406419719-o6iKRAXYjZZAk
(4) – We have a lot of people preparing to take one or more sections of the CPA Exam before the end of the April-May testing window. As in many endeavors in life, it is important to finish up your study strong. You want to go into the testing site with a lot of momentum. You want to make the last days and weeks of study your very best.
We wake up each morning bearing a lot of chains that hold us back from reaching our goals. These are self-inflicted weaknesses that we cling to which keep us from shining and keep us from achieving our potential.
---We believe that we are not smart enough to pass the CPA Exam. That is just a chain that we cling to that holds us back.
---We believe that we are not able to find the time needed for study—another chain that we use to keep ourselves from advancing. It is easy to blame family, friends, and job.
---We judge ourselves to be lazy or weak. You are only as lazy and weak as you think you are. It is the thinking that makes it so.
“I’m just not strong enough to pass the CPA Exam” is easy to say and easy to believe but all it does is hold us back.
We hide under these chains so that we don’t have to face the responsibilities of being successful. A lot of us just don’t want to deal with being successful. It’s easier to wallow around and make excuses and stay lazy.
The world needs for you to stop being timid and push yourself to success.
When you wake up tomorrow morning, wake up a different person. Don’t wake up as a scared person who feels that they are incapable of winning. That is pure baloney. Wake up a different person tomorrow – a person who has put fears and self-doubts and excuses behind. Wake up a different person tomorrow – if you can simply get rid of (a) your fears, (b) your self-doubt, and (c) your excuses, if you can break through your own chains, then that person tomorrow will have a better chance of passing the CPA Exam.
My younger daughter has cerebral palsy. Despite the problems that CP creates, she is the hardest working person that I know. Last month, she received her Gold Award – the highest award that any Girl Scout can achieve. At the ceremony, the leaders read a poem by Marianne Williamson that I think applies to us all. It talks about having the courage to break through your chains to use your talents well and wisely. It was perfect for the Girl Scouts but it was also perfect for people taking the CPA Exam. My two favorite lines are “your playing small does not serve the world” and “we are all meant to shine.” I think that is true about everyone and everything we do.
“Our deepest fear is not that we are inadequate.
Our deepest fear is that we are powerful beyond measure.
It is our light, not our darkness that most frightens us.
We ask ourselves,
Who am I to be brilliant, gorgeous, talented, fabulous?
Actually, who are you not to be?
You are a child of God.
Your playing small does not serve the world.
There is nothing enlightened about shrinking
so that other people won't feel insecure around you.
We are all meant to shine, as children do.
We were born to make manifest the glory of God that is within us.
It's not just in some of us; it's in everyone.
And as we let our own light shine,
we unconsciously give other people permission to do the same.
As we are liberated from our own fear,
our presence automatically liberates others.”
Okay, tomorrow morning, when you get out of bed, it is going to be a new day. Start by leaving your old chains behind. Walk away from those things that you are using to hold yourself back. Forget the excuses. Throw out the self-doubt. You have the ability to pass the CPA Exam if you will just finish strong, if you’ll just put in the hours you need here at the end.
Shine – do the work – make the progress. Answer as many questions as you can. Learn from your mistakes.
This is accounting. It is not easy but it is not rocket science either. You don’t have to be perfect. You merely have to pass. People just like you pass every day. It takes time and patience and perseverance but it doesn’t take any quality that you don’t already have.
Go get it – wake up tomorrow a new person – a person who is going to get the points needed to pass the CPA Exam. Leave your chains of fear and doubt behind.
(5) – As always, we are legally bound to tell you that you can unsubscribe from these emails. If we weren’t legally bound, we wouldn’t tell you because we hope you’ll stay. There is no variable cost (using a good old accounting term) of one more subscriber. So please stay as long as you can.
But, if you ever do want to unsubscribe, scroll to the bottom of any email lesson and you’ll find the appropriate button and it will remove you from our list.
