How to Move Forward Quiz

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)

 

August 20, 2015

 

Lesson 164

 

From:   Joe

 

How to Keep Moving Forward Quiz

 

I have recently been reading a novel where one of the main characters is a college football coach.   In the book, a friend visits the coach and sees the following quote taped to the wall:  “A good coach will make his players see what they can be rather than what they are.”  I liked the quote so well that I looked it up in Google and found that those words were originally said by Ara Parasheghian who was a very successful football coach at Notre Dame from 1964 through 1974.  

 

Like the coach in the book, I really like the quote.   It always strikes me that there is little reason to worry about who you are right now.   The more important questions are:  who do you want to become and how can you keep moving forward to achieve that goal?   How great can you become?

 

Moving forward really does not require talent or intelligence.   They are both helpful but they are certainly not required.   It seems to me that moving forward requires desire (you have to want to move forward or nothing will ever get done), belief in yourself (it is virtually impossible to achieve any goal if you do not think you can make it), and work (hard work alone will not create a winner but no one is ever truly going to be successful without hard work. 

 

Desire

Belief in Yourself

Hard Work

 

Only three things but it is amazing how far those three attributes can carry you.  With those three, you can move mountains.   Write them on your wall.

 

Okay, my guess is that most of the people reading these email lessons are working to pass the comprehensive CPA Exam.  So, let’s stop for a moment and assess your progress.   How would you rate yourself on each of my three criteria?  Learn more and take the quiz...

 

 

---

---

Fast Forward Academy Review Course Will Help you Pass the Exam

 

The future of CPA review has arrived.  Check out our partner in CPA review.  They provide so much more than other review courses at a fraction of the cost!

• Patented technology gives you the power to succeed.
• One-click intelligent learning to focus on the right subjects.
• Academic support when you need it most.
• CPA course access until you pass

 

---

---

 

Don't Just Take Our Word For It

 

We always love to get emails from our candidates.   Here’s one that we received recently (slightly edited).

 

“Thank you. I have been working the questions. They are doing the job, because the questions are really annoying me (i.e. forcing me to think) !! This is exactly what I want in preparing for the exam. I also use XXXXX, but find the CPAreviewforFree questions more challenging. I want tougher questions while studying.”

 

Love to get the positive words from someone who clearly understands what is needed to pass the CPA Exam.    

 

This email reminded me of a recent conversation that I had (at lunch one day at Taco Bell) with a friend of mine who also teaches accounting in college.   He was quite mystified and was asking for clarification.    Although I didn’t take notes, here are the basics of that conversation.

 

My friend:   “Last week, I went onto the website of several of the major CPA review programs because I wanted to get some questions to use in my class during the fall.   All of the questions that I found were terrible.   Many of them were over 25 years old.   They looked like questions from the Civil War.   And a lot of the questions were just poorly written and flawed.   I could not have used any of those questions in my class.   I really had expected better.   What’s going on with these review programs and these poor questions?”

 

Me:   “Well, the CPA Exam became non-disclosed in 1994, about the time that many of the current candidates were born.   The review courses don’t want to spend the time and money to write new questions so they continue to use a lot of questions that were on the exam before 1994.   That way they can say that they use questions that were on the CPA Exam even though it was 25 years ago.   You’ll occasionally see questions in their materials that were literally on the CPA Exam in the 1970s.”  

 

My friend:   “Don’t you write your own questions for CPAreviewforFREE?”

 

Me:   “Sure, we have over 2,500 free questions and we have written them all within the last couple of years.   I probably wrote 2/3 of them myself.   They are fresh.   They are up to date.   They have good answer explanations.   But, remember, I have taught in college for 44 years now so I have an awful lot of experience at writing test questions.” 

 

My friend:   “Why don’t the other review courses write more of their own questions?”

 

Me:   “Well, you will have to ask them.   My bet is that few of their people really have long term experience as classroom teachers who are forced to write test questions over and over for real tests and explain answers to real students.   Teaching in college requires you to be able to write hundreds of test questions each year but working in CPA Review does not.”

 

My friend:   “But doesn’t the AICPA release test questions each year from the current CPA exam?”

 

Me:   “Certainly, but there has always been a question about the ones that they are willing to release.   If you were the examiners, would you release questions that were working well?   My guess is that they tend to release questions that are flawed in some way.   You and I have taught for a long time.   We could actually read some of the questions they release and spot the problem with the questions.   Some words are confusing or the question will just be too convoluted.   Sometimes the questions are simply too easy and, therefore, don’t show who should pass.   The examiners track the questions on the exam carefully.   They know the ones that have problems.   Why realize great questions that are working well?”

 

My friend:   “What is the best thing about writing your own questions?”

