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August 22, 2011
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Lesson 102
From: Joe
(1) – There are about 10 days left in the July-August testing window for the CPA Exam. Because many people wait until the very end of the window to take the exam, I realize that a lot of you who are reading this email are getting very close to the time to enter the exam site. A few last minute thoughts.
--Many people get close to 75. Therefore, the points you add here at the end may well be the difference between passing and failing. Keep adding points for as long as you can. Each question might be the difference between 74 and 75.
--Try to review all of the material briefly within the last week of the exam. You want every single topic to be fresh in your mind. Any topic that you have not looked at in the last week is probably a bit stale.
--It is far better to be relaxed and rested than it is to over-study. One of the biggest mistakes that people make is trying to push themselves to complete exhaustion right before the exam and then they are mystified by how many careless mistakes they make during the actual exam. Few people do well at any 3-4 hour task if they start out very tired. Use the last 24 hours to get relaxed and rested.
--Few things on the exam are more important than time management. Have a plan for how quickly you want to work each question and then stay aware of your time throughout the exam.
--Read the information that they send you about taking the test in advance and follow their rules precisely. You don’t want anything upsetting your calmness on the day of the exam. You want this to be an entirely calm and uneventful experience.
--By the way they grade, you can miss a lot of questions and still pass. In fact, they expect you to miss quite a significant number. Don’t let weird topics and odd questions rattle you. Too many candidates get four questions they know and one that they don’t know and become obsessed (and badly distracted) by the one they didn’t know. If it really is an odd question, eliminate as many answers as possible and take a guess.
At the end, walk away and tell yourself: “I gave it my very best and that’s all I can do and I’m not going to spend another second worrying about it.”
(2) – Remember, if you really don’t want to pay a fortune for mediocre CPA Review, we have a number of products that can help you gain the points you need to pass at a very low price.
---For $15 per month per part, you can get our Essentials. For each part, the Essentials contains:
a. Hundreds of slides of content to cover all of the topics you need to know to pass.
b. A study guide that merges all our free questions and answers with the content material that is provided in the Essentials and tells you what to do at each study session.
c. Approximately 10 examples of simulations (for each part other than BEC) and written communication questions (for BEC)
---For $29.99 per month, you can get (for FAR only so far) our Points to Pass software program. This computer program allows you to practice 250 of our most important questions an infinite number of times, each time with different numbers and answers. To work an example of our Points to Pass program, click here and start automatically working a demo question on leases. To our knowledge, no other review course has this software testing program.
Work that basic question over and over until you can do the problem in your sleep. You’ll be surprised how quickly you can master even the most complicated question using Points to Pass.
d. Remember that we have 250 specially picked questions in the Points to Pass program just like the demo question that you can work dozens of time until you can work each one backwards and forwards.
(3) – I was in a meeting two weeks back with the CPA Examiners. Here are the pass rates for the first two quarters of 2011. As you can see, they are a little lower than in recent years. The folks from the AICPA said they had expected a slight drop because of the various changes made in January 2011 in the exam (adding task based simulations, moving the written communications questions to BEC, adding IFRS, and the like). They said that when a licensing exam changes in some way the scores usually drop for a quarter or two until candidates adapt. So, they expect higher pass rates to come back very soon.
--AUD – 46 percent
--BEC – 45 percent
--FAR – 43 percent
--REG – 43 percent
(4) – This is our 102nd lesson and we have literally had people get all 102 of these lessons over the last few years. For others of you, this is probably your first email lesson from CPAreviewforFREE. We want everyone to know that you always have the right to unsubscribe whenever you wish. Scroll to the bottom of this or any other lesson and you’ll find a link that allows you to unsubscribe.
We love having you, especially if you stay around for 102 lessons. However, you do have the legal right to unsubscribe and we want you to know that we honor that right.
(5) - Today (Monday, August 22), classes begin here at the University of Richmond. It is my 41st year as a college teacher. I always love the start of a new year. Students come into class and every single person has the ability to do well. When students walk in on the first day, every one of them could make an A or a B simply by putting in the time and doing the work. There is the universal opportunity for people to succeed. I will like that feeling as I stare out at my students today. The only thing that stands between each of those students and success are the stumbling blocks that they place there themselves.
When you deal with college students, you eventually hear every possible excuse and then some. I don’t want excuses. I’m not trying to be a hard guy but I want success.
I want them to do a moderate amount of work and think about that material (“debits are on the left and credits are on the right – there are only two variables here, how tough can this be?”) If they do the work and do it consistently, they’ll all make an A or a B.
For me, it is all about the start of a new year. No matter how bad things have been in the past, we start over and everyone is on an even playing field. No matter what you did in previous classes, everyone starts off at the same spot and what you make of it is up to you. Whether you have been an A+ student in the past or a C- student, this is a new year and this is a new opportunity to show what you can do.
One of the things I like, though, is to try to extend this “newness.” Why focus on a new year? Every day is a new day. Every day holds infinite possibilities. Every day brings the chance that you can make something wonderful happen.
I think we all get locked into negative thinking – “this is a bad week,” “this is a bad month,” “2011 has been a tough year for me,” “I’ve always struggled with standardized tests.” I sometimes hear this negative thinking as a litany that just colors a person’s entire existence.
Would your friends say that you are a positive person or would your friends say that you are a negative person? True me – it is always better to be a positive, optimistic, upbeat person. If your friends would refer to you as a negative person, today is a good day to start making a change.
Today is Monday, August 21. I don’t know what happened to you on August 20 or 19 or any other day and I don’t really care. I just care about today. It is such a wonderful opportunity. At the end of this day, you can be different – you can be better. And, you can help make the people around you better. You can be different and you can make a difference.
I don’t care how much or how little you have studied for the CPA Exam in the past. You’ve got a new day to add points. I always say that any day where you can add 2-3 points is a great day. Maybe it didn’t happen yesterday but, gosh, it can happen today.
Go and start working questions. Don’t put it off. Don’t give me excuses. Imagine your grade getting slightly higher and higher as you work each new question. Read the question, come up with your answer, read my answer, make a few notes (10 words or less) if you need to. Then, move on to the next question. This is not rocket science. It is learning how to answer questions. And the best way to learn how to answer questions is to read questions, come up with your answer, read my answer, take a few notes.
Make it happen.
Today!!!
Today!!!
Today!!!
It is a new day – make it a great one.
(6) – Need some encouragement. Need some ideas. Read “Tips for Success.” Read a tip or three every day. I think they’ll give you an energy boost.
(7) – Time to practice. Let’s get started on adding those 2-3 points for today.
FAR
Smile Today is a private not-for-profit organization. In Year One, Smile Today receives a check for $24,000 that must be used to pay for dental work for impoverished children. In Year Two, the money is paid to a local dentist for work that she did on 180 local children who could not afford to have proper dental care. What is recorded within unrestricted net assets during Year Two as reported by Smile Today?
A. Nothing is reported.
B. A decrease of $24,000 to be pay for the dental work.
C. An increase of $24,000 as a result of the original donation.
D. Both an increase and a decrease of $24,000.
Answer is D
In a private not-for-profit organization, a designated gift of this type is initially (Year One) recorded as an increase in temporarily restricted net assets. Subsequently, when the money is spent as specified or when the required time period has passed, this amount is removed from temporarily restricted net assets and added to unrestricted net assets. At the same time, the $24,000 paid to the dentist for the work done is reported as an expense within unrestricted net assets. Consequently, both the support and the expense are reported in unrestricted net assets in Year Two when the money is properly spent.
Auditing and Attestation
The January Company is a small corporation that sells men’s clothing in Billings, Montana. The company does not issue securities to the public and is not required to have audited financial statements. However, Jeter and Cano, CPAs are hired to do a review of the company’s annual financial statements. In performing the review, the CPAs discover that a material amount of expenses was capitalized during the year. How does this impact the report issued by the CPAs?