(6) – I am always thrilled to get emails from successful candidates who have made good use of all our free questions and answers. Here are a couple of recent emails. (This is the part of this email lesson that the leaders of all those big programs don’t want you to hear. YOUR money is paying for THEIR Mercedes-Benz. Our success scares them.)
From KM: I finally did it on my own and without taking a class. I wanted to thank you for recommending cpareviewforfree.com because it really helped me target what areas were my weaknesses. It was nice to be able to do multiple choice questions online where the answer is presented to me instantly, instead of having to flip through pages and pages to find the right answer. I couldn't have done it without it.
From KW: I was one that you encouraged through this tedious process. Each week, I looked forward to receiving your e-mails because it seemed I was out of gas! I studied using many sources and tested with your questions to gauge myself. I am excited to tell you I no longer need the encouraging words or questions. I mean that in the best way. On 3/24/2011, I received my FAR grade (final section). I have passed all sections! Thank you, Thank you, Thank you!
From OP: Just a thank you note for all your help over the past year or more. I just got word last week that I passed the last section of my exam. I am so happy, especially at 58 years old. God Bless you for all your efforts in helping so many to achieve their dreams.....
And, I know what some of you are going to ask: I drive a 1997 Subaru station wagon (which is red and has 119,000 miles on it).
(7) – Okay, let’s do some practice – time to add some points. That should be your constant chant: add points, add points.
---FAR – Here is one of the 37 questions that I asked on my final exam for Intermediate Accounting II last week. Most of my students did well on this question; let’s see how well you do.
In Year One, the Alba Company has sales revenues of $600,000. The company has no other revenues and expenses except for a warranty expense of $160,000. The company expects these warranties to be satisfied as follows: $30,000 in Year Two, $60,000 in Year Three, and $70,000 in Year Four. The enacted tax rate is 24 percent. The company believes that there is 58 percent chance that it will have adequate taxable income in Year Two to absorb the warranty expense but that likelihood drops to 51 percent in Year Three, and 39 percent in Year Four. On its December 31, Year One balance sheet, what does this company report as its total net deferred income tax asset (noncurrent)?
A. $14,400
B. $16,800
C. $21,600
D. $31,200
Answer is A
The $30,000 temporary difference in Year Two creates a deferred tax asset but it relates to a Warranty Payable that will be settled next year and, thus, is reported as a current liability. Deferred tax effects created by current accounts are themselves reported as current. The question is asking for the noncurrent asset to be reported. The $60,000 and $70,000 temporary differences will not be settled until Years Three and Four. For those two, the related Warranty Payable is noncurrent. Thus, the deferred tax asset is also noncurrent which is what the question is asking. The total asset would be $130,000 times 24 percent or $31,200. However, the likelihood of receiving the benefit of the Year Four figure (the $70,000 temporary difference) is not more likely than not (not over 50 percent). Thus, that part of the deferred tax asset ($70,000 times 24 percent or $16,800) must be removed by establishing a valuation allowance. The deferred tax asset to be
recognized is $31,200 but the valuation allowance for that amount is $16,800 so that the net deferred tax asset is $31,200 less $16,800 or $14,400.
---Auditing & Attestation - The following question comes from one of our ten audit simulations that we will have in our subscription service for Auditing that we hope to have available within the next week.
Cox Company is being audited by Brown & Yellow CPAs. This public accounting firm has offices in five locations but this audit is primarily performed out of the Baltimore office. Smith is a partner in this firm and works out of the Baltimore office but does not participate in the Cox Company audit. Jones is also a partner in this firm but works out of the Philadelphia office and does not participate in the Cox Company audit. The CPA firm is now trying to determine who in the firm qualifies as a covered member of this engagement so audit independence rules can be verified. Which of the following is true?
