Try us FIRST before you spend your hard-earned money.
Over 2,500 FREE CPA Review Questions and Answers Available to YOU (for FREE)
April 9, 2014
Lesson 149
From: Joe
The Best Use of CPAreviewforFREE
The question we get, by far, more than any others is: “How is the best way to make use of CPAreviewforFREE to pass the CPA Exam?” Candidates have heard from friends and coworkers about how much help our site can be. They have heard other candidates talk about passing all four parts without spending a fortune. They are appropriately curious.
Whether you are using our site for the first time or have been working our questions many time and to make sure no one gets confused, we created a video that explains how our website functions to help you maximize the best use of your time. If you are planning to take the CPA Exam within the next 6-18 months, take a few moments right now to watch the video and start adding points today without having to pull out your credit card and go into massive debt.
If you know anyone who is thinking about taking the CPA Exam, please pass along this YouTube video so they can also learn how to get those 75 points without spending thousands of dollars. Be a friend. Pass the message along.
Do YOU Have What It Takes To Reach Your Goal of Passing the CPA Exam
I took time off on Monday and watched some of the NCAA men’s college basketball championship game. I watched a bit of the women’s championship. I am always so impressed by people who work incredibly hard to achieve a goal they really want. Those players have been working and sacrificing for months and months often without much of a break. We are talking about hundreds and even thousands of hours of practice. Win or lose, at least they gave it their best effort. I think we should all set challenging goals for ourselves and then do our best to make them happen. The world would be a better place if everyone established goals that pushed them forward at record speed.
That is one of the things that I have always loved about the CPA Exam. It is a goal that is truly challenging but still worth all of the required time and effort.
In my book, Don’t Just Dream About Success: Stack the Odds in Your Favor (available on Amazon), Chapter Four is all about setting goals.
Here are two excerpts from that chapter. They have been edited a bit to fit the space.
Excerpt of Levels 1-3 Goals
Former ice hockey superstar Wayne Gretzky is often quoted as saying, “You miss 100% of the shots you don't take.” Any discussion of success needs to consider this phenomenon: A goal is set, but no action is ever taken. Do people just become paralyzed? The odds of success obviously fall to zero unless some valid attempt is made at doing the necessary work. I suspect that every person has at least one goal that they think about often but, to quote my mother, “They won’t even lift a finger to make it happen.” This is not failure. Failure requires the investment of effort. This is an inability to even start.
Why do people sabotage their chance of success in this way? What holds us all back? The path to success is almost never totally hidden. Everyone knows that practice is necessary to become a tennis player or chess master. Diet and exercise lead to weight loss. A good grade in school requires hours of study. If people have identified goals and understand what is required to shift the odds in their favor, why do so many fail to make any legitimate effort?
Too often people come to view themselves as failures for not achieving stated goals when, in truth, those goals were no more than fantasies. A lack of self-awareness about the reality of our desires can lead to personal frustration and a loss of self-esteem. Invariably, early each semester, a few students march into my office to inform me (often in breathless tones) that they want to succeed in my class. To start that dialogue, I casually ask if their wish for success in my class is a Level-1 goal or a Level-2 goal or a Level-3 goal. They shake their heads in puzzlement. To them, my query seems like some type of strange trick question.
A Level-1 goal is a daydream, a fantasy. It might feel real, but it is not. “I plan to play centerfield for the New York Yankees” is a typical example. Others could include: “I want to be the first explorer to land on Mars,” “I want to discover a cure for the common cold,” “I want to write plays that are equal to Hamlet and King Lear.” Some students would love an A in my class but only if it came as a gift requiring no work. A Level-1 goal is fun to contemplate, especially when stuck in the mundane existence of daily life, but it is unlikely to become a serious quest. People love to revel in their Level-1 dreams. Unfortunately, no matter how hard we protest, serious effort on our part is unlikely to occur.
A Level-2 goal is a desire to be roughly at the average (or maybe within one standard deviation of the average). The person is not obsessed with success but certainly does not want to fail. Any outcome above that is a bonus, a reason for rejoicing. The hope is that sufficient interest, work, and energy will be dredged up so that the results are passable and rise to the perceived average range.
Finally, most successful people have a few Level-3 goals that light up their days and nights and push them forward, often at blinding speed. For me, Level-3 goals are an aspect of the human mind that makes existence truly exciting. Without them, daily life begins to feel disappointing and dull. If you feel lost and adrift, you probably need a Level-3 goal.
The presence of two essential characteristics identifies a goal as Level 3.