A. An adverse opinion must be rendered because the company did not follow U.S. GAAP.
B. A disclaimer of opinion must be rendered because the company did not follow U.S. GAAP.
C. The material misstatement must be disclosed by the CPAs in a separate paragraph to their report.
D. The CPAs must decide between a qualified opinion and an adverse opinion based on the magnitude and nature of the problem.
Answer is C
An opinion is given as the result of an audit. The CPAs carried out a review and not an audit so no type of opinion can be rendered at all. For a review, CPAs are required to include an extra explanatory paragraph in their report to draw attention to any material departure from U.S. GAAP.
Regulation
The Morganton Corporation has revenues of $100,000, expenses of $80,000, and charitable contributions of $5,000. Which of the following is true?
A. Taxable income is $18,000 and $3,000 in contributions can be carried over for five years.
B. Taxable income is $20,000 and $5,000 in contributions can be carried over indefinitely.
C. Taxable income is $15,000 and there are no amounts to be carried over.
D. Taxable income is $19,000 and $4,000 in contributions can be carried over for three years.
Answer is A
A corporation first computes its net income without the contributions taken into consideration. Here, that is $20,000 ($100,000 less $80,000). Charitable contributions of up to 10 percent of that figure ($2,000 in this case) can then be deducted. That drops taxable income to $18,000. The remainder of the contributions ($3,000) can be carried forward for up to five years.
BEC
The Lenoir Company produces several types of widgets in two departments. In the first department, there are three separate activities and, in the second department, there are four separate activities. The production process has a significant amount of overhead and officials believe that it is especially important to assign the overhead to each type of widget as precisely as possible. If activity-based costing is used, which of the following statements is true?
A. Overhead is assigned one time, at the end of the process in the second department.
B. Overhead is assigned two times, at the end of each of the two departments.
C. Overhead is assigned for each separate activity, three times in the first department and four times in the second.
D. One continuous overhead rate is applied as each widget moves through the production process.
Answer is C
Activity-based costing attempts to assign overhead as accurately as possible by dividing up the entire process into activities, each with its own identified cost driver. For example, in the first activity in department one, officials may believe that overhead is caused by direct labor hours and should be assigned in that way. In the second activity in department one, perhaps overhead is assumed to be related to the cost of direct materials and is assigned that way. Whenever overhead is particularly large, its assignment to individual products becomes especially important. Activity-based costing does that using separate cost drivers for each identifiable activity.
Have a great week!!
Remember that each new day is a wonderful opportunity so make the most of it!!
Joe Hoyle
www.CPAreviewforFREE.com
Monday, August 22, 2011
Friday, August 19, 2011
You can do it, Points to Pass New Demo, Survey Results
CPAreviewforFREE--Try us FIRST before you spend your hard-earned money.
Lesson 101—In this lesson--Points to Pass New Demo, More Survey Results, Grading Changes in 2011, A word from Joe
From: Lynn (No, Joe hasn't gone anywhere!)
POINTS TO PASS NEW DEMO
Ready to try Points to Pass? Not sure what it is or how it works? We thought you might like to give Points to Pass a try since it's not like any other CPA review product. Go to our store, scroll down to Points to Pass and click on the link "Example PtP Question". That's it! You'll work an UNLIMITED number of questions based on just that one demo question until you get the concept down perfectly.
If you like what you see, it is only one dollar per day for all 250 Points to Pass questions! For an infinite number of questions. Yep, $29.99 per month.
MORE SURVEY RESULTS
A tip to see our site in a larger font size: Open up your browser to CPAreviewforFREE and press the Control and "+" keys again and again to zoom in. No, you don't have to hit the Shift key to achieve the upper case "+".
Many of you mentioned that there's no phone number on the website to contact us and felt that we lose a bit of legitimacy because of it. We also have a 98% customer satisfaction rate with our current email support system and we run a very tight ship to keep prices down which we pass along to you!
GRADING CHANGES AS OF JAN 2011
You may or may not be aware of the grading changes that took effect in January 2011. Because they moved all the written communication questions to BEC, they had to change that. You can find everything about scoring now here.
WORDS FROM JOE
You might find this interesting. On one particular day recently, we measured our traffic by city. We were interested in learning where people came from who used our materials. Here are the top eight:
--New York City
--Hyderabad, India
--Chicago
--Washington, DC
--Los Angeles
--Houston
--San Francisco
--Philadelphia
Wherever you are, we are glad you are with us.
I love what Michael Jordan had to say: “Obstacles don't have to stop you. If you run into a wall, don't turn around and give up. Figure out how to climb it, go through it, or work around it.”
Does this sound like you?
--“I simply cannot find the time to study.”
Always be ready to study whenever a free minute or two pops up. Too many people take 30 minutes just to get ready to study. Everything has to be aligned perfectly. You can’t do that. You always have to be ready to get some work done if you have even the slightest chance. Always carry note cards in your pocket, for example. When a free moment shows up, pull them out and start reviewing. Or, for a small fee, you can download all of our questions and answers. Carry them with you at all times and if you have even one minute, that is a perfect chance to work a question or two.
--“I mean to study but somehow it never happens. Each day is the same – I’m a person with good intentions.”
At the start of every day, write down exactly when you are going to study and for how long. Then, when those times arise, stop everything else and make it happen. Nothing beats a schedule. If you say “at 7:30 in the morning, I’m going to study for 30 minutes before I head to work” then that should be an absolute necessity. If you say “at 5:00 each evening, I’m going to study for 45 minutes before I start to cook dinner” then you must not let that time slip by. Set the schedule and then hold yourself to that schedule.
I was talking with a friend of mine the other day and he mentioned the seminal work by Booker T. Washington “Up From Slavery” which was his autobiography, published 110 years ago. My friend had read it recently and mentioned one line that had made a real difference to him: "I have learned that success is to be measured not so much by the position that one has reached in life as by the obstacles which he has overcome while trying to succeed."
YOU can do it!
Lesson 101—In this lesson--Points to Pass New Demo, More Survey Results, Grading Changes in 2011, A word from Joe
From: Lynn (No, Joe hasn't gone anywhere!)
POINTS TO PASS NEW DEMO
Ready to try Points to Pass? Not sure what it is or how it works? We thought you might like to give Points to Pass a try since it's not like any other CPA review product. Go to our store, scroll down to Points to Pass and click on the link "Example PtP Question". That's it! You'll work an UNLIMITED number of questions based on just that one demo question until you get the concept down perfectly.
If you like what you see, it is only one dollar per day for all 250 Points to Pass questions! For an infinite number of questions. Yep, $29.99 per month.
MORE SURVEY RESULTS
A tip to see our site in a larger font size: Open up your browser to CPAreviewforFREE and press the Control and "+" keys again and again to zoom in. No, you don't have to hit the Shift key to achieve the upper case "+".
Many of you mentioned that there's no phone number on the website to contact us and felt that we lose a bit of legitimacy because of it. We also have a 98% customer satisfaction rate with our current email support system and we run a very tight ship to keep prices down which we pass along to you!
GRADING CHANGES AS OF JAN 2011
You may or may not be aware of the grading changes that took effect in January 2011. Because they moved all the written communication questions to BEC, they had to change that. You can find everything about scoring now here.
WORDS FROM JOE
You might find this interesting. On one particular day recently, we measured our traffic by city. We were interested in learning where people came from who used our materials. Here are the top eight:
--New York City
--Hyderabad, India
--Chicago
--Washington, DC
--Los Angeles
--Houston
--San Francisco
--Philadelphia
Wherever you are, we are glad you are with us.
I love what Michael Jordan had to say: “Obstacles don't have to stop you. If you run into a wall, don't turn around and give up. Figure out how to climb it, go through it, or work around it.”
Does this sound like you?
--“I simply cannot find the time to study.”