A. Smith and Jones are both covered members for this audit engagement.
B. Smith is a covered member but Jones is not
C. Jones is a covered member but Smith is not
D. Neither Smith nor Jones is a covered member
Answer is B
A covered member is any individual on the audit engagement team, anyone who can influence either the engagement or the members of the engagement team, and the partners in the office in which the engagement is primarily performed. Thus, all partners in the Baltimore office would be covered members whereas other partners would only be covered members if they were part of the engagement team or had some influence on it. The designation of the covered members is important because those individuals must abide by specific independence rules toward the audit client.
---Regulation – I wrote the following question by looking (randomly) at the 2010 IRS instruction book for the 1040 form. I have always thought that was one of the very best ways to prepare for the individual income tax part of the Regulation exam—use the instruction manual.
Mr. Jones is a high school counselor and Mrs. Jones is an elementary school aide who works 1,000 hours per year. Mr. Jones spent $200 of his own money for educational software that was common and accepted in his field. Mrs. Jones spent $320 of her own money for books that were also ordinary and necessary for her job. If a joint return is filed, how much of a deduction can they take in arriving at their adjusted gross income for the tax year?
A. $200
B. $450
C. $500
D. $520
Answer is B
I might as well quote the 1040 instructions for this one. “If you were an eligible educator in 2010, you can deduct on line 23 up to $250 of qualified expenses you paid in 2010. If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. However, neither spouse can deduct more than $250 of his or her qualified expenses on line 23. You may be able to deduct expenses that are more than the $250 (or $500) limit on Schedule A, line 21. An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide who worked in a school for at least 900 hours during a school year. Qualified expenses include ordinary and necessary expenses . . . .” So, Mr. Jones can deduct his $200 but Mrs. Jones can only deduct $250 of her expenses. The remaining expenses can be listed as an itemized deduction on Schedule A.
---BEC – I was reading a friend’s managerial accounting textbook recently and came upon the question “what is a cost driver?” so I wrote the following question based on the reading I was doing.
Buffalo Bakery produces donuts but has had trouble determining an accurate cost for its overhead and, thus, has been uncomfortable with setting a price. The accountant is unsure about the cost driver that has been utilized. In this situation, what is meant by a cost driver?
A. The quantity of expensive materials (such as sugar) used in the production process.
B. The number of hours that the machine operators must work.
C. The actions that cause increases in costs such as electricity, rent, and indirect materials
D. The potential for shortages in vital items both in material and equipment.
Answer is C.
According to my friend’s textbook, a cost driver is the action that causes (or “drives”) the costs associated with the activity. Company officials are concerned about the cost of overhead (all costs associated with production other than direct material and direct labor). In determining the cost for a manufactured item, costs must be anticipated for overhead such as electricity, rent, and indirect materials. Such costs do not change randomly. All changes have a cause and those causes are referred to as cost drivers. By determining the cost driver for each cost, the accountant can anticipate the amount that will have to be spent at different levels of production.
We are into the month of May – time to push off chains and start making good things happen that will bring you those points that you need to pass the CPA Exam.
Joe Hoyle
Co-Founder
CPA Review for FREE
www.CPAreviewforFREE.com
CPA Review for FREE
www.CPAreviewforFREE.com
Over 2,200 FREE CPA Review Questions and Answers Available for YOU
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Lesson 93
From: Joe
(1) – Would you like to help www.CPAreviewforFREE.com? We always tell people that we are only able to continue our operations because of the kindness of so many people. How can YOU help so that we can keep our 2,200 questions and answers available for FREE?
The answer is easy: Simply forward this email to a friend, acquaintance, stranger or someone else who might be interested in taking the CPA Exam. That’s the best way you can help us. Forward this email and just say – these email lessons are free and they’ll help you learn more about passing the CPA Exam. After that, it is up to the other person to go on to our website and register and check the box that they want to get CPA Exam information (these email lessons).
Especially in May and June, it is helpful if we can get the word out to college students who are graduating and, thus, starting to do some serious thinking about the CPA Exam. At this time of the year, those are some of our prime targets. They often spent $2,500-$3,000 (that they probably don’t have) before they even know that we exist. The big courses want you to think that you have no alternative. Don’t let that happen.
