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
No comments:
Post a Comment