Always be ready to study whenever a free minute or two pops up. Too many people take 30 minutes just to get ready to study. Everything has to be aligned perfectly. You can’t do that. You always have to be ready to get some work done if you have even the slightest chance. Always carry note cards in your pocket, for example. When a free moment shows up, pull them out and start reviewing. Or, for a small fee, you can download all of our questions and answers. Carry them with you at all times and if you have even one minute, that is a perfect chance to work a question or two.
--“I mean to study but somehow it never happens. Each day is the same – I’m a person with good intentions.”
At the start of every day, write down exactly when you are going to study and for how long. Then, when those times arise, stop everything else and make it happen. Nothing beats a schedule. If you say “at 7:30 in the morning, I’m going to study for 30 minutes before I head to work” then that should be an absolute necessity. If you say “at 5:00 each evening, I’m going to study for 45 minutes before I start to cook dinner” then you must not let that time slip by. Set the schedule and then hold yourself to that schedule.
I was talking with a friend of mine the other day and he mentioned the seminal work by Booker T. Washington “Up From Slavery” which was his autobiography, published 110 years ago. My friend had read it recently and mentioned one line that had made a real difference to him: "I have learned that success is to be measured not so much by the position that one has reached in life as by the obstacles which he has overcome while trying to succeed."
YOU can do it!
Wednesday, August 17, 2011
CPAreviewforFREE--Try us FIRST before you spend your hard-earned money.
Lesson 101—In this lesson--Points to Pass New Demo, More Survey Results, Grading Changes in 2011, A word from Joe
From: Lynn (No, Joe hasn't gone anywhere!)
POINTS TO PASS NEW DEMO
Ready to try Points to Pass? Not sure what it is or how it works? We thought you might like to give Points to Pass a try since it's not like any other CPA review product. Go to our store, scroll down to Points to Pass and click on the link "Example PtP Question". That's it! You'll work an UNLIMITED number of questions based on just that one demo question until you get the concept down perfectly.
If you like what you see, it is only one dollar per day for all 250 Points to Pass questions! For an infinite number of questions. Yep, $29.99 per month.
MORE SURVEY RESULTS
A tip to see our site in a larger font size: Open up your browser to CPAreviewforFREE and press the Control and "+" keys again and again to zoom in. No, you don't have to hit the Shift key to achieve the upper case "+".
Many of you mentioned that there's no phone number on the website to contact us and felt that we lose a bit of legitimacy because of it. We also have a 98% customer satisfaction rate with our current email support system and we run a very tight ship to keep prices down which we pass along to you!
GRADING CHANGES AS OF JAN 2011
You may or may not be aware of the grading changes that took effect in January 2011. Because they moved all the written communication questions to BEC, they had to change that. You can find everything about scoring now here.
WORDS FROM JOE
You might find this interesting. On one particular day recently, we measured our traffic by city. We were interested in learning where people came from who used our materials. Here are the top eight:
--New York City
--Hyderabad, India
--Chicago
--Washington, DC
--Los Angeles
--Houston
--San Francisco
--Philadelphia
Wherever you are, we are glad you are with us.
I love what Michael Jordan had to say: “Obstacles don't have to stop you. If you run into a wall, don't turn around and give up. Figure out how to climb it, go through it, or work around it.”
Does this sound like you?
--“I simply cannot find the time to study.”
Always be ready to study whenever a free minute or two pops up. Too many people take 30 minutes just to get ready to study. Everything has to be aligned perfectly. You can’t do that. You always have to be ready to get some work done if you have even the slightest chance. Always carry note cards in your pocket, for example. When a free moment shows up, pull them out and start reviewing. Or, for a small fee, you can download all of our questions and answers. Carry them with you at all times and if you have even one minute, that is a perfect chance to work a question or two.
--“I mean to study but somehow it never happens. Each day is the same – I’m a person with good intentions.”
At the start of every day, write down exactly when you are going to study and for how long. Then, when those times arise, stop everything else and make it happen. Nothing beats a schedule. If you say “at 7:30 in the morning, I’m going to study for 30 minutes before I head to work” then that should be an absolute necessity. If you say “at 5:00 each evening, I’m going to study for 45 minutes before I start to cook dinner” then you must not let that time slip by. Set the schedule and then hold yourself to that schedule.
I was talking with a friend of mine the other day and he mentioned the seminal work by Booker T. Washington “Up From Slavery” which was his autobiography, published 110 years ago. My friend had read it recently and mentioned one line that had made a real difference to him: "I have learned that success is to be measured not so much by the position that one has reached in life as by the obstacles which he has overcome while trying to succeed."
YOU can do it!
---------------------------
Lesson 101—In this lesson--Points to Pass New Demo, More Survey Results, Grading Changes in 2011, A word from Joe
From: Lynn (No, Joe hasn't gone anywhere!)
POINTS TO PASS NEW DEMO
Ready to try Points to Pass? Not sure what it is or how it works? We thought you might like to give Points to Pass a try since it's not like any other CPA review product. Go to our store, scroll down to Points to Pass and click on the link "Example PtP Question". That's it! You'll work an UNLIMITED number of questions based on just that one demo question until you get the concept down perfectly.
If you like what you see, it is only one dollar per day for all 250 Points to Pass questions! For an infinite number of questions. Yep, $29.99 per month.
MORE SURVEY RESULTS
A tip to see our site in a larger font size: Open up your browser to CPAreviewforFREE and press the Control and "+" keys again and again to zoom in. No, you don't have to hit the Shift key to achieve the upper case "+".
Many of you mentioned that there's no phone number on the website to contact us and felt that we lose a bit of legitimacy because of it. We also have a 98% customer satisfaction rate with our current email support system and we run a very tight ship to keep prices down which we pass along to you!
GRADING CHANGES AS OF JAN 2011
You may or may not be aware of the grading changes that took effect in January 2011. Because they moved all the written communication questions to BEC, they had to change that. You can find everything about scoring now here.
WORDS FROM JOE
You might find this interesting. On one particular day recently, we measured our traffic by city. We were interested in learning where people came from who used our materials. Here are the top eight:
--New York City
--Hyderabad, India
--Chicago
--Washington, DC
--Los Angeles
--Houston
--San Francisco
--Philadelphia
Wherever you are, we are glad you are with us.
I love what Michael Jordan had to say: “Obstacles don't have to stop you. If you run into a wall, don't turn around and give up. Figure out how to climb it, go through it, or work around it.”
Does this sound like you?
--“I simply cannot find the time to study.”
Always be ready to study whenever a free minute or two pops up. Too many people take 30 minutes just to get ready to study. Everything has to be aligned perfectly. You can’t do that. You always have to be ready to get some work done if you have even the slightest chance. Always carry note cards in your pocket, for example. When a free moment shows up, pull them out and start reviewing. Or, for a small fee, you can download all of our questions and answers. Carry them with you at all times and if you have even one minute, that is a perfect chance to work a question or two.
--“I mean to study but somehow it never happens. Each day is the same – I’m a person with good intentions.”
At the start of every day, write down exactly when you are going to study and for how long. Then, when those times arise, stop everything else and make it happen. Nothing beats a schedule. If you say “at 7:30 in the morning, I’m going to study for 30 minutes before I head to work” then that should be an absolute necessity. If you say “at 5:00 each evening, I’m going to study for 45 minutes before I start to cook dinner” then you must not let that time slip by. Set the schedule and then hold yourself to that schedule.
I was talking with a friend of mine the other day and he mentioned the seminal work by Booker T. Washington “Up From Slavery” which was his autobiography, published 110 years ago. My friend had read it recently and mentioned one line that had made a real difference to him: "I have learned that success is to be measured not so much by the position that one has reached in life as by the obstacles which he has overcome while trying to succeed."
YOU can do it!