(2) – By the way, those of you who are teachers might be interested in reading my teaching blog that I created in connection with my Financial Accounting textbook.
http://m1e.net/c?128895165-44nNhN/l.klSs%406419717-DhrtMNOAYMhwE
If you know a teacher, forward the URL.
(3) – I know we have a lot of international candidates who read these email lessons. You may have seen the following announcement from the AICPA on our Facebook page:
International applications for the Uniform CPA Examination are now being accepted by participating state boards of accountancy. Candidates who wish to sit for the Exam in Japan, Bahrain, Kuwait, Lebanon, or the United Arab Emirates should visit NASBA’s website for the updated list of state boards, a breakdown of fees, and the updated Candidate Bulletin:
http://m1e.net/c?128895165-2EWBD3juWEuF6%406419718-02j786rs0vu36
If you’re unsure of your eligibility or would like more information, the AICPA Exam website’s International Examination FAQs provide a good starting point:
http://m1e.net/c?128895165-voKD1BqEZuT02%406419719-o6iKRAXYjZZAk
(4) – We have a lot of people preparing to take one or more sections of the CPA Exam before the end of the April-May testing window. As in many endeavors in life, it is important to finish up your study strong. You want to go into the testing site with a lot of momentum. You want to make the last days and weeks of study your very best.
We wake up each morning bearing a lot of chains that hold us back from reaching our goals. These are self-inflicted weaknesses that we cling to which keep us from shining and keep us from achieving our potential.
---We believe that we are not smart enough to pass the CPA Exam. That is just a chain that we cling to that holds us back.
---We believe that we are not able to find the time needed for study—another chain that we use to keep ourselves from advancing. It is easy to blame family, friends, and job.
---We judge ourselves to be lazy or weak. You are only as lazy and weak as you think you are. It is the thinking that makes it so.
“I’m just not strong enough to pass the CPA Exam” is easy to say and easy to believe but all it does is hold us back.
We hide under these chains so that we don’t have to face the responsibilities of being successful. A lot of us just don’t want to deal with being successful. It’s easier to wallow around and make excuses and stay lazy.
The world needs for you to stop being timid and push yourself to success.
When you wake up tomorrow morning, wake up a different person. Don’t wake up as a scared person who feels that they are incapable of winning. That is pure baloney. Wake up a different person tomorrow – a person who has put fears and self-doubts and excuses behind. Wake up a different person tomorrow – if you can simply get rid of (a) your fears, (b) your self-doubt, and (c) your excuses, if you can break through your own chains, then that person tomorrow will have a better chance of passing the CPA Exam.
My younger daughter has cerebral palsy. Despite the problems that CP creates, she is the hardest working person that I know. Last month, she received her Gold Award – the highest award that any Girl Scout can achieve. At the ceremony, the leaders read a poem by Marianne Williamson that I think applies to us all. It talks about having the courage to break through your chains to use your talents well and wisely. It was perfect for the Girl Scouts but it was also perfect for people taking the CPA Exam. My two favorite lines are “your playing small does not serve the world” and “we are all meant to shine.” I think that is true about everyone and everything we do.
“Our deepest fear is not that we are inadequate.
Our deepest fear is that we are powerful beyond measure.
It is our light, not our darkness that most frightens us.
We ask ourselves,
Who am I to be brilliant, gorgeous, talented, fabulous?
Actually, who are you not to be?
You are a child of God.
Your playing small does not serve the world.
There is nothing enlightened about shrinking
so that other people won't feel insecure around you.
We are all meant to shine, as children do.
We were born to make manifest the glory of God that is within us.
It's not just in some of us; it's in everyone.
And as we let our own light shine,
we unconsciously give other people permission to do the same.
As we are liberated from our own fear,
our presence automatically liberates others.”
Okay, tomorrow morning, when you get out of bed, it is going to be a new day. Start by leaving your old chains behind. Walk away from those things that you are using to hold yourself back. Forget the excuses. Throw out the self-doubt. You have the ability to pass the CPA Exam if you will just finish strong, if you’ll just put in the hours you need here at the end.
