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Lesson 124
VOTE!
In about two weeks on Tuesday, November 6, here in the United States, there will be an election. We here at CPA Review for FREE always urge everyone to get out and vote. No matter which candidate or party you support, we believe that democracy and freedom can only survive if we make the effort necessary to cast our ballots. We are lucky to live in a country where we can vote. Everyone should make the most of that opportunity. I certainly understand that there is no perfect candidate. We always seem to want something different. I sometimes think we want candidates who are not human. But they are all human and they deserve our support. Pick one that you believe in and go out there and make your vote count. It will remind you of how lucky you are to be able to vote.
And, no matter who wins, be thankful that there are people who are courageous enough to put themselves through this. We spend too much time tearing down that “other candidate” when we should feel a deep sense of gratitude for everyone who seeks to serve our nation. Promise yourself that you will support the winner whether it is your person or the other person.
If you think preparing for the CPA Exam is hard, you should try running for president. Every skeleton comes out of the closet.
Carve Out Time to Study--Not Pumpkins
One of the hardest things about passing the CPA Exam is just finding the time to do the preparation that is necessary. We all live full lives that keep us running around constantly. Then, we suddenly try to add in a number of hours of study each day and there simply is not enough available time. I cannot tell you how often people write to tell me that they get to the end of each day exhausted without having found the time to do any studying. It is frustrating.
How can you get organized enough to find sufficient time to study? Well, I have two pieces of advice. More...
Phone Apps FAQ's
Even finding time to use the Phone Apps is hard. How can I do it?
Candidates often complain about not having time. That is true. The burden is on you to find the time. Always be ready to study. That is one of the primary reasons to look into buying our apps. All of our questions are available to you on our new mobile apps. That makes studying at odd moments ever so much easier.
Do I need wifi or my data plan to use the phone app?
Once you download the app onto your phone, you do not need wifi or your precious data plan minutes to work practice questions. One of the true secrets to passing the CPA Exam is being ready to study when any opportunity presents itself. It is rare, most days, to have 90 minutes of free time to study. But there are numerous times during each day when you have an open 2-10 minutes. If you are not ready, it is easy to miss those chances to stay. And that time can accumulate. Always be ready to do a bit of studying whenever a few spare minutes open up. While you are waiting for your meal to arrive at lunch. Or, you are waiting for a bus. Or, you are sitting in a doctor’s office until it is time for your appointment. Be ready to add points.
Which smartphones work with the new phone apps?
Only iPhone/iPad and Android smartphones support our apps. For more info on the apps, read this article.
Do I have a ghost of a chance to pass using CPAreviewforFREE only?
Yes you do! Our review course program is a stand alone self study regimen which will prepare you to pass IF you are willing to put in the time--about 60-100 hours per part. We have all the resource articles, practice questions, online Essential Content material and smartphone apps to get you there. Don't take our word for it. We have manytestimonials on our site to prove it.
Luck? No--Hard Work? Yes
My wife and I went to Philadelphia last week and had a great day wandering through several magnificent museums. One day we went to the Franklin Institute. There sits a huge statue of Benjamin Franklin in the foyer. Around that statue, Franklin’s famous quotations are constantly flashing up on the walls. While we were standing, my wife pointed to one particular quotation that came up and told me that Benjamin Franklin was talking to CPA Exam candidates when he said “I am a strong believer in luck and I find the harder I work the more I have of it.”
People will often hear about a candidate who passes the CPA Exam and will mumble with a bit of envy “boy, that person certainly is lucky.” Nonsense. Absolute nonsense. Luck has nothing really to do with it. I realize that people would like to think that luck plays a role because that takes some of the burden off of them. But, in truth, people who put in the work (we usually recommend 60 to 100 hours for each of the four parts) and who come to understand the material, usually do well. There is no guarantee but their chances go way up.
On the other hand, people (for whatever reason) who are not able to put in a sufficient amount of time and effort are much more likely to struggle on the actual exam.