---------------------------
Tuesday, August 2, 2011
CPAreviewforFREE Survey Results, New Practice Questions, Points to Pass
CPAreviewforFREE--Try us FIRST before you spend your hard-earned money.
Lesson 100—In this lesson--Some Survey Results, New Points to Pass Launch, Motivation, Study Aids, 4 New Practice Questions
From: Joe
SURVEY RESULTS
THANKS to everyone who took a minute to answer our CPAreviewforFREE survey. We’ll be commenting on additional results in future newsletters. Here’s one thing we discovered immediately:
A 94% approval rating. 76% of the respondents said that the quality of our content was better or the same than the other review programs they had used while another 18 percent said that we were the only review program they had used. That is a pretty impressive statistic.
One of the comments we received from Question 8 of the survey: “I have no suggestion but I will say your questions helped me pass all 4 parts on the first try. I have recommended your site to many people. You have done an excellent job.”
Gosh, that is great to hear.
POINTS TO PASS LAUNCH
We have been having great success with our new Points to Pass product designed specifically for FAR. You still have 622 free FAR questions and answers available for use at any time at www.CPAreviewforFREE.com. However, I personally selected 250 of the most important of those FAR questions. We then built the Points to Pass software program that would constantly change those 250 questions and make them 2,500 questions or even 2,500,000 questions. Computers do marvelous things. Here’s the great part: You can work those especially important questions as many times as you like until you can do them in your sleep.
You can take each question and work it over and over with different numbers and different variables until you know the process backwards and forwards.
Or, you can go to any FAR category (Financial Statement Structure of Not-for-Profit Organizations as just one example) and keep working questions in that category for hours and days and even weeks. The computer program will keep changing the numbers and other variables of the questions I selected and then feed each new question to you until you have the whole category down perfectly.
Countless questions by individual question.
Countless questions by individual category.
I have always argued that the very very very best way to pass the CPA Exam is to work questions and read answers. Everything else does help but working questions and reading answers is the best. Do that one thing long enough and you’ll pass. However, UNTIL NOW, there has not been a way to have enough good questions available to work. People run out of questions pretty quickly in every program. But Points to Pass solves that problem by providing an infinite number of variations to the 250 most important questions in FAR.
And it is only one dollar per day. Yep, $29.99 per month. For an infinite number of FAR questions.
WORDS TO STUDY BY
I was talking with a friend of mine the other day and he mentioned the seminal work by Booker T. Washington “Up From Slavery” which was his autobiography, published 110 years ago. My friend had read it recently and mentioned one line that had made a real difference to him: "I have learned that success is to be measured not so much by the position that one has reached in life as by the obstacles which he has overcome while trying to succeed."
We are halfway through the July-August testing window for the CPA Exam. I realize that a lot of people who read these email lessons are gearing up to take part of the exam before the end of August.
It can be a tense time.
Many of you are worrying about passing or failing. Worry can become a constant mental distraction. As I have said often in these emails, I think your worry is misplaced. If it were me, I wouldn’t allow the words “pass” or “fail” into my vocabulary. I would worry, but only about one specific thing: adding points. How can you add a point or two today? Any other question or any other goal is probably unimportant. That should be the first thing you think about when you wake up in the morning and the last thing you evaluate when you go to sleep at night.
However, my friend’s comment from “Up From Slavery” made me start thinking about the obstacles we all face when pushing to achieve success. What obstacles do you face in your quest to pass the CPA Exam? And, what can you do to overcome those obstacles?
Maybe it is not the CPA Exam that is the problem. Maybe it is the obstacles you face each day. Maybe you let them stop you. Maybe you let them keep you from success.
Here are a couple obstacles that are pretty common in CPA Review.
--“By the time I finish all my work, I’m too tired to study.”
If possible, study first and then do your other work when you begin to get tired. Sweeping the floor can be done when you are half asleep but studying can’t. Unloading the dishwasher can be done without being too alert but studying can’t. Washing out the bath tub doesn’t take many brain cells but studying does.
--“There are just not enough hours in the day for me to do everything and get in my study time.”
Take a moment each day to evaluate what you really “must do.” People often structure their lives to stay incredibly busy. Then, when they try to add something important like the CPA Exam, there just doesn’t appear to be any available time. Perhaps some of those things that you’ve added to your life can be delayed a bit until the exam is passed. Do you have to water your plants every day or can you make it every third day? Do you have to dust your furniture quite so often? Do you have to go to the gym every single day? Can you grocery shop once a week rather than twice? When you are studying for the CPA Exam, it is not a bad idea – before you do anything other than study – to ask yourself “can this task be delayed for a day?” Yeah, there are things you really must do but not everything you do each day is a “must do.”
Think about your obstacles – those things in your life that keep you from putting in the time and effort needed to pass the CPA Exam. Then, figure out how to work your way around those obstacles. You can do it!! That is the mark of success.
STUDY AIDS
When you are working questions on www.CPAreviewforFREE.com, keep a list of all the questions you miss. Keep that list in two columns. One column is for all questions that you miss because there was some part of the question that you didn’t know. The other column is for all questions that you miss because you were careless. You read a word wrong or missed a computation or you started working before you read the entire question.
It is especially important that you train yourself to keep the “careless list” at close to zero. Over time, as you study and practice, the “don’t know list” will go down automatically. However, the “careless list” is based entirely on your ability to stay focused and pay attention. You want to train your mind and your eyes to read all of the questions and pick out the important data and put them together. If you allow yourself to be sloppy while you study, that habit will carry over into the actual exam. So, stop being careless.
Don’t let yourself pick up bad habits. Don’t let yourself get used to missing questions because you are being careless. That is an awful habit. When it comes to that one attribute of the CPA Exam, don’t settle for 75. Shoot for 100 or, in other words, as you study work to have no questions at all missed because of carelessness.
PRACTICE TIME
Let’s see if we can add four points to your scores.
FAR
The Potter Corporation has been in business for four years. The completed contract method has been used for all of those years to recognize revenue on construction projects. At the end of the fourth year, company officials decide to change to the percentage of completion method. That method would have increased income in the first three years by $80,000 and in Year Four by $30,000. How is this change in accounting principle reported?
A. Retroactively – the reported income for the first three years is increased by $80,000.
B. Currently – only the $30,000 amount for the current year is changed.
C. Cumulatively – the entire $110,000 income effect is recognized in the current year.
D. In the future – no changes are made until next year
Answer is A
This change is a change in an accounting principle. Most changes in accounting principle (such as this one) are handled retroactively. The previously reported numbers are changed to align them with the new principle. A change in an accounting estimation is different. It is handled currently and then into the future.
Auditing
The Malfoy Company makes a huge purchase of inventory near the end of Year Two that is shipped to the company on December 30, Year Two. It is sent FOB shipping point. However, no record is made of this inventory until it is received on January 9, Year Three. In looking at the company’s Year Two financial statements, which of the following is most likely to alert the auditor that a recording error has occurred?
A. The Year Two current ratio is much higher than the Year One current ratio
B. The Year Two gross profit is much lower than the Year One gross profit
C. The Year Two inventory turnover is much higher than the Year One inventory turnover
D. The Year Two working capital is much lower than the Year One working capital
Answer is C
Nothing has been recorded in Year Two even though the goods (and the related debt) belong to Malfoy because of the FOB point. The goods were not received in Year Two and, therefore, could not have been sold. Cost of goods sold was not affected by the purchase and, thus, the gross profit is correctly stated. There are only two mistakes. Inventory is too low and accounts payable is also too low by the same amount. Those mistakes offset so that both working capital and the current ratio are also correctly reported. However, inventory turnover is cost of goods sold divided by the average inventory for the period. If inventory was too low at the end of Year Two, then the average inventory will also be too low. Therefore, since cost of goods sold is correctly stated, the inventory turnover will be too high.
