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April, 2013
April, 2013
From: Joe
IF THEY CAN DO IT, SO CAN YOU!
It is spring and life is good and we always love to hear from candidates who have been using AND passing with CPAreviewforFREE.
From MR:
I'd like to thank cpareviewforfree for the great and affordable CPA review materials. I have just passed the CPA exam with flying colors by using your free MCQs and the Essentials. Below are my results.
FAR - 86
AUD - 91
BEC - 80
REG - 79
Thank you cpareviewforfree. More power to you and may you be able to help more CPA candidates!
FAR - 86
AUD - 91
BEC - 80
REG - 79
Thank you cpareviewforfree. More power to you and may you be able to help more CPA candidates!
From OV:
I received my score for REG today and I passed (82). Once again, thank you CPAReviewForFree! I've passed two sections at the first attempt because of you guys.
NEW TESTING WINDOW, NEW ENERGY TO PASS
The month of April starts the second testing window of 2013. What is your goal for this testing window (which will conclude on the last day of May)? By that point in time, what do you want to have accomplished? Having a specific goal firmly in your mind is a big help in passing the CPA Exam.
If you live in the US, you probably know that college teams are playing a lot of basketball these days in what is known as March Madness. What can we learn from those folks who compete in March Madness on their way to selecting a national champion? I have two things that I want to point out.
1. First, you don’t become a championship basketball team by accident. In life, we often blame things on luck. That is nonsense. Back in October, these players and these coaches set a goal for themselves. Perhaps it was more like a dream at that time. They wanted to be one of the teams that got into March Madness and then did well in the tournament and went all the way to the championship. I’ll bet those players and those coaches have worked on reaching that goal virtually every day since that time. They have put in hours and hours of preparation. They have risked failure. They have made sacrifices. They have practiced when they were probably sick of practice. They have worked long hours and then worked some more. No one doubts this. In fact, we expect such an effort of people who want to be great.
You don’t achieve great things by preparing in a mediocre fashion.
While they have been practicing, what have we been doing? We sit on our couches and watch those teams play and we yell at the television: “Why don’t you play harder?” I wonder what it would feel like if one of those players turned to us and said “Hey, why don’t you study harder for the CPA Exam?” Wouldn’t that be appropriate? We want the players on our favorite team to work extra hard and succeed to make us feel good. We want someone else to do the real work so we can share in the success.
In truth, how important are those basketball games to our daily lives? What is important is what we do in our own lives. Do we want to succeed? Do we know why we want to pass the CPA Exam? Are we willing to put in the work that is necessary while knowing that we still risk failure?
Do we prefer to sit on the couch and watch or do we do the hard work and succeed? That’s a very basic question in life.
Many teams with talented players do not win. Talent alone is never enough. Those teams either don’t practice enough or they never quite develop the teamwork that is necessary. There are no guarantees when you compete. I cannot guarantee that you will pass the CPA Exam no matter how hard you prepare. I can guarantee, though, that you will fail every time if you don’t prepare. Life is like that. You have to be able to deal with the uncertainty. You do the work for one reason: to stack the odds in your favor.
The April-May testing window is now open. It will close at the end of May. Many of you will be happy with your CPA Exam progress at the end of those two months – not everyone but hopefully most. Don’t sit on the couch. Do the work. Stack the odds in your favor. Have enough ambition to take the risk and throw yourself at that exam. The people who are still playing in March Madness did not get to that point by playing it safe and secure. If you are going to be successful on the CPA Exam, it will not be luck. Plan out what you want to do each day and make sure you get to that goal.
The second thing is to make a plan to make it happen.
CALLING ALL ACCOUNTING COLLEGE PROFS, COLLEGE STUDENTS AND ANYONE WHO KNOWS ACCOUNTING COLLEGE STUDENTS
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LET'S PRACTICE SOME QUESTIONS AND START SEEING IF WE CAN ADD POINTS TO GET YOU CLOSER TO SUCCESS
FAR – The question comes from yesterday’s Intermediate accounting class here at the University of Richmond.
The FGCC Company had an enacted income tax rate of 28 percent. The company ended Year One with a deferred income tax liability of $40,000, a deferred income tax asset of $50,000 and a valuation allowance of $19,000. The enacted tax rate was raised at the start of Year Two to 30 percent. The company ended Year Two with a deferred income tax liability of $70,000, a deferred income tax asset of $40,000, and a valuation allowance of $24,000. On the company’s Year Two income statement, what is the amount of income tax expense – deferred that is reported?
A. $15,000
B. $25,000
C. $35,000
D. $45,000
Answer is D
A balance sheet approach is used for deferred taxes. The balance sheet totals are computed and an adjustment is made to move each previous year total to the newly computed amount. The balancing number for that entry is the income tax expense-deferred amount to be reported on the income statement. The expense is not computed directly but only as the amount that moves previous balance sheet accounts to their updated totals. Here, the liability is increased by a $30,000 credit (from $40,000 to $70,000), the asset is reduced by a $10,000 credit (from $50,000 to $40,000), and the valuation allowance is increased by a $5,000 credit (from $19,000 to $24,000). The balancing amount is a $45,000 debit which represents the income tax expense-deferred. Notice here that the enacted tax rates are not used in this calculation because the proper asset and liability balances have already been calculated.
Auditing
The Cosby CPA firm is auditing the financial statements of Hamster, Inc. for the latest year. Hamster manufactures widgets in its factory located in Gaffney, South Carolina. The auditors are currently analyzing each of the entries made to the repair expense account. What is one of the purposes for doing this testing?
A. The auditors hope to gain evidence that the company’s liabilities are not overstated.
B. The auditors hope to gain evidence that the company’s net income is not understated.
C. The auditors hope to gain evidence that the company’s current assets are not overstated.
D. The auditors hope to gain evidence that the company’s current assets are not understated.
Answer is B.
The auditors are looking for the possibility of material misstatements. The repair expense account is studied to determine whether any costs that should have been added to an asset account were incorrectly added to this expense account. If that has taken place, the expense balance will be overstated and, as a result, reported net income will be understated. If that has occurred, the machinery and equipment balances will also be understated but they are not current assets.
Regulation
Mr. Wilson has placed his house on the market for $319,000. However, he sends a signed letter to Mr. Dennis offering to sell the property to him for only $300,000. Mr. Dennis responds with a signed letter agreeing to buy the house for $290,000. What is the best term for the letter written and sent by Mr. Dennis?
A. An implied acceptance
B. A purchase agreement
C. A counteroffer
D. A promissory letter
Answer is C
A counteroffer is a return offer made by a party who has rejected an offer. Mr. Dennis has basically turned down the $300,000 offer made by Mr. Wilson but has then made an offer to buy the house for $290,000. Because this offer follows the rejection of Mr. Wilson’s offer, it is referred to as a counteroffer.
BEC
An economist is hoping to see a future increase in gross domestic product. The economist is looking for evidence that might indicate this future change will happen. Which of the following is most likely to indicate this possibility?
A. Increase in the hours worked each week by production workers
B. Increase in the amount of imports
C. Decrease in the rate of inflation
D. Decrease in the monetary amounts in circulation.
Answer is A
According to Wikipedia, the “gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a given period of time.” Thus, GDP is a measure of productivity. The more production workers work the more likely it is that the GDP will increase.
Have a great week. Work hard. Make a real difference.
Joe Hoyle
President, CPAreviewforFREE