Don’t rely on luck – as Benjamin Franklin knew: What counts is your willingness and ability to put in all those hours in an efficient way. If you do that, there is no reason to even think about luck.
Time to stop being lucky and start adding some real points.
Here are a few of practice questions. Let’s see how you do. Are any of them scary?
FAR – I’m currently reading “Essentials of Accounting for Governmental and Not-for-Profit Organizations” by Paul Copley up at James Madison University. This question is based on the information that I have been reading today.
Within the City of Copley, an enterprise fund provides a service to a governmental fund for cash. On fund financial statements, how is this transaction recorded?
A. As an expense by the governmental fund and as a transfer in by the enterprise fund
B. As an expenditure by the governmental fund and as revenue by the enterprise fund
C. As an other financing use by the governmental fund and as an other financing source by the enterprise fund
D. As a transfer out by the governmental fund and as a transfer in by the enterprise fund
Answer is B
This interfund service is not a transfer because actual work is being performed. Therefore, the reporting is done the same as if each of the parties had been dealing with an outside organization. The governmental fund loses current financial resources because a service is acquired. For fund financial statements, that is reported as an expenditure. The enterprise fund provides those services and, therefore, earns the compensation received. That is reported as revenue.
Auditing
The CPA firm of Abraham and Associates is auditing the financial statements of the West Nebraska Corporation (WNC). The auditors have obtained a general understanding of WNC’s internal control system and are pleased with the results. What might the auditors do next?
A. Verify the assessment of internal control by performing analytical procedures
B. Consider whether additional testing of specific control policies and procedures would be an efficient means of lowering overall audit time and cost.
C. Consider whether the internal control is strong enough so that an unqualified opinion can be rendered without substantive testing.
D. Make sure that the information received has been documented through the use of a flow chart.
Answer is B
After a general understanding of internal control has been obtained, the auditor should consider whether additional testing of more specific factors (such as policies and procedures) might reduce audit time enough to outweigh the cost and effort of doing that additional testing. Often, the additional testing of specific controls is not viewed as an effective way to reduce overall audit effort so that the auditor moves directly to substantive testing procedures. However, in some cases, this additional emphasis on internal control can be used to reduce the assessment of control risk enough to warrant that work. Some amount of substantive testing is always necessary to render an unqualified opinion. The internal control information must be documented but a flowchart is not required. Analytical procedures are used to spot account balances that seem out of line with what the auditor might have anticipated and are not directly related to internal control.
Regulation
What is a registration statement?
A. It is another term for a company’s audited financial statements.
B. It is a document that must be filed with the SEC each year by a publicly-held company.
C. It is a document that is filed with the SEC to list all inside parties and any insider trading that has taken place in the previous 12 calendar months.
D. It is a statement that must be filed with the SEC before the initial sale of securities in interstate commerce.
Answer is D
When a company wants to issue its securities through interstate commerce (for example, capital stock shares that will subsequently be traded on a stock exchange), specific information must be provided to the SEC with portions of that information being made public. The overall filing is known as a registration statement.
BEC
A company starts the year with $340,000 in accounts receivable. During the year, credit sales of $2,993,000 are made while cash collections are $2,763,000. No accounts are written off during the year. How long did it take the company to collect its average accounts receivable during this year?
A. 46.3 days
B. 52.5 days
C. 55.5 days
D. 60.4 days
Answer is C
Ending accounts receivable is $340,000 plus $2,993,000 less $2,763,000 or $570,000. Therefore average accounts receivable for the year is ($340,000 + $570,000)/2 or $455,000. Sales per day is $8,200 ($2,993,000/365 days). If the company sells $8,200 each day and average receivables total $455,000, then the average time to collect accounts receivable is $455,000/$8,200 or 55.5 days
Joe Hoyle
Co-Founder
CPA Review for FREE
Co-Founder
CPA Review for FREE
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