Regulation
Owners of the Granger Partnership have decided to liquidate and go out of business. Hermione is one of the partners who holds a partnership interest of $5,000. The only thing she receives from the liquidation is a machine with a book value of $7,000 but a fair value of $7,600. Hermione held a 20 percent ownership in the partnership. What gain does Hermione recognize for tax purposes on the receipt of this liquidation distribution?
A. Zero
B. $1,520
C. $2,000
D. $2,600
Answer is A
Normally, in a partnership liquidation where the partner only receives nonmonetary assets, the partner picks up the new property at the basis of the old partnership so that no gain is recognized. Therefore, Hermione will record the machine on her tax records as having a basis of $5,000. The old partnership basis of $5,000 goes away and is replaced by a new basis for the machine of $5,000. There is no difference so there is no taxable gain.
BEC
The Weasley Company takes 77 days on the average to sell its inventory. It takes 43 days on the average to pay for that inventory. It takes 52 days on the average to collect the money from a sale. For the Weasley Company, what is the cash conversion cycle?
A. 68 Days
B. 86 Days
C. 129 Days
D. 172 Days
Answer is B
The cash conversion cycle is the number of days that it takes a company to buy inventory and pay for it and then sell it and collect the money. Therefore, it is the time that it takes to sell inventory less the time it takes to pay for the inventory plus the time it takes to collect the resulting account receivable. Here, that would be 77 days less 43 days plus 52 days or 86 days.
August is ready to start – make it a great month. Make it the month that you study for and pass the next part of the CPA Exam.
Lesson 100—In this lesson--Some Survey Results, New Points to Pass Launch, Motivation, Study Aids, 4 New Practice Questions
From: Joe
SURVEY RESULTS
THANKS to everyone who took a minute to answer our CPAreviewforFREE survey. We’ll be commenting on additional results in future newsletters. Here’s one thing we discovered immediately:
A 94% approval rating. 76% of the respondents said that the quality of our content was better or the same than the other review programs they had used while another 18 percent said that we were the only review program they had used. That is a pretty impressive statistic.
One of the comments we received from Question 8 of the survey: “I have no suggestion but I will say your questions helped me pass all 4 parts on the first try. I have recommended your site to many people. You have done an excellent job.”
Gosh, that is great to hear.
POINTS TO PASS LAUNCH
We have been having great success with our new Points to Pass product designed specifically for FAR. You still have 622 free FAR questions and answers available for use at any time at www.CPAreviewforFREE.com. However, I personally selected 250 of the most important of those FAR questions. We then built the Points to Pass software program that would constantly change those 250 questions and make them 2,500 questions or even 2,500,000 questions. Computers do marvelous things. Here’s the great part: You can work those especially important questions as many times as you like until you can do them in your sleep.
You can take each question and work it over and over with different numbers and different variables until you know the process backwards and forwards.
Or, you can go to any FAR category (Financial Statement Structure of Not-for-Profit Organizations as just one example) and keep working questions in that category for hours and days and even weeks. The computer program will keep changing the numbers and other variables of the questions I selected and then feed each new question to you until you have the whole category down perfectly.
Countless questions by individual question.
Countless questions by individual category.
I have always argued that the very very very best way to pass the CPA Exam is to work questions and read answers. Everything else does help but working questions and reading answers is the best. Do that one thing long enough and you’ll pass. However, UNTIL NOW, there has not been a way to have enough good questions available to work. People run out of questions pretty quickly in every program. But Points to Pass solves that problem by providing an infinite number of variations to the 250 most important questions in FAR.
And it is only one dollar per day. Yep, $29.99 per month. For an infinite number of FAR questions.
WORDS TO STUDY BY
I was talking with a friend of mine the other day and he mentioned the seminal work by Booker T. Washington “Up From Slavery” which was his autobiography, published 110 years ago. My friend had read it recently and mentioned one line that had made a real difference to him: "I have learned that success is to be measured not so much by the position that one has reached in life as by the obstacles which he has overcome while trying to succeed."
We are halfway through the July-August testing window for the CPA Exam. I realize that a lot of people who read these email lessons are gearing up to take part of the exam before the end of August.
It can be a tense time.
Many of you are worrying about passing or failing. Worry can become a constant mental distraction. As I have said often in these emails, I think your worry is misplaced. If it were me, I wouldn’t allow the words “pass” or “fail” into my vocabulary. I would worry, but only about one specific thing: adding points. How can you add a point or two today? Any other question or any other goal is probably unimportant. That should be the first thing you think about when you wake up in the morning and the last thing you evaluate when you go to sleep at night.
However, my friend’s comment from “Up From Slavery” made me start thinking about the obstacles we all face when pushing to achieve success. What obstacles do you face in your quest to pass the CPA Exam? And, what can you do to overcome those obstacles?
Maybe it is not the CPA Exam that is the problem. Maybe it is the obstacles you face each day. Maybe you let them stop you. Maybe you let them keep you from success.
Here are a couple obstacles that are pretty common in CPA Review.
--“By the time I finish all my work, I’m too tired to study.”
If possible, study first and then do your other work when you begin to get tired. Sweeping the floor can be done when you are half asleep but studying can’t. Unloading the dishwasher can be done without being too alert but studying can’t. Washing out the bath tub doesn’t take many brain cells but studying does.
--“There are just not enough hours in the day for me to do everything and get in my study time.”
Take a moment each day to evaluate what you really “must do.” People often structure their lives to stay incredibly busy. Then, when they try to add something important like the CPA Exam, there just doesn’t appear to be any available time. Perhaps some of those things that you’ve added to your life can be delayed a bit until the exam is passed. Do you have to water your plants every day or can you make it every third day? Do you have to dust your furniture quite so often? Do you have to go to the gym every single day? Can you grocery shop once a week rather than twice? When you are studying for the CPA Exam, it is not a bad idea – before you do anything other than study – to ask yourself “can this task be delayed for a day?” Yeah, there are things you really must do but not everything you do each day is a “must do.”
Think about your obstacles – those things in your life that keep you from putting in the time and effort needed to pass the CPA Exam. Then, figure out how to work your way around those obstacles. You can do it!! That is the mark of success.
STUDY AIDS
When you are working questions on www.CPAreviewforFREE.com, keep a list of all the questions you miss. Keep that list in two columns. One column is for all questions that you miss because there was some part of the question that you didn’t know. The other column is for all questions that you miss because you were careless. You read a word wrong or missed a computation or you started working before you read the entire question.
It is especially important that you train yourself to keep the “careless list” at close to zero. Over time, as you study and practice, the “don’t know list” will go down automatically. However, the “careless list” is based entirely on your ability to stay focused and pay attention. You want to train your mind and your eyes to read all of the questions and pick out the important data and put them together. If you allow yourself to be sloppy while you study, that habit will carry over into the actual exam. So, stop being careless.
Don’t let yourself pick up bad habits. Don’t let yourself get used to missing questions because you are being careless. That is an awful habit. When it comes to that one attribute of the CPA Exam, don’t settle for 75. Shoot for 100 or, in other words, as you study work to have no questions at all missed because of carelessness.
PRACTICE TIME
Let’s see if we can add four points to your scores.
FAR
The Potter Corporation has been in business for four years. The completed contract method has been used for all of those years to recognize revenue on construction projects. At the end of the fourth year, company officials decide to change to the percentage of completion method. That method would have increased income in the first three years by $80,000 and in Year Four by $30,000. How is this change in accounting principle reported?
A. Retroactively – the reported income for the first three years is increased by $80,000.
B. Currently – only the $30,000 amount for the current year is changed.
C. Cumulatively – the entire $110,000 income effect is recognized in the current year.
D. In the future – no changes are made until next year
Answer is A
This change is a change in an accounting principle. Most changes in accounting principle (such as this one) are handled retroactively. The previously reported numbers are changed to align them with the new principle. A change in an accounting estimation is different. It is handled currently and then into the future.