---First, the degree of difficulty ensures that success is not easy to attain. The challenge must require a personal stretch. People want to be pushed to excel, but need a reason to do the work. Without a worthy goal, no one has sufficient incentive to exert the necessary effort. A great description of this human need is expressed in the movie A League of Their Own by the manager (Tom Hanks). In telling one of his players why she should stay with the team and continue to play baseball, Hanks says in no uncertain terms: “It's supposed to be hard. If it wasn't hard, everyone would do it. The hard is what makes it great.”
“If it wasn’t hard, everyone would do it. The hard is what makes it great.” Now that sounds like a true Level-3 goal.
--Second, 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. “I want to be strong, but I am not going to exercise” simply means that the goal is not a real priority. It is a dream. A Level-3 goal verges on obsession. You can taste the desire when you wake in the morning. You carry it with you through your day and to bed every night. The desire to succeed prods you constantly to use your time well. If you profess the deepest longing to accomplish a specific objective but do not follow up with the needed work, then, by definition, the desire is a Level-1 fantasy and not a Level-3 goal.
Why do people not achieve more success? One of my theories is that we sap our creative energies by mentally dallying too long with Level-1 fantasies. They feel good. They do not demand pain or sacrifice. They are custom-built for procrastination. Consequently, we lack the motivation to seek and develop sufficient Level-3 goals. Level-1 fantasies expand over time and crowd out Level-3 goals. Without the desire inherent in Level 3, no work is done and genuine success becomes nearly impossible to achieve. Ask yourself this pointed question:
What difficult challenge do I want to accomplish right now with such intensity that I will begin taking action within the next 24 hours and regularly thereafter?
**
Excerpt Number Two
A few years ago, I came upon the best description of a Level-3 experience that I had ever seen, both extremely challenging and personally exciting. My family was vacationing on the Outer Banks of North Carolina. One day we drove to Kitty Hawk to tour the Wright Brothers National Memorial where they first flew their airplane. A major part of the facility was housed in a wonderfully designed exhibition building. Displayed on the inner walls were a number of pertinent quotes from the Wright brothers describing various experiences during their arduous journey to achieve flight. These ruminations were all interesting but one just stunned me. The words rang like they were originating inside my own head. I read and then reread the plaque for several minutes until each word was locked in memory.
“I got more thrill out of flying before I had ever been in the air at all – while lying in bed thinking how exciting it would be to fly.” Orville Wright
Although nothing I have ever done is comparable to building a flying machine by hand, those feelings are still perfectly understandable to me. Often as I chase after a new Level-3 goal, I find myself lying in bed each evening thinking about the thrill of success. Again and again, I picture the moment of achievement. I am not interested in some faraway dream. I want a goal that has immediacy. Work is required right then. And I am willing to do it. In fact, I cannot wait to get started. That, indeed, is a Level-3 goal. The anticipation of success provides the fuel necessary to get the work done.
Feel that excitement as much as possible. I have always believed Level-3 clubs should be formed in towns, schools, churches, and other organizations to enable people to share and discuss their goals and the actions being taken to make them come true. The thrill of sharing these dreams aloud with such a supportive group would help to make everyone’s success more likely.
**
In conclusion, ask yourself: Is passing the CPA Exam a Level-1 fantasy for you or a true Level-3 goal? Does the desire to pass burn hot enough so that you are willing to do all that necessary work starting today? There is an excitement about taking on a true challenge and then working your very best to become a winner. That is one of the wonderful feelings that comes from taking on and passing the CPA Exam.
Go get it!
Check Out Our Partnership with Fast Forward Academy
Intelligent Learning...No two people are exactly the same. Fast Forward Academy identifies the areas YOU specifically need to study. Then, we adjust and accommodate your study by shaping our tools and content with laser focus to your exact needs. This is not a one-size-fits-all obsolete industrial model to education, but rather the future... a one-size-fits-YOU custom approach to learning and succeeding.
As you know, we are passionate about helping people succeed and Fast Forward Academy’s CPA review program is heads above the programs currently out in the marketplace. We are approached frequently to partner with other programs, but Fast Forward Academy’s free and premium product lines provide a fully integrated review program for desktop, tablet, mobile and online. They are aligned with our vision to provide an exceptional service to our candidates at a reasonable price.
We are offering a 10% discount if you redeem the coupon code CPAREVIEWFORFREE during checkout. Details of the partnership...
Practice, Practice, Practice
Let’s get to work. Let’s start adding some points and let’s do it right now.
FAR
The McAdoo Corporation spent $2 million this year on research costs in hopes of developing a new patent and then another $1 million on development. The company produces a set of financial statements according to US GAAP and then creates a second set based on IFRS. Based on the normal handling of research and development costs, which of the following is mostly likely to be true for the current year?
a. The US GAAP statements will report a lower expense total than the IFRS statements.
b. The IFRS statements will report a lower asset total than the US GAAP statements.
c. The IFRS statements will report a higher net income that the US GAAP statements.
d. The US GAAP statements will report a higher retained earnings total than the IFRS statements.
