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April 22, 2014
Lesson 150
From: Joe
Being Good is Good Enough
If you truly want to pass the CPA Exam, you don’t ever have to be great on any day. That is simply not necessary. Great is not required. But you do need to be good and you do need to be strong almost every day. Great is not needed but good is necessary as is being consistently strong. And, everyone has the ability to do that. There is absolutely nothing preventing you from passing the CPA Exam, sooner rather than later. Be good and be consistently strong most days and you will make it.
To be successful on the CPA Exam, no one needs to be a super person. You don’t have to be a genius. You don’t have to be brilliant. You don’t have to leap tall buildings with a single bound.
But you do have to be good and you do have to be strong almost every day.
It is that consistent effort that is so important to get the 75 points you need in order to pass the CPA Exam. Too many people start out on their studies like they are going to conquer the world. They study night and day for a few days. But then they burn out. That is not the way to pass the CPA Exam. “Methodical” is a good word to keep in mind.
--Set a goal. How many hours do you want to study this week? Make it reasonable. That is your target.
--Set a goal. How many days do you want to study this week? Not necessarily 6 or 7 but maybe four or five.
--Now that you know how many days you want to study this week – determine which ones it will be. If you don’t specify the days, you’ll find excuses each day to avoid studying. Look in a mirror and ask yourself which days you are going to study and then hold yourself to that.
--Take your target hours for the week and divide it by the number of days you are going to study during that week. That’s your immediate goal. That number is what you need to accomplish over the next 24 hours.
--Always know the number of hours you need to study each day and when you are going to make time to do those hours.
If you are going to join the choir of people who have passed the CPA Exam, you have to make the challenge a real priority and do so at this very moment. Anything that puts the process off into the distant future will work against you. You need an urgency to be successful. Remember you don’t have to be great but you do need to be good and you need to be strong. And you need them now.
Go to CPAreviewforFREE and start working problems. Do a problem and read the answer. Do a problem and read the answer. Get into the habit.
Be good – don’t worry about trying to be great.
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How I Passed The CPA Exam
Two weeks ago, I included a couple of excerpts from my book Don’t Just Dream About Success: Stack the Odds in Your Favor (available for $8.99 on Amazon—paperback or Kindle). The response was absolutely amazing. Even I was shocked by how many people were intrigued by the guidance that was included.
So, I am going to include a bit more from the book in today’s lesson. More specifically, I want to share information from Chapter Seven on how I went about studying for and passing the CPA Exam. It wasn’t easy for me but I made up my mind that I was going to pass and then set out to make it happen. You can do it too!
Excerpt One (from Don’t Just Dream About Success: Stack the Odds in Your Favor)
(My) encounter (with the CPA Exam) took place during the spring of 1970, and culminated on May 6-8 of that year. Long decades have now passed, but the experience still influences how I face each of life’s new challenges. Hitting the wall and successfully pushing through the challenge has been one of the most positive experiences of my life. I discovered the power of personal evolution. I learned to manage my time effectively and gained confidence in myself. If you (yes, YOU) plan to stack the odds for success in your favor, such lessons are essential.
Having majored in accounting during college, I took the CPA examination in a hotel ballroom in Charlotte, North Carolina, on May 6, 7, and 8 of 1970. At that time, this comprehensive set of tests was 19 ½ hours long and was only given each May and November. Then, and now, a candidate had to pass all four of the individual sections as one of the requirements for admission into the accounting profession. At that time, the pass rate on each separate test was roughly 33 percent. That percentage is eye-catching because it reflects the true intensity of the challenge. The percentage of candidates who pass is now somewhat higher but, in those years, two of every three candidates walked out of each of the four tests with a failing grade. Not surprisingly, the pressure was mind numbing. Failure meant an additional six months of study before the next set of exams was given with their own 33 percent pass rate. Given the odds, many bright, hard-working accountants took the CPA exam for years without ever achieving success. Most faced the challenge with a genuine sense of dread.
I returned to college after my Christmas vacation in January 1970, a senior accounting major with decent grades earned at a good school. A job waited for me following graduation. I had a fiancée and wedding plans. I was ready (at least I believed) for adult life. But, the CPA examination stood in my path – very much like a giant wall.
Excerpt Two:
Passing was important to me. I wanted to get on with life. I was ready to be an adult and stop having to sit in little desks, listen to lectures, and take tests. Moreover, I had a burning desire to pass all four parts on my first attempt. In college, my grades were fairly good, but far from stellar. For many reasons, the elevated level of ambition that I felt so intensely in high school had disappeared. I missed the feeling. An essential part of me had gotten misplaced during those four years. The CPA exam offered the chance to recapture the internal drive that had pushed me to succeed. I was not aware at the time, but completion of this examination became a genuine Level-3 goal for me.
