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July 20, 2012
Lesson 119
Lesson 119
From: Joe
THIRTY QUESTIONS A DAY CAN CHANGE YOUR LIFE
Greetings from Richmond, Virginia, where the temperature is supposed to hit about 100 today and tomorrow. That’s a great time to curl up in a cool room with a computer and work questions onCPAreviewforFREE. You do not have to work thousands of questions each day. Believe it or not, if you take your time and work just 30 questions per day and really think about each answer, you can go through our entire 2,300 question database in 2 ½ months.
People often view the CPA Exam as this massive undertaking. And, of course, there is a lot to be done. However, it is amazing how much you can get done if you simply break things down and then put in a consistent effort virtually every day. If I asked you how long it would take to work 2,300 questions, you’d probably say 6-9 months because the number of questions seems so large.
But, if you just work 30 questions per day (which should take 90 minutes or less), you can go through our entire group of questions in 2 ½ months. Take that a step further and figure that you'll be studying for one part of the exam at a time and it should take only approximately 20 days (550 questions/30 a day).
So, what are you waiting for – get to work, answer some questions. It’s going to be hot today. You might as well find a cool place and start answering questions.
WELCOME TO OUR FIRST TIME READERS
It's always great to welcome new users to our site and newsletters. There are lots of resources to help you prepare for the exam. Hopefully, you didn't buy another review course before trying CPAreviewforFREE. We offer everything you need to pass the exam. "Try us first before you spend your hard earned money."
Visit our Forum of users to give back, share insights, frustrations, happenings, and dreams. Be on the lookout for news of weekly "best" comments as voted on by others in the forum. We'll be giving away our products and services to the best response. We also have many Tips for Success in our Resources section of the site. Most importantly, you can always reach us to ask for help, let us know you passed the exam or part of the exam, or suggestions to make us better.
Check out our HELP!!! & HOPE alliance with Project Hope as part of our forum. We all have so much to be thankful for and Project HOPE is there to help those in need in their most critical time.
If you have read these email lessons for long, you probably know that I read a lot. I rarely watch television (except for “Breaking Bad”) but I enjoy reading. I was reading a book last week and the hero was talking with a young woman and he asked her who she would like to be if she could be anyone in the world. It’s a common question and people usually talk about athletes or singers or actors or politicians.
I really enjoyed the answer the woman gave in the book because I thought it was ever so true: “If I could be anyone, I would just as soon be me on my good days.” I think we all get tied up occasionally in wishing that we could be someone else. What we want seems to be outside of ourselves, outside of our own abilities; we have to be someone else to get what we want. However, on a really good day, would you truly want to be anyone else? Those days when you feel strong, courageous, and confident are just great. Those are the days when you know that you can conquer the world. What you want is not outside of you some place; it is inside of you – it is that strength, courage, and confidence that hides inside of each of us that we really want to draw out.
That’s one of the reasons that people try to pass the CPA Exam. They want that exhilaration that comes from passing an exam that people often fail. They know that passing the CPA Exam will require all of their strength, courage, and confidence. Every last ounce. Passing will help them understand just how strong, courageous, and confident they really are.
It is always important to know why you are trying to pass the CPA Exam. I think that is a must. Some of reasons don't count. More...
HOW TO TURN A NEGATIVE INTO A POSITIVE
I get a lot of emails, as you might imagine. I’m always touched by how many people write because they have become tired and frustrated and upset. Over the years, I have received thousands of emails that start out “I work these questions and I miss them and that is so discouraging.”
I guess that is one way to look at it but I’m not sure that’s the best way.
I have a saying that I find helps me to avoid becoming discouraged: “every action in life can have two outcomes: (1) it can help you learn something new or (2) it can reinforce what you already know. And, both outcomes are positive.” If you can look at life that way, it can be a wonderfully positive experience: everything’s either a learning experience or a reinforcement of what you know. Here's what works to increase that knowledge. More...
PRACTICE, PRACTICE, PRACTICE
Let’s do a bit of practice. I actually went to the site and picked four questions at random and then changed them up a bit. And, here they are:
FAR
A company located in the United States sells a significant amount of inventory to a company in Chile on credit. The transaction was denominated in Chilean pesos. The balance had not been paid prior to the end of the current fiscal year. Financial statements are now being prepared for the US company and its functional currency is the US dollar. Officials want to know which exchange rate will be used to report these amounts (the receivable and the revenue) in terms of US dollars. What procedure should the company follow in determining the amounts to be reported?
A. Internal conversion
B. Remeasurement
C. Translation
D. Exchange arrangement
Answer is B
The US company has engaged in a transaction that is denominated in a currency outside of its functional currency. The exchange rates to be applied are based on the remeasurement process. In remeausrement, monetary assets and liabilities are reported at the current exchange rate (the exchange rate at the balance sheet date) and all other accounts are reported using the historical exchange rate at the time of the original recording.
Auditing
A CPA is in the process of evaluating the design of a specific internal control being applied by an audit client. The CPA will determine whether the control can do all but which of the following?
A. Detect material misstatements
B. Correct material misstatements
C. Prevent material misstatements
D. None of the above is a correct answer
Answer is B
Internal control policies and procedures are intended to keep material misstatements from occurring and winding up in the financial statements reported by a company. This process usually takes one of two forms. Many elements of internal control are designed to prevent material misstatements from ever occurring in the first place. Other elements are created to detect material misstatements that have managed to get into the financial reporting system. Some types of misstatements are more easily prevented. Others are more easily detected. Internal control policies and procedures should recognize and address those traits.
Regulation
Company A traded a large delivery truck to Company Z for a small delivery truck and a medium size delivery truck. The fair value of the assets exchanged is equal: both sides are surrendering assets worth $37,000. Company A’s tax basis in the large truck is $42,000 and Company Z’s tax basis in the small truck and medium truck are $8,000 and $24,000. What is the tax effect of this transaction?
A. Company Z has a tax basis in the new large truck of $42,000
B. Company A has a total tax basis in the two new trucks (small and medium-sized) of $32,000.
C. Company A has a tax loss of $10,000
D. Company A has a total tax basis in the two new trucks (small and medium-sized) of $42,000.
Answer is D
Like-kind business assets are being exchanged here and no cash or other boot is conveyed. Thus, it is a tax-free exchange and both parties retain their tax basis. Company A had a tax basis of $42,000 and it will still have a tax basis of $42,000. Company Z had a tax basis of $32,000 and it will still have a tax basis of $32,000
BEC
In Year Two, the Walton Company reported a contribution margin of $800,000 and net income of $600,000. If the contribution margin was 40 percent of sales, what is the break-even point for this company?
A. $500,000
B. $600,000
C. $720,000
D. $840,000
Answer is A
Contribution margin is sales minus a company’s variable costs. If contribution margin is $800,000 and net income is $600,000, then the total amount of fixed costs is $200,000. Break-even point can then be determined by taking Sales minus Variable Costs minus Fixed Costs and setting that formula equal to zero. Sales minus Variable Costs will be 40 percent of sales while Fixed Costs total $200,000. Therefore, 40 percent of Sales minus $200,000 equals zero. Or, 40 percent of Sales equals $200,000. Or, Sales at break-even is equal to $500,000 ($200,000/40 percent).
Have a great week. Stay cool. Stay inside and work questions at www.CPAreviewforFREE.com
Joe Hoyle
CoFounder
CPA Review for FREE
