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Lesson 116—In this lesson--Community Forum Launched; Apps Update; Work Harder and Smarter; Practice Questions
Lesson 116—In this lesson--Community Forum Launched; Apps Update; Work Harder and Smarter; Practice Questions
From: Joe
COMMUNITY FORUM SITE LAUNCHED
CPAreviewforFREE today announced its partnership with Project HOPE, a global nonprofit healthcare organization. The partnership coincides with the launch of CPAreviewforFREE’s own community site called “HELP!!! + HOPE (Helping Others Pass the Exam). Designed as a survival guide for candidates preparing to pass the Certified Public Accountants, HELP!!! + HOPE is a discussion forum for our users to provide tips and tricks to help others pass the CPA exam. Now you don't have to go to other websites to discuss common issues, questions, share stories, etc. Use your current login info and seamlessly create your username that will appear on the forum. We are a "one stop shop" from CPA exam preparation, discussion and encouragement for others after passing the exam. More..
THANKS, AGAIN
We always love hearing from each of you concerning your CPA Exam adventures. Here’s one that came in just a day or so ago on Facebook:
“New scores are being released! Just passed FAR (last exam) with an 87! Thanks CPA Review for Free!"
Our goal is to help everyone get the points they need to pass. Whether you are rich or poor, we believe you and everyone else deserves the chance to pass the CPA Exam and gain entrance to the Accounting profession.
Spread the word – we are here to help.
APPS UPDATE
To download our difficulty ranking of mcq's apps directly from your smart device, hereis how it can be done. The instructions were just fine to access from your PC Android device (google play)or MAC (iTunes), but definitely didn't show the best way to do it from your iPad/iPhone or Android smartphone device. Note: The apps are not available for Blackberry or Kindle Fire devices. We plan on selling the mcq's by difficulty ranking on the website in the next couple of months.
TIPS TO WORK HARDER AND SMARTER
I was watching the first few minutes of a pro basketball game a few nights ago (apparently I’m watching too much television). If you don’t follow pro basketball, they are down to the final four teams. On this telecast, they went inside the locker room of one of the teams and listened to the coach’s final few words before the team went out to play basketball against a very strong competitor. As you can imagine, I’m always fascinated by how coaches work to get their teams ready to play at a high level.
LAZY, NO; UNINSPIRED, YES
I gave a presentation recently at the Kentucky Accounting Educator’s Conference. At some point, I made a comment that dealing with lazy students is often challenging. On the way to the airport, Randy Hahn who teaches at Kentucky State told me something he had heard from Zig Ziglar, the famous motivational speaker. According to Ziglar, there are no lazy people – they are only people who are uninspired. More...
PRACTICE QUESTIONS
Let’s do some practice. I love setting up some questions that you can practice on.
FAR
The Loomis Corporation has two checking accounts at the end of the year. One has a positive balance of $120,000 and the other has a negative balance of $14,000. The account with the negative balance tends to swing between slightly positive and slightly negative as company officials seek to minimize the amount of assets tied up in cash. On a balance sheet, how much is reported by the company as the cash balance within its assets?
A. US GAAP - $120,000 and IFRS - $120,000
B. US GAAP - $120,000 and IFRS - $106,000
C. US GAAP - $106,000 and IFRS - $120,000
D. US GAAP - $106,000 and IFRS - $106,000
Answer is B
According to US GAAP, negative cash balances are separated and reported as liabilities. Therefore, only the positive balance of $120,000 is shown within the assets. Under IFRS, both balances are netted and then reported as assets if the negative balance is part of normal cash management. Putting the two balances together gives a net $106,000 asset to be reported on the balance sheet.
REG
To get the following question, I went to www.irs.gov and typed “1040 Instructions” into the search engine. Then, I just randomly scrolled down until I found something to write a question about. When you are studying individual income taxes, the government’s instructions are a good source of free information. However, as I have said before in these email lessons, don’t get hung up on dollar amounts that change quickly. Notice in this question, that I simply assume the number is $4,500 rather than ask for the exact amount, a number that is correct for only one particular year.
Jim Jaxon worked for one company for 8 months this year and another company for the remaining 4 months. The first company withheld $3,000 from his pay for social security. The second company withheld another $1,900 from his pay for social security. Assume that the maximum social security that should have been withheld in that year is $4,500. What should Jaxon do because of these social security withholding amounts?
A. Nothing, the excess payment resulted from two separate jobs and is lost.
B. Demand a rebate of $400 from the second employer.
C. Take a $400 credit on his federal income tax return.
D. Demand a rebate of $200 from each of the two employers.
Answer is C
This type of a situation can easily happen if an employee has more than one job in a year. The credit for the excess social security withholding allows a simple way to limit an employee’s payment to the maximum amount for that year. The employers are not at fault as long as neither withheld more than the maximum figure for the year.
AUD
Rick Fox, CPA, is auditing Smith Corporation for the year ending December 31, Year Eight. Fox uncovers a rather large cash payment recorded on January 4, Year Nine. Fox becomes concerned by what this payment might indicate. Which of the following is least likely to be a potential concern for the CPA?
A. The December 31, Year 8, cash balance was overstated.
B. The December 31, Year 8, working capital is understated.
C. The Year 8 net income figure is overstated.
D. The December 31, Year 8, liability balance is understated
Answer is B
There are really two potential concerns here for the CPA: (1) the payment might have been made in Year 8 but not recorded until Year 9 and (2) the amount might have been owed in Year 8 but no recording was made until the payment in Year 9. First, the payment made here might have been made in Year 8 but the recording was delayed until Year 9 so that the reported cash balance remained high (overstated). Second, the payment might have been made in Year 9 to settle an expense and liability that should have been recorded in Year 8 but was not. In that case, reported net income for Year 8 is too high for that year (overstated) and the liability balance at the end of Year 8 was too low (understated). So, cash at the end of Year 8 might have been overstated and the liabilities might have been understated. Both of those conditions cause working capital (current assets minus current liabilities) to be overstated on the balance sheet rather than understated.
BEC
Which of the following is computer software designed to help humans make decisions?
A. Random data connectivity theory
B. Artificial intelligence
C. Factual life-alteration simulation
D. Complex wisdom analysis
Answer is B
When computers were first developed, they were designed to process information mechanically. That processing could be done with extreme speed and accuracy. Over the decades, programming has been developed so that computers are able to replicate a particular decision-making process. That aspect of computer technology is known as artificial intelligence (AI).
Go get it – take that risk. Push yourself harder than you ever thought possible.
Joe Hoyle
CoFounder
CPA Review for FREE
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