Shine – do the work – make the progress. Answer as many questions as you can. Learn from your mistakes.
This is accounting. It is not easy but it is not rocket science either. You don’t have to be perfect. You merely have to pass. People just like you pass every day. It takes time and patience and perseverance but it doesn’t take any quality that you don’t already have.
Go get it – wake up tomorrow a new person – a person who is going to get the points needed to pass the CPA Exam. Leave your chains of fear and doubt behind.
(5) – As always, we are legally bound to tell you that you can unsubscribe from these emails. If we weren’t legally bound, we wouldn’t tell you because we hope you’ll stay. There is no variable cost (using a good old accounting term) of one more subscriber. So please stay as long as you can.
But, if you ever do want to unsubscribe, scroll to the bottom of any email lesson and you’ll find the appropriate button and it will remove you from our list.
(6) – I am always thrilled to get emails from successful candidates who have made good use of all our free questions and answers. Here are a couple of recent emails. (This is the part of this email lesson that the leaders of all those big programs don’t want you to hear. YOUR money is paying for THEIR Mercedes-Benz. Our success scares them.)
From KM: I finally did it on my own and without taking a class. I wanted to thank you for recommending cpareviewforfree.com because it really helped me target what areas were my weaknesses. It was nice to be able to do multiple choice questions online where the answer is presented to me instantly, instead of having to flip through pages and pages to find the right answer. I couldn't have done it without it.
From KW: I was one that you encouraged through this tedious process. Each week, I looked forward to receiving your e-mails because it seemed I was out of gas! I studied using many sources and tested with your questions to gauge myself. I am excited to tell you I no longer need the encouraging words or questions. I mean that in the best way. On 3/24/2011, I received my FAR grade (final section). I have passed all sections! Thank you, Thank you, Thank you!
From OP: Just a thank you note for all your help over the past year or more. I just got word last week that I passed the last section of my exam. I am so happy, especially at 58 years old. God Bless you for all your efforts in helping so many to achieve their dreams.....
And, I know what some of you are going to ask: I drive a 1997 Subaru station wagon (which is red and has 119,000 miles on it).
(7) – Okay, let’s do some practice – time to add some points. That should be your constant chant: add points, add points.
---FAR – Here is one of the 37 questions that I asked on my final exam for Intermediate Accounting II last week. Most of my students did well on this question; let’s see how well you do.
In Year One, the Alba Company has sales revenues of $600,000. The company has no other revenues and expenses except for a warranty expense of $160,000. The company expects these warranties to be satisfied as follows: $30,000 in Year Two, $60,000 in Year Three, and $70,000 in Year Four. The enacted tax rate is 24 percent. The company believes that there is 58 percent chance that it will have adequate taxable income in Year Two to absorb the warranty expense but that likelihood drops to 51 percent in Year Three, and 39 percent in Year Four. On its December 31, Year One balance sheet, what does this company report as its total net deferred income tax asset (noncurrent)?
A. $14,400
B. $16,800
C. $21,600
D. $31,200
Answer is A
The $30,000 temporary difference in Year Two creates a deferred tax asset but it relates to a Warranty Payable that will be settled next year and, thus, is reported as a current liability. Deferred tax effects created by current accounts are themselves reported as current. The question is asking for the noncurrent asset to be reported. The $60,000 and $70,000 temporary differences will not be settled until Years Three and Four. For those two, the related Warranty Payable is noncurrent. Thus, the deferred tax asset is also noncurrent which is what the question is asking. The total asset would be $130,000 times 24 percent or $31,200. However, the likelihood of receiving the benefit of the Year Four figure (the $70,000 temporary difference) is not more likely than not (not over 50 percent). Thus, that part of the deferred tax asset ($70,000 times 24 percent or $16,800) must be removed by establishing a valuation allowance. The deferred tax asset to be
recognized is $31,200 but the valuation allowance for that amount is $16,800 so that the net deferred tax asset is $31,200 less $16,800 or $14,400.