Auditing
The Malfoy Company makes a huge purchase of inventory near the end of Year Two that is shipped to the company on December 30, Year Two. It is sent FOB shipping point. However, no record is made of this inventory until it is received on January 9, Year Three. In looking at the company’s Year Two financial statements, which of the following is most likely to alert the auditor that a recording error has occurred?
A. The Year Two current ratio is much higher than the Year One current ratio
B. The Year Two gross profit is much lower than the Year One gross profit
C. The Year Two inventory turnover is much higher than the Year One inventory turnover
D. The Year Two working capital is much lower than the Year One working capital
Answer is C
Nothing has been recorded in Year Two even though the goods (and the related debt) belong to Malfoy because of the FOB point. The goods were not received in Year Two and, therefore, could not have been sold. Cost of goods sold was not affected by the purchase and, thus, the gross profit is correctly stated. There are only two mistakes. Inventory is too low and accounts payable is also too low by the same amount. Those mistakes offset so that both working capital and the current ratio are also correctly reported. However, inventory turnover is cost of goods sold divided by the average inventory for the period. If inventory was too low at the end of Year Two, then the average inventory will also be too low. Therefore, since cost of goods sold is correctly stated, the inventory turnover will be too high.
Regulation
Owners of the Granger Partnership have decided to liquidate and go out of business. Hermione is one of the partners who holds a partnership interest of $5,000. The only thing she receives from the liquidation is a machine with a book value of $7,000 but a fair value of $7,600. Hermione held a 20 percent ownership in the partnership. What gain does Hermione recognize for tax purposes on the receipt of this liquidation distribution?
A. Zero
B. $1,520
C. $2,000
D. $2,600
Answer is A
Normally, in a partnership liquidation where the partner only receives nonmonetary assets, the partner picks up the new property at the basis of the old partnership so that no gain is recognized. Therefore, Hermione will record the machine on her tax records as having a basis of $5,000. The old partnership basis of $5,000 goes away and is replaced by a new basis for the machine of $5,000. There is no difference so there is no taxable gain.
BEC
The Weasley Company takes 77 days on the average to sell its inventory. It takes 43 days on the average to pay for that inventory. It takes 52 days on the average to collect the money from a sale. For the Weasley Company, what is the cash conversion cycle?
A. 68 Days
B. 86 Days
C. 129 Days
D. 172 Days
Answer is B
The cash conversion cycle is the number of days that it takes a company to buy inventory and pay for it and then sell it and collect the money. Therefore, it is the time that it takes to sell inventory less the time it takes to pay for the inventory plus the time it takes to collect the resulting account receivable. Here, that would be 77 days less 43 days plus 52 days or 86 days.
August is ready to start – make it a great month. Make it the month that you study for and pass the next part of the CPA Exam.
Friday, July 8, 2011
New Points to Pass Unlimited FAR Question Bank
Try us FIRST before you spend your hard-earned money.
July 8, 2011
CPA Review for FREE
www.CPAreviewforFREE.com
Over 2,200 FREE CPA Review Questions and Answers Available for YOU (for FREE)
157 Weeks of Operation and 25,375,351 Page Views (an average of over 160,000 page views per week for three solid years)
Lesson 99
From: Joe
(1) – We crossed over 25 million page views recently. Because the average person typically looks at about 22 pages on our site with each visit, that means that www.CPAreviewforFREE.com has been used over one million times in three years by future CPAs gaining the knowledge they need to pass. Can you imagine, 1,000,000 visits by accountants adding points to their score for free? I find that both wonderful and amazing. People from around the world get to work with the same database so that they can all pass the exam and get on with their careers (and not have to pay an arm and a leg).
(2) – For those of you taking FAR in July and August, we are introducing our newest product: Points to Pass. It is set up so that you can practice each topic in FAR literally an infinite number of times. We all know that practice is the way to pass—this is the ultimate tool for practicing.
Are you missing too questions in a particular topic such as inventory, consolidations, or leases? Points to Pass doesn’t provide you with just 10 or 20 additional questions but an UNLIMITED SUPPLY OF QUESTIONS FOR EACH TOPIC IN FAR. You can keep working questions in every topic until you have them completely under control.
For example, we have 23 questions currently about inventory in our database. Let’s say you are struggling with that topic and want to keep practicing after you finish those 23. Well, if you have Points to Pass, you can get more and more and more Inventory questions for as long as you want.
Here’s how it works. We have taken each of the FAR topics and designated about half of those questions as especially important. We have then created a computer program that will change one or more of the essential variables in each of those questions so that you can work them again but with different numbers. So, the 23 inventory questions can become 50 or 100 or 1,000. Just keep working until you are comfortable with that topic and then move to the next one and do it again.
To start practicing with Points to Pass, log into your account at www.CPAreviewforFREE.com and click on Manage Your Purchases>New Subscriptions and select Points to Pass for a 1 month package for only $29.99 or 3 months for only $89.97.
If you have a question about Points to Pass, send an email to info@cpareviewforfree.com
(3) – Always love to hear from you folks who are taking (or have taken) the CPA Exam!!!
FROM BR: “I passed!!! I passed 3 parts (BEC, AUD, and REG) using only your software, simulations, and subscription notes.... Thank you so much for providing this site; it has been a life saver!!!! Thank you so much.”
FROM SD: “I just wanted to say ‘THANK YOU’ for your dedication and hard work in providing a truly free CPA review service. There were many days that my mind was exhausted from studying and I would want to ‘rest’ it but I would get an email from you and it would perk me up to try your practice questions. Sometimes our brains need a ‘re-boot’ and your emails always did the trick for me. I passed my first CPA exam on October 8, 2010 & my final part on May 23, 2011 and all on the first try. I truly believe in your ‘get a point every day’ theory and feel like it helped me push through some very tough material.”
FROM KM: “Just wanted to thank you for the pointers you gave me. I got the Reg part with an 80 after going through your subscription material. Unfortunately my Auditing had expired, but am very confident of getting it back on July 10 when I retake it.”
FROM VT: “I just got my REG score back today. I passed with a 75. That was my first attempt at REG so I am happy that I passed.... Thank you for your website. I used your website as 50% of my study material and the other is a book I bought at Borders. I am attempting to pass without having to spend a lot of money. We will see how that goes by the end of September.”
FROM RJ: “After receiving scores of 60, 60, 72 and then 65 I found out yesterday that I received a score of 88 on the Audit and Attestation part of the CPA exam! I stared at the computer screen for about a minute before the score actually registered in my mind and realized that I passed!!! It's really great to see what a passing score looks like! … Now it's on to adding points in BEC! Every time I sit down to study I remember what you always say ‘add points,’ ‘add points,’ ‘add points.’
FROM TM: “I have cleared all 4 papers at first attempt. I used your free material as well as bought BEC and Reg subscriptions. They were very useful. Thanks for your help.”
FROM CD: “I'm loving the essential material on CPAReviewForFree. I'm telling everyone I know who is studying for the exam to use that instead of the other guys. Thanks.”
(4) – And, now for the legal stuff. You received this email because you have signed up for it. We love having you. We love hearing from you (see above). We love being helpful. I’ve been writing these email lessons for well over a decade and I’m sure I can go on for another decade or two, maybe even another millennium. However, you absolutely do have the legal right to unsubscribe whenever you wish. So, on any email lesson, if you scroll to the bottom, you’ll find a link that is labeled “Unsubscribe.” If you need to go, we understand. But, we do hope you’ll tell anyone and everyone about www.CPAreviewforFREE.com and its attempt to create world harmony through the universal passing of the CPA Exam.
(5) – I really like to spend each Fourth of July in Yorktown, Williamsburg, and Jamestown, Virginia because so much of our country’s history took place in those 10-15 miles. You can see where the British surrendered at the end of the Revolution. You can see where Thomas Jefferson went to school. You can see where the early settlers risked their lives to start the Jamestown Colony. Yeah, it is my favorite place to spend Independence Day.