Excerpt Three:
Success on the CPA exam offered a chance for redemption. I wanted to pass all four sections immediately to reignite the element of my personality that I had allowed college to dampen down: my passion for success. (Not coincidentally, I later became a teacher, in part, because I wanted future college students to have a better educational experience than my own.) To ready myself for the battle, more on Joe's success story.
Okay, let’s do some practice.
Remember, you don’t have to be great but you do need to be good and you do need to be consistently strong.
FAR
Good Company filed a $900,000 law suit against Bad Company during Year One. At the end of Year One, both companies think that Good will probably win $200,000 but that a win of $370,000 is reasonably possible. In Year Two, the suit is settled with Bad paying $170,000 in cash to Good. What does each company recognize on its income statement for Year Two?
a. Good recognizes a gain or $170,000 and Bad recognizes a recovery (gain) of $30,000.
b. Good recognizes a loss of $30,000 and Bad recognizes a recovery (gain) of $30,000.
c. Good recognizes a gain of $170,000 and Bad recognizes a loss of $170,000.
d. Good recognizes a loss of $30,000 and Bad recognizes a loss of $170,000.
Regulation
Ajax is eager to sell its former headquarters, a commercial building valued at $1,650,000. Ajax has received an offer from Johns in the amount of $1,800,000. The offer stated, among other things, “all fixtures and furnishings now in the building shall remain and be conveyed with the sale.” The furniture was of inconsequential value, but, for sentimental reasons the president of Ajax did not want to convey an old “Ajax Corporation” sign which still hung in the lobby. Which of the following is correct?
a. The board of directors of Ajax must authorize the sale for any contract to be valid.
b. An acceptance by Ajax which does not convey the “Ajax Corporation” sign will cancel the offer from Johns.
c. The offer from Johns must be notarized since the contract involves real estate.
d. Ajax’s advertisement to sell its building, since it specified the price, is a valid offer.
Auditing
An investor is looking at audit reports for two different companies and finds the same sentence in both: “Our responsibility is to express an opinion on these financial statements based on our audit.” In the first case, that sentence is at the end of the first paragraph. In the second case, that sentence is at the beginning of the third paragraph. Which of the following is most likely?
a. The first report is for a public entity and the second report is for a nonpublic entity.
b. The first report is for a nonpublic entity and the second report is for a public entity.
c. The first case is correct but the second case is not.
d. The second case is correct but the first case is not.
BEC
An investor recently bought a large amount of gold as an investment after selling a portfolio of corporate bonds. Which of the following is the most likely reason for those actions?
a. Inflation rates are expected to remain the same over the near future.
b. Interest rates are expected to fall in the near future.
c. Corporate dividend levels are expected to rise in the near future.
d. Inflation rates are expected to rise in the near future.
Answers
FAR
Answer is A
For a contingent loss, balances are recognized when they are probable. Bad would recognize a probable loss of $200,000 in Year One but would then reduce that to $170,000 because of the settlement. The reduction creates a $30,000 recovery (gain). Contingent gains are not recognized until finalized because accounting is conservative. The entire $170,000 is recognized by Good in Year Two.
Regulation
Answer is B
Any “acceptance” which varies from the terms of an offer constitutes a counter-offer which cancels the original offer.
Auditing
Answer is A
The Public Company Accounting Oversight Board sets the standards for public companies and has maintained the traditional audit report where the auditor’s responsibility is stated at the end of the first paragraph. The Auditing Standards Board sets standards for nonpublic companies and has created a new standard report where the auditor’s responsibilities are spelled out at the beginning of the third paragraph.
BEC
Answer is D
Since the investor is switching from bonds to gold, corporate dividend levels are not relevant. A rise in dividend rates would be a reason for switching to equity investments but not into gold. Because the portfolio of bond investments has already been bought, their interest rates will not be impacted by a drop in interest rates but their values will climb because high interest rates have been locked in. If inflation rates do not change, they have no real impact on the future value of either the bonds or the gold. However, if inflation rates are expected to rise, the set bond interest rate will not be able to rise with inflation and the value of the bonds will drop. But the value of gold will rise in recognition of the reduced value of the dollar (caused by the increase in the rate of inflation).
Go for it!
Joe Hoyle
President
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