---Auditing & Attestation - The following question comes from one of our ten audit simulations that we will have in our subscription service for Auditing that we hope to have available within the next week.
Cox Company is being audited by Brown & Yellow CPAs. This public accounting firm has offices in five locations but this audit is primarily performed out of the Baltimore office. Smith is a partner in this firm and works out of the Baltimore office but does not participate in the Cox Company audit. Jones is also a partner in this firm but works out of the Philadelphia office and does not participate in the Cox Company audit. The CPA firm is now trying to determine who in the firm qualifies as a covered member of this engagement so audit independence rules can be verified. Which of the following is true?
A. Smith and Jones are both covered members for this audit engagement.
B. Smith is a covered member but Jones is not
C. Jones is a covered member but Smith is not
D. Neither Smith nor Jones is a covered member
Answer is B
A covered member is any individual on the audit engagement team, anyone who can influence either the engagement or the members of the engagement team, and the partners in the office in which the engagement is primarily performed. Thus, all partners in the Baltimore office would be covered members whereas other partners would only be covered members if they were part of the engagement team or had some influence on it. The designation of the covered members is important because those individuals must abide by specific independence rules toward the audit client.
---Regulation – I wrote the following question by looking (randomly) at the 2010 IRS instruction book for the 1040 form. I have always thought that was one of the very best ways to prepare for the individual income tax part of the Regulation exam—use the instruction manual.
Mr. Jones is a high school counselor and Mrs. Jones is an elementary school aide who works 1,000 hours per year. Mr. Jones spent $200 of his own money for educational software that was common and accepted in his field. Mrs. Jones spent $320 of her own money for books that were also ordinary and necessary for her job. If a joint return is filed, how much of a deduction can they take in arriving at their adjusted gross income for the tax year?
A. $200
B. $450
C. $500
D. $520
Answer is B
I might as well quote the 1040 instructions for this one. “If you were an eligible educator in 2010, you can deduct on line 23 up to $250 of qualified expenses you paid in 2010. If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. However, neither spouse can deduct more than $250 of his or her qualified expenses on line 23. You may be able to deduct expenses that are more than the $250 (or $500) limit on Schedule A, line 21. An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide who worked in a school for at least 900 hours during a school year. Qualified expenses include ordinary and necessary expenses . . . .” So, Mr. Jones can deduct his $200 but Mrs. Jones can only deduct $250 of her expenses. The remaining expenses can be listed as an itemized deduction on Schedule A.
---BEC – I was reading a friend’s managerial accounting textbook recently and came upon the question “what is a cost driver?” so I wrote the following question based on the reading I was doing.
Buffalo Bakery produces donuts but has had trouble determining an accurate cost for its overhead and, thus, has been uncomfortable with setting a price. The accountant is unsure about the cost driver that has been utilized. In this situation, what is meant by a cost driver?
A. The quantity of expensive materials (such as sugar) used in the production process.
B. The number of hours that the machine operators must work.
C. The actions that cause increases in costs such as electricity, rent, and indirect materials
D. The potential for shortages in vital items both in material and equipment.
Answer is C.
According to my friend’s textbook, a cost driver is the action that causes (or “drives”) the costs associated with the activity. Company officials are concerned about the cost of overhead (all costs associated with production other than direct material and direct labor). In determining the cost for a manufactured item, costs must be anticipated for overhead such as electricity, rent, and indirect materials. Such costs do not change randomly. All changes have a cause and those causes are referred to as cost drivers. By determining the cost driver for each cost, the accountant can anticipate the amount that will have to be spent at different levels of production.
We are into the month of May – time to push off chains and start making good things happen that will bring you those points that you need to pass the CPA Exam.
Joe Hoyle
Co-Founder
CPA Review for FREE
www.CPAreviewforFREE.com
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