Driving home on the 4th, I was listening to some music on the radio and a group sang a song that just seemed to fit the mood of that trip: “No one remembers what you didn’t do.” Those people at Yorktown, Williamsburg, and Jamestown are remembered because of what they managed to accomplish.
Okay, passing the CPA Exam is not on the same planet as winning the Revolutionary War or founding a colony in a new world. I do realize that. But the things that count in this life are the things that you accomplish. It is not easy, I fully understand. I passed the CPA Exam myself – I know how hard it is to do all that work. However, nothing was ever accomplished by not trying. Nothing good comes from giving up. Life is about doing.
I am a firm believer that everyone can pass the CPA Exam. Yes, you have to put in the time. You have to work enough questions. You have to read enough answers. You have to take enough notes. It is not easy. That’s what makes it worth doing.
No one is ever going to remember what you don’t do.
Life is meant to be lived by doing. Do the work and pass that exam.
You’ll always be so glad you put in that work.
(6) – I posted part of the following message on our Facebook page yesterday – here’s the entire message.
Many, many people reading these lessons will be taking one or more parts of the CPA Exam during the roughly 8 weeks that remain until the end of August. Sometime in the next 8 weeks, an awful lot of you will walk into a testing center somewhere in this world and take a section of the CPA Exam. Whether you pass or fail that exam depends very much on how well you use these last days and weeks. The points you add at the end are the most important because that is the stuff you’ll remember the best.
It is easy to get tired and discouraged and find reasons not to study, especially here in the summer when the weather can be so beautiful. We are all human; it is very easy to find reasons NOT to do the work.
It is a much bigger challenge to find reasons each day TO study. Why should YOU study today? Make it a habit every day to find one good reason for you to do what has to be done:
I want to add a point today. I want to do the work to add a point today. Why is that?
I don't ever want to ever take this exam again.
I want my parents, my spouse, my friends, my kids to be proud of me.
I want to show my boss what I know.
I want my resume to say "CPA."
I want to get that promotion.
I know I can do it so I might as well get it done.
I want to feel good about myself.
I want that “I did it” feeling when I see those scores.
In these last 8 weeks, it is very easy to get into a "I dread study" routine. Occasionally, I hear from people who tell me: "I'm going to study today but I am going to hate every second of it." Trust me, that makes it 10 times more difficult to put in the time. It is just hard to be efficient at preparation when you only have negative reasons to study.
Don't approach your studies as a negative - that's one of the primary problems with our school system; learning is too often viewed as a negative by the students. Find a good positive reason to study today:
I want to show my spouse (or my girl friend or boy friend) that I can make 75.
I want to prove to my teacher in college that I was smarter than he thought.
I want to get a new job and this will help my search.
I'll get a raise or a bonus when I pass.
I want to watch television again or go to the movies.
I want to be able to play with my kids more next fall.
I want to prove to the world that I can do it.
If you look, there are many many good reasons to study today.
Come at this exam in an aggressive, positive manner. It should not be a torture to be dreaded but a challenge to be conquered. Study is not a punishment; study - just like exercise - will make you better and, thus, better able to conquer the challenge you face.
(7) – Ah, time for a bit of practice – take out a pencil and piece of paper and see how many of these you can get correct.
FAR
A nongovernmental not-for-profit organization (Charity A) receives a gift of $50,000 that must be conveyed to another, separate not-for-profit organization. Which of the following statements is true?
A – Charity A will record contribution revenue of $50,000 in all cases.
B – Charity A will record contribution revenue of $50,000 but it must be labeled as temporarily restricted.
C – Charity A will record contribution revenue of $50,000 but only if it has variance powers to change the beneficiary.
D – Charity A cannot record contribution revenue but must record a liability of $50,000 to the other charity.
Answer is C
Normally, when a not-for-profit organization receives a gift that must be conveyed to another charity, it is merely serving to convey the money and records it as a liability (answer D). However, if the initial charity is giving variance powers so that it does have the ability to change beneficiary, then it has genuine control over the money. Under that situation, Charity A records the gift as contribution revenue and not as a liability.
Auditing & Attestation
A CPA is performing an independent audit of the Longston Corporation. The CPA is currently doing a test of the controls surrounding the recording of accounts receivable. Shirley Jones is the internal auditor for Longston and has offered to help in performing these tests of controls. Which of the following is true?
A – The CPA cannot allow the internal auditor to provide any direct assistance in the tests of controls.
B – The CPA should not have let the internal auditor know what testing was being considered.
C – The CPA can allow the internal auditor to provide direct assistance in the tests of these controls.
D – The CPA can allow the company accountant to be of direct assistance but not the internal auditor.
Answer is C.
The CPA may receive assistance from the internal auditor in providing tests of controls (and also substantive testing procedures) with proper oversight. The CPA will probably be interested in making sure the internal auditor is properly competent by verifying her education, certification, and work experience and by examining her previous work for this client. The CPA will also need to ensure that her work is properly reviewed. However, if all of that seems appropriate, the CPA can get direct assistance from the internal auditor in doing tests of controls.
Regulation
Ligano serves as an agent for Boswell. Boswell has only given Ligano the authority to carry out 4 specific actions on his behalf. However, Ligano carries out an action in Boswell’s name that is not one of those four. The agent (Ligano) lacked authority to legally bind the principal (Boswell). Boswell decides to affirm the act and do the specified work despite Ligano’s lack of authority. What action has Boswell taken?
A – Reimbursement by judgment
B – Ratification
C – Reference by priority
D – Reference by remainder
Answer is B
Whenever an agent (such as an employee) takes an action without proper authority, once informed, the principal must either ratify it (agree to be bound to the agreement) or repudiate it (inform the other party that the principal will not be bound by the agreement because the agent did not have proper authority).
BEC
The Swinton Company wants to open a new retail outlet in Manchester. Swinton officials go to the local bank and borrow $500,000 to start operations and agree to pay an annual interest rate of 8 percent. As part of the agreement, Swinton must maintain a cash balance in the local bank of $40,000. What is the effective cost to Swinton of borrowing this money for one year? (rounded)
A – 8.2 percent
B – 8.5 percent
C – 8.7 percent
D – 8.9 percent
Answer is C
Swinton only gets $460,000 from the bank to use because $40,000 must stay with the bank. The annual cost of the loan is an interest charge of $40,000 ($500,000 times 8 percent). If Swinton pays $40,000 per year to get $460,000, the annual cost of the loan is $40,000/$460,000 or 8.7 percent.
You’ve got roughly 8 weeks left in the July-August window. Let’s make the very best of that time to add points and get 75 and pass.
Joe Hoyle
Co-Founder and President
CPA Review for FREE
www.CPAreviewforFREE.com
July 8, 2011
CPA Review for FREE
www.CPAreviewforFREE.com
Over 2,200 FREE CPA Review Questions and Answers Available for YOU (for FREE)
157 Weeks of Operation and 25,375,351 Page Views (an average of over 160,000 page views per week for three solid years)
Lesson 99
From: Joe
(1) – We crossed over 25 million page views recently. Because the average person typically looks at about 22 pages on our site with each visit, that means that www.CPAreviewforFREE.com has been used over one million times in three years by future CPAs gaining the knowledge they need to pass. Can you imagine, 1,000,000 visits by accountants adding points to their score for free? I find that both wonderful and amazing. People from around the world get to work with the same database so that they can all pass the exam and get on with their careers (and not have to pay an arm and a leg).
(2) – For those of you taking FAR in July and August, we are introducing our newest product: Points to Pass. It is set up so that you can practice each topic in FAR literally an infinite number of times. We all know that practice is the way to pass—this is the ultimate tool for practicing.