 

Me:   “Oh, there are several advantages.   You get a more complete coverage.   You can look at a topic like accounts receivable and think about the different ways that a question can be asked and then you can write individual questions for each of those parts of the topic.   I really like having an example of every possible question.   That takes some professional thinking.   I also like to write better explanations.   Read some of the explanations of the other programs and they are terrible.   I have often said that the single most important aspect of CPA Review is the answer to the practice questions.   Reading those answers is how people learn to answer the next question correctly.   And, you can make the questions hard enough that the candidate gets stronger and stronger.   Weak questions produce weak candidates.   Strong questions produce strong candidates. 

 

My friend:   “And, your 2,600 questions are available for free?”

 

Me:   “Absolutely free.”

 

My friend:   “And, some candidates still don’t use them?   I don’t understand that.” 

 

Me:   “I guess that is the reason that half the people fail each part of the exam.”

 

Practice Some Free Questions

 

Time for a little practice.   Have fun.   Read the questions, come up with your best answer, and then read my answer (carefully) at the end.

 

FAR 

 

In Year One, a company is found guilty by the government of violating certain environmental regulations and fined $1.4 million.   The company has filed an appeal that will be judged in early in Year Three.   At the end of Year One, the company believes that it is probable that the company will eventually lose between $100,000 and $500,000.  No number within that range is a better estimate than any other.   It is also reasonably possible that it will lose as much as $800,000.   Near the end of Year Two, the company and the government agree on a $1 million penalty.   What loss does the company recognize in Year Two at the time of settlement?

 

A.  $200,000

B.  $500,000

C.  $700,000

D.  $900,000

 

 

Auditing

 

The CPA firm of Roberts & Lynes is currently audited the financial statements of the Amsterdam Corporation.   Below are four actions taken by the auditors.   Which of these actions is most likely to have provided evidence about the valuation and allocation financial statement assertion in connection with the Amsterdam Corporation’s Inventory balance?

 

A.  Select inventory items found in the company’s warehouse and trace them to the final inventory listing.

B.  Select items on the final inventory listing and make sure the item is physically present in the company’s warehouse at the end of the year.

C.  Examine invoices received from the company’s suppliers.

D.  Examine cancelled checks paid subsequent to the end of the year for inventory purchases

 

Regulation

 

Paul and Art are equal partners in their partnership.   For the current year, the partnership has revenues of $90,000 and ordinary expenses of $50,000.   In addition, for the work that he does during the year, Paul receives a guaranteed payment of $24,000 each year.   No other cash distributions were paid to the owners.  What is the overall impact on Paul’s individual income tax return for this year?

 

A.   Increase taxable income by $8,000

B.   Increase taxable income by $20,000

C.   Increase taxable income by $24,000

D.   Increase taxable income by $32,000

 

BEC

 

A manufacturing company has a current ratio of 3:1.   What can be said about the acid-test ratio (sometimes referred to as the quick ratio)?

 

A.   The acid-test ratio will be lower.

B.   The acid-test ratio will be higher.

C.   The acid-test ratio will be the same.

D.   The acid-test ratio could be either higher or lower.

 

Answers

 

FAR

 

The answer is D.

 

When a contingent loss is probable within a range, the best estimate is recognized.  If no amount within the range is better than any other, then the lowest amount should be recorded.   Thus, in Year One, the company reports a loss and liability of $100,000.   In Year Two, when the penalty is settled at $1 million, the other $900,000 loss must be recognized.

 

Auditing

 

The answer is C.

 

Here, the inventory account is being tested to see if the figure reported as an asset is properly valued on the balance sheet.   For example, if a table is reported as $55, is that number valued according US GAAP?   Valuation for inventory is normally the lower of cost or market.   The invoices will show the cost of inventory items and, therefore, can be used in determining the proper valuation.   Comparing inventory items that are present to the final listing does not relate to valuation but, rather, to completeness (no units have been left out) and existence (no units have been incorrectly added).   Cancelled checks do not provide individual cost figures but rather show the impact on accounts payable and cash of the payment being made.

 

 

Regulation 

 

The answer is D.

 

First, the guaranteed payment to the partner of $24,000 was paid for work done and is taxable income to Paul.   The partnership has income of $40,000 ($90,000 less $50,000) but that figure is reduced by the $24,000 which is taxable directly to Paul and leaves the ordinary income at $16,000.   As an equal partner, Paul is taxed on half of that amount or $8,000.  His taxable income is increased by $32,000 ($24,000 plus $8,000).  

 

 

BEC 

 

Answer is A

 

The current ratio is found by taking a company’s current assets and dividing the amount by its current liabilities.  It is a measure of liquidity.   The acid-test ratio is a more immediate measure of the ability to pay debts and is found by removing inventory (and, sometimes prepaid expenses and supplies) from the current ratio equation.   A manufacturing company would have inventory.   Remaining that balance from the asset side will reduce the size of the resulting acid-test ratio

 

    

Joe Hoyle

President, CPAreviewforFREE