Work New Practice Questions; How to Be a Champion

Try us FIRST before you spend your hard-earned money.   CPA Review for FREE   Over 2,500 FREE CPA Review Questions and Answers Available to YOU (for FREE)     June 18, 2014   Lesson 153   From:   Joe   Thank You!   Thanks to everyone who has written us notes recently about your CPA Exam success stories.   We are always delighted to get such good news.   Our one and only goal is to help everyone pass the CPA Exam and be able to move on with their lives and careers.  Don’t let the outrageous cost of some CPA Exam Review programs hold you back from the success that you need and deserve.   And, also, thanks to everyone who has passed along information about our program to others.   We have over 2,500 of the best questions you ever studied and they are all available for free.   However, we simply cannot afford to advertise.  One of the challenges of “free” is that there is never enough money available for marketing purposes.  We depend on you to spread the word.   All those other courses charge a fortune but, consequently, they have money available to advertise.   So, if you spend money for a bad program, you are helping them prosper and entice other people to follow them.     Be a smart shopper.  Try us first before you give away any of your hard-earned money.   People just like you pass the CPA Exam every day using our materials.  Don’t throw your money away.    Try us first.   Here’s a video that shows how our program works.     How to Become a Champion   It is an interesting time in sports.   The Los Angeles Kings just won the National Hockey League championship and the San Antonio Spurs recently became the champions of the National Basketball Association.   And, of course, soccer’s World Cup competition is being played in Brazil.    I have always been fascinated by teams who manage to take on the best competition and win.  This year, the Kings in ice hockey and the Spurs in basketball were quite simply the best.   They just played better.   And, at the end, they won and got to celebrate like a bunch of kids.   You couldn’t help but be excited for them.     Okay, if someone came up to you and asked the question:   How do you become a champion?   How would you answer?   What would you say?   How would you respond to the question,  "How do you become a champion?"   It really isn’t a mystery.   I think we all have a pretty good idea of what it takes.   After some thought, here is my answer (or at least some parts of my answer).  More...   Good luck—you can do it!!!     Thanks for buying our book!     And, while I am at it, thanks to everyone who has bought my book:   Don’t Just Dream About Success:   Stack the Odds in Your Favor.    It is less than $9.00.   Just to help you get a notion of what it covers, here are two reviews from Amazon (and, truthfully, I have no clue who wrote either of these reviews):   Review One:   Initially hesitant to read a "self help" book, I was pleasantly surprised to find that this is not what this is. Instead of pointing out a path to success, Hoyle instead forces you to think about what you deem success, your goals, and how to make these goals come to fruition. As he states in so many ways, there is no magic bullet, and the goal has to be worth the associated sacrifices otherwise you will never achieve it. This book is best in the questions it asks you (yes YOU!) the reader to think about, and has my mind working over what my own goals and successes are.   Review Two:   I love this book. It is the best motivational book not only for those who are studying for the CPA exam, but also for every kid who wants to be a successful in his or her life. As Mr. Hoyle says, "You have to have the intestinal fortitude to sit down and do the work today (now)". Championship teams seem to have a way of playing their very best game at the crucial time.   When it comes time for the most important game, they are able to deliver their best effort.   That is exactly what I want from you.   When you walk in to take the CPA Exam, I want you to be at the very top of your game.   Feel strong and confident.   Make that the best test you ever took.       Practice, practice, practice   Let’s do some practice questions.   The first problem below (both the question and the answer) comes from our friends over at Fast Forward Academy.   If you are looking for a complete program, check them out and get a 10% discount by giving them the discount code: CPAREVIEWFORFREE     Auditing and Attestation   An auditor’s report would be designated a special report when it is issued in connection with:   A.  Interim financial information of a publicly held company that is subject to a limited review. B.  Compliance with aspects of regulatory requirements related to audited financial statements. C.  Application of accounting principles to specified transactions. D.  Limited use prospective financial statements such as a financial projection.   FAR   The Grazino Corporation bought several other companies a few years ago and recognized a large amount of goodwill.   In preparing financial statements for the current year, one of the reporting units in this business combination has a significant portion of that goodwill.   At the end of the current year, officials have looked at a variety of qualitative factors and believe that there is a 59 percent chance that this particular reporting unit has a fair value that is larger than its current carrying value.   