Are you missing too questions in a particular topic such as inventory, consolidations, or leases? Points to Pass doesn’t provide you with just 10 or 20 additional questions but an UNLIMITED SUPPLY OF QUESTIONS FOR EACH TOPIC IN FAR. You can keep working questions in every topic until you have them completely under control.
For example, we have 23 questions currently about inventory in our database. Let’s say you are struggling with that topic and want to keep practicing after you finish those 23. Well, if you have Points to Pass, you can get more and more and more Inventory questions for as long as you want.
Here’s how it works. We have taken each of the FAR topics and designated about half of those questions as especially important. We have then created a computer program that will change one or more of the essential variables in each of those questions so that you can work them again but with different numbers. So, the 23 inventory questions can become 50 or 100 or 1,000. Just keep working until you are comfortable with that topic and then move to the next one and do it again.
To start practicing with Points to Pass, log into your account at www.CPAreviewforFREE.com and click on Manage Your Purchases>New Subscriptions and select Points to Pass for a 1 month package for only $29.99 or 3 months for only $89.97.
If you have a question about Points to Pass, send an email to info@cpareviewforfree.com
(3) – Always love to hear from you folks who are taking (or have taken) the CPA Exam!!!
FROM BR: “I passed!!! I passed 3 parts (BEC, AUD, and REG) using only your software, simulations, and subscription notes.... Thank you so much for providing this site; it has been a life saver!!!! Thank you so much.”
FROM SD: “I just wanted to say ‘THANK YOU’ for your dedication and hard work in providing a truly free CPA review service. There were many days that my mind was exhausted from studying and I would want to ‘rest’ it but I would get an email from you and it would perk me up to try your practice questions. Sometimes our brains need a ‘re-boot’ and your emails always did the trick for me. I passed my first CPA exam on October 8, 2010 & my final part on May 23, 2011 and all on the first try. I truly believe in your ‘get a point every day’ theory and feel like it helped me push through some very tough material.”
FROM KM: “Just wanted to thank you for the pointers you gave me. I got the Reg part with an 80 after going through your subscription material. Unfortunately my Auditing had expired, but am very confident of getting it back on July 10 when I retake it.”
FROM VT: “I just got my REG score back today. I passed with a 75. That was my first attempt at REG so I am happy that I passed.... Thank you for your website. I used your website as 50% of my study material and the other is a book I bought at Borders. I am attempting to pass without having to spend a lot of money. We will see how that goes by the end of September.”
FROM RJ: “After receiving scores of 60, 60, 72 and then 65 I found out yesterday that I received a score of 88 on the Audit and Attestation part of the CPA exam! I stared at the computer screen for about a minute before the score actually registered in my mind and realized that I passed!!! It's really great to see what a passing score looks like! … Now it's on to adding points in BEC! Every time I sit down to study I remember what you always say ‘add points,’ ‘add points,’ ‘add points.’
FROM TM: “I have cleared all 4 papers at first attempt. I used your free material as well as bought BEC and Reg subscriptions. They were very useful. Thanks for your help.”
FROM CD: “I'm loving the essential material on CPAReviewForFree. I'm telling everyone I know who is studying for the exam to use that instead of the other guys. Thanks.”
(4) – And, now for the legal stuff. You received this email because you have signed up for it. We love having you. We love hearing from you (see above). We love being helpful. I’ve been writing these email lessons for well over a decade and I’m sure I can go on for another decade or two, maybe even another millennium. However, you absolutely do have the legal right to unsubscribe whenever you wish. So, on any email lesson, if you scroll to the bottom, you’ll find a link that is labeled “Unsubscribe.” If you need to go, we understand. But, we do hope you’ll tell anyone and everyone about www.CPAreviewforFREE.com and its attempt to create world harmony through the universal passing of the CPA Exam.
(5) – I really like to spend each Fourth of July in Yorktown, Williamsburg, and Jamestown, Virginia because so much of our country’s history took place in those 10-15 miles. You can see where the British surrendered at the end of the Revolution. You can see where Thomas Jefferson went to school. You can see where the early settlers risked their lives to start the Jamestown Colony. Yeah, it is my favorite place to spend Independence Day.
Driving home on the 4th, I was listening to some music on the radio and a group sang a song that just seemed to fit the mood of that trip: “No one remembers what you didn’t do.” Those people at Yorktown, Williamsburg, and Jamestown are remembered because of what they managed to accomplish.
Okay, passing the CPA Exam is not on the same planet as winning the Revolutionary War or founding a colony in a new world. I do realize that. But the things that count in this life are the things that you accomplish. It is not easy, I fully understand. I passed the CPA Exam myself – I know how hard it is to do all that work. However, nothing was ever accomplished by not trying. Nothing good comes from giving up. Life is about doing.
I am a firm believer that everyone can pass the CPA Exam. Yes, you have to put in the time. You have to work enough questions. You have to read enough answers. You have to take enough notes. It is not easy. That’s what makes it worth doing.
No one is ever going to remember what you don’t do.
Life is meant to be lived by doing. Do the work and pass that exam.
You’ll always be so glad you put in that work.
(6) – I posted part of the following message on our Facebook page yesterday – here’s the entire message.
Many, many people reading these lessons will be taking one or more parts of the CPA Exam during the roughly 8 weeks that remain until the end of August. Sometime in the next 8 weeks, an awful lot of you will walk into a testing center somewhere in this world and take a section of the CPA Exam. Whether you pass or fail that exam depends very much on how well you use these last days and weeks. The points you add at the end are the most important because that is the stuff you’ll remember the best.
It is easy to get tired and discouraged and find reasons not to study, especially here in the summer when the weather can be so beautiful. We are all human; it is very easy to find reasons NOT to do the work.
It is a much bigger challenge to find reasons each day TO study. Why should YOU study today? Make it a habit every day to find one good reason for you to do what has to be done:
I want to add a point today. I want to do the work to add a point today. Why is that?
I don't ever want to ever take this exam again.
I want my parents, my spouse, my friends, my kids to be proud of me.
I want to show my boss what I know.
I want my resume to say "CPA."
I want to get that promotion.
I know I can do it so I might as well get it done.
I want to feel good about myself.
I want that “I did it” feeling when I see those scores.
In these last 8 weeks, it is very easy to get into a "I dread study" routine. Occasionally, I hear from people who tell me: "I'm going to study today but I am going to hate every second of it." Trust me, that makes it 10 times more difficult to put in the time. It is just hard to be efficient at preparation when you only have negative reasons to study.
Don't approach your studies as a negative - that's one of the primary problems with our school system; learning is too often viewed as a negative by the students. Find a good positive reason to study today:
I want to show my spouse (or my girl friend or boy friend) that I can make 75.
I want to prove to my teacher in college that I was smarter than he thought.
I want to get a new job and this will help my search.
I'll get a raise or a bonus when I pass.
I want to watch television again or go to the movies.
I want to be able to play with my kids more next fall.
I want to prove to the world that I can do it.
If you look, there are many many good reasons to study today.
Come at this exam in an aggressive, positive manner. It should not be a torture to be dreaded but a challenge to be conquered. Study is not a punishment; study - just like exercise - will make you better and, thus, better able to conquer the challenge you face.
(7) – Ah, time for a bit of practice – take out a pencil and piece of paper and see how many of these you can get correct.
FAR
A nongovernmental not-for-profit organization (Charity A) receives a gift of $50,000 that must be conveyed to another, separate not-for-profit organization. Which of the following statements is true?
A – Charity A will record contribution revenue of $50,000 in all cases.
B – Charity A will record contribution revenue of $50,000 but it must be labeled as temporarily restricted.
C – Charity A will record contribution revenue of $50,000 but only if it has variance powers to change the beneficiary.
D – Charity A cannot record contribution revenue but must record a liability of $50,000 to the other charity.
Answer is C
Normally, when a not-for-profit organization receives a gift that must be conveyed to another charity, it is merely serving to convