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December 31, 2013
Lesson 145
From: Joe Hoyle
New Year’s Eve – Time to Make a Resolution that YOU Will Be More Successful in 2014!!!
You can do it and CPAreviewforFREE.com is here to help.
Less than two weeks ago, my new book (Don’t Just Dream about Success: Stack the Odds in Your Favor) was released on Amazon in both the Kindle and the paperback versions. The book is available for less than $9.00.
Proceeds from the sale of this Success book will enable CPA Review for FREE to continue to offer our 2,400+ free questions and answers to CPA Exam candidates and college accounting students around the world. Our website receives 500,000 hits per year and you (yes, YOU) can provide the financial assistance needed to keep making these questions available. Buy a book. With the discount, it is practically free. YOUR SUPPORT CAN MAKE THE DIFFERENCE. Buy a book, read it, become more successful. Now, there is a genuine win-win situation.
And, if you like my Success book, please leave a positive reader review on the Amazon site. That is a great marketing help for us. (Also, do us a favor and forward this message along to anyone who might enjoy a book on achieving success.)
If you are a follower on our Facebook page, you know that I have been posting daily quotes from Don’t Just Dream about Success: Stack the Odds in Your Favor. Here are a few of my favorites. Although the book is 142 pages of advice, stories, and assignments, these quotes will give you a good idea of the message that I want to convey. I believe everyone benefits from receiving positive feedback on how to achieve success more of the time. That was the reason that I wrote this book. It is for YOU.
Motivational quotes on our Facebook page from: Don’t Just Dream about Success: Stack the Odds in Your Favor.
“Success should become like breathing, something we do every moment as a natural part of life.”
“We should all latch on to dreams that push us toward greatness. You (yes, YOU) can do that. The ability to make a mark on this world is only limited by your ability to dream.”
“I am convinced that people can take specific steps to improve their chances for success whenever they encounter the opportunities that life provides. Success is not random. It is not the product of luck. Successful people have learned how to succeed. That can be you. That should be you. With thought and work, you can achieve success a much higher percentage of the time. Start today to nudge the odds upward. Do that and evolve into a winner as you begin to succeed more often.”
“Time is the most important weapon you have in your quest to succeed. Time is more valuable than talent, brains, and strength. Time is like gold: You should hoard and make careful use of it.”
“The desire for success burning within the heart has to be hot enough to push the person to do the difficult work that is necessary.”
“The distance between success and failure is often smaller than you might imagine. If your efforts are focused on continuously getting better, success is rarely too far away.”
“A lot more goes into a winning performance than mere talent and physical repetition. Do not be naïve. Nothing is ever that simple. Players must be mentally ready to succeed if they hope to hit the winning shot. Although hours of practice on the court are essential, the mind also has to be properly trained.”
“You have to be a successful person every day if you are going to be a successful person any day.”
One quote that I discuss in my new Success book (but that comes from another person) was said by the legendary football coach Vince Lombardi. In that particular chapter of the Success book, I write about the fact that we often try to make things in life too complicated and that attitude holds us back. Keeping things as simple as possible is usually the best strategy.
Coach Lombardi said: “Some people try to find things in this game that don't exist but football is only two things—blocking and tackling.”
So, in today’s lesson, as you look forward to a brand new year, I want you to think about success on the CPA Exam (or whatever you seek to accomplish during 2014) and try to narrow that success down to just two words. Let’s keep things truly simple. I want passing the CPA Exam to become a simpler task for you. I want success to become simpler. I think that focusing the whole process on just two words might help you to get more comfortable with the preparation that you need to do if you are going to succeed.
What would your two words be if I asked you to describe “Success on the CPA Exam” in just two words?
I have spent a lot of time thinking about this question and here are some of the words that I considered. They are all extremely important but I didn’t think they were the MOST important. More...
Practice, Practice, Practice
Okay, let’s do some practice problems and start adding points to your CPA exam score as you move into 2014.
FAR
A company buys an available for sale security as an investment at the beginning of Year One. It goes up in value by $9,000 in Year One and by another $7,000 in Year Two. On the last day of Year Two, the company sells this investment for $16,000 more than its original cost. The company then reports net income of $80,000 in Year One and $90,000 in Year Two. What amount should the company report as its comprehensive income in each of these two years?
a. $80,000 in Year One and $106,000 in Year Two
b. $89,000 in Year One and $81,000 in Year Two
c. $89,000 in Year One and $97,000 in Year Two
d. $80,000 in Year One and $99,000 in Year Two
Auditing
Under certain circumstances an independent auditor must communicate information directly to those who are charged with the ultimate governance of the reporting entity (often the board of directors). The auditor can communicate any information that is deemed important but certain matters are required to be discussed with those in charge of governance. Which of the following is most likely to be communicated in this manner?
a. An event occurring after the end of the year provided important audit evidence about a reported balance.
b. The auditor had to assess control risk in determining the amount of substantive testing that was required.
c. Management consulted with another public accounting firm about the financial reporting of a large transaction near the end of the year.
d. The accounting department of the reporting organization has not experienced significant turnover in a number of years.
Regulation
An independent CPA serving as a tax return preparer for the Unicorn Company recklessly disclosed information about the company that was discovered while preparing the tax return. Which of the following is true?
a. Although considered a bad practice, no penalty can be assessed for such behavior.
b. A monetary penalty can be assessed against the tax return preparer.
c. A penalty can only be assessed if the disclosed information was financial in nature.
d. A penalty can only be assessed if the disclosed information specifically included the names of individuals who had not agreed to be so named.
BEC
Which of the following is an example of collusive pricing?
a. Company A decides to take a loss in order to gain market share by pricing its output significantly below that of Company B, its major competitor.
b. Company A prices its products higher than that of Company B, its major competitor, but hopes to continue selling at normal levels by an increase in its marketing budget.
c. Company A forms a secret agreement with Company B, its major competitor, to keep prices higher than they would be in a purely competitive environment.
d. Company A simply waits for Company B, its major competitor, to set a price and it automatically sets the price at a 5 percent discount from that amount.
Have a great start to your 2014. You can be successful this year. Make it happen!!!
Answers
FAR
Answer is B
Because the investment is classified as an available for sale security, no gain or loss is recognized in computing net income in Year One but the entire $16,000 is included in Year Two when the investment is sold. In reality, the investment did not go up by $16,000 in Year Two but rather by $9,000 in Year One and by $7,000 in Year Two. To arrive at comprehensive income, the zero net income effect in Year One is increased to $9,000 which increases the reported income from $80,000 to $89,000. To get to comprehensive income, the $16,000 net income increase in year Two is reduced to $7,000 which decreases reported income by $9,000 from $90,000 to $81,000.
Auditing
Answer is C
An independent auditor is most likely to talk with the people in charge of governance when something occurs which might indicate the possible existence of a material misstatement. Answers a, b, and d are all common events that take place often in audits or within audit clients. Nothing out of the ordinary is apparent in these answers. However, whenever the entity’s management talks with another public accounting firm (other than its own), the question arises as to whether the management is looking to manipulate the reporting for its own benefit. Such consultation is not forbidden and may well not be a problem. But, the people in charge of governance need to be aware that this has happened and, perhaps, talk with management about the need for such consultation.
Regulation
Answer is B
Knowingly or recklessly disclosing or using any tax return information other than to prepare or assist in preparing a tax return can lead to the assessment of a monetary penalty.
BEC
Answer is C
Collusive pricing occurs when companies within an industry form a secret pact to increase all profits by setting prices at an artificially high amount. In effect, competition is eliminated so that customers are negatively impacted.
Joe Hoyle
President
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