What is the impact of this determination? A.   There is no impact based on this determination B.   The reporting unit must now perform tests to determine if the goodwill balance has been impaired. C.   No further testing is needed this year for this reporting unit as far as goodwill impairment is concerned. D.   Goodwill is impaired according to this information and must be written down and a loss recognized.     Regulation   What is a prospectus?   A.   It is a different term for the MD & A (Management’s Discussion and Analysis) which appears with financial statements. B.   A document filed with the Securities and Exchange Commission to provide details about an investment that is offered for sale to the public. C.   A legal account registered by an approved investment advisor. D.   A contract maintained by an agent to show the authority that has been conveyed.     BEC   During the current year, the price of widgets went up 10 percent.   During the same period, suppliers increased the quantity of widgets supplied by 15 percent.   Which of the following is true based on that set of information?   A.   The supply is said to be elastic. B.   The demand is said to be elastic. C.   The supply is said to be inelastic. D.   The demand is said to be inelastic.     ANSWERS   Auditing and Attestation   Answer is B   Special reports are issued in connection with various types of statements including:  (1) financial statements which are prepared in conformity with another comprehensive basis of accounting other than US GAAP such as the cash basis; (2) specified elements, accounts, or items found in a financial statement (such as a report on just the amount of sales made during a period of time); (3) compliance with aspects of contractual agreements or regulatory requirements related to audited financial statements; and (4) financial information presented in prescribed forms or schedules that require a prescribed form for the auditor’s reports.   Based on that list, the answer has to be B.    The client apparently needs a report on its compliance with aspects of regulatory requirements related to information in its audited financial statements.   According to the rules, a report resulting from that type engagement is identified as a special report and, therefore, must follow the requirements for special reports.     What about the other three possible answers?   Why are they not considered special reports?   Answer A is incorrect because audits and reviews of historical financial statements fall under basic auditing and review rules and are not identified by a separate classification system.   You might say that they are normal reports and not special reports.   Answer C is incorrect because this type of request is often referred to as “opinion shopping.”   A company’s auditors have probably refused to provide an unqualified or unmodified opinion because of the handling of a certain transaction.   The reporting company has gone to a different auditing firm to see if that group might be more willing to accept the proposed accounting.   The idea being that the company will switch auditors if the new group will accept the desired method of reporting.   As you can imagine, this tactic is frowned on in the auditing profession.   Consequently, there are only a few rules that guide this type of response.   The practice is not justified by inclusion as an official type of special report.     Answer D is incorrect.   Normally engagements dealing with future events such as projections are classified as attestation engagements.  Because reporting problems are different when looking at the impact of future events, a separate classification system has been set up.       FAR Answer is C   According to a FASB Update in 2011:   “The amendments in the Update permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in (US GAAP). The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent.”   And, then, “If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary.”   In other words, because the qualitative factors show that there is greater than a 50 percent that the reporting unit is worth more than its current fair value, no further testing is required because the goodwill is not impaired.    Conversely, if the chances are not greater than 50 percent, then the company must carry out the full testing procedures to determine if goodwill has been impaired.     Regulation   Answer is B   A prospectus is a formal legal document required by and filed with the Securities and Exchange Commission.   It provides a range of information and details about an investment offering for sale to the public. A prospectus is intended to contain the facts that a potential investor needs to know in order to make informed investment decisions.   BEC   Answer is A   The price of widgets rose causing the supply of widgets on the market to rise as manufacturers hope to make more profits.   They supply more so the answer here has to be A or C.  The answer here has to be either A or C because the question is asking about the impact of the price change on the supply of the items.   The ratio of the increase in supply over the price change is 15%/10% or 1.5.   Because that figure is greater than 1.0, supply is said to be elastic, it expands more quickly than the price change.   Had this figure been less than 1.0, supply would have been said to be inelastic.     Thanks for being with us.   Study hard and add points.   Joe Hoyle CoFounder President CPAreviewforFREE.com