FAR (Number Two) In my last email lesson, I wrote a problem that contained an obvious typing error. Although the error was easy to spot, I wanted to provide a correct version of that question.
On January 1, Year One, the Hogan Company issues a four year $100,000 term bond that pays an annual 6 percent cash interest. Interest is paid every 12/31 with the face value to be paid four years from the issuance date. The bond is issued to earn an actual annual rate of 10 percent. The present value of an ordinary annuity of $1 for four time periods at a 10 percent rate is 3.16. The present value of a single amount of $1 in four time periods at a 10 percent rate is .68. What interest expense should Hogan report on its Year Two income statement?
a. $6,000
b. $6,800
c. $8,966
d. $10,000
Auditing
A company starts Year Four with inventory of $200,000. During the year, purchases of $700,000 are made and the ending inventory is $300,000. During Year Five another $700,000 in inventory is bought and the ending inventory is $500,000. Based on calculating the inventory turnover, which of the following is most likely to be true for Year Five?
a. Inventory on hand is more likely to be older and therefore subject to age problems
b. The profit margin has decreased during the year.
c. The profit margin has increased during the year.
d. Inventory on hand is more likely to be younger and therefore less likely to be damaged.
Regulation
Which of the following is not a deduction that an individual taxpayer can take in arriving at adjusted gross income in filing a federal income tax return?
a. Student loan interest
b. Alimony paid
c. Union dues
d. Penalty for early withdrawal of money from a savings account
BEC
June Wysocki was recently appointed as an outside member of the board of directors of the Kantalone Company. Which of the following is the best identification of an outside director?
a. One who is not directly related to the chief executive officer either personally or financially.
b. One who has sold all of his or her stock in the company to avoid the possibility of a conflict of interest.
c. One who used to work for the company but has since quit or retired.
d. One who is not otherwise employed by the company and does not represent any particular group of stakeholders.
Answers
FAR
Answer is C
Under US GAAP, both research and development costs are expensed as incurred. Thus, expenses are high causing net income to be low. Because the costs are expensed and not capitalized, total assets are low. Because the costs are expensed, retained earnings is low. Under IFRS, research costs are expensed but most development costs are capitalized. Expenses are lower and net income is higher. That causes a high retained earnings as well as a higher balance for total assets. Net income is higher under IFRS than under US GAAP.
2nd FAR Question
Answer is C
The future cash flows are $6,000 per year ($100,000 times 6 percent) for four years and then $100,000. The present value of those cash flows is $6,000 times 3.16 or $18,960 plus $100,000 times .68 or $68,000. The price of the bond is the total present value of $86,960 ($18,960 plus $68,000). Interest for Year One is that $86,960 times 10 percent or $8,696. Because only $6,000 is paid, the other $2,696 is compounded. The bond was sold at a discount so the compounding is added to bring the principal up to $89,656 ($86,960 + $2,696) at the end of Year One. In Year Two, this new $89,656 balance is multiplied by 10 percent to get interest of $8,966, the answer for this question.
Auditing
Answer is A
Inventory turnover can be computed in a couple of ways but is most likely to be cost of goods sold divided by the average inventory. In Year Four, cost of goods sold is $200,000 + $700,000 - $300,000 or $600,000. Average inventory is ($200,000 + $300,000)/2 or $250,000. Inventory turnover is $600,000/$250,000 or 2.4 times during the year. That is a measure of how quickly inventory is sold. In Year Five, cost of goods sold is $300,000 + $700,000 - $500,000 or $500,000. Average inventory is ($300,000 + $500,000)/2 or $400,000. Inventory turnover is $500,000/$400,000 or 1.25 times during the year. Inventory is selling at a much slower pace in Year Five which indicates to the auditor that problems might be caused by the age of the inventory on hand. It is more likely to be broken or unsalable. None of the information given here talks about sales so profit margin cannot be determined.
Regulation
Answer is C
According to current tax laws, student loan interest, alimony payments, and any penalty charged for the early withdrawal of money from a savings account are deductions that can be taken (in whole or part) in arriving at adjusted gross income. Union dues, on the other hand, are job expenses that can only be taken as an itemized deduction.
BEC
Answer is D
Wikipedia provides the following definition of an outside director. “An outside director is a member of the board who is not otherwise employed by or engaged with the organization, and does not represent any of its stakeholders. A typical example is a director who is president of a firm in a different industry. Outside directors bring outside experience and perspective to the board. They keep a watchful eye on the inside directors and on the way the organization is run.”
Get to work. Invest the time and add the points and get the CPA Exam passed and out of your way so you can go about enjoying your life.
Joe Hoyle
President
CPA Review for FREE
No comments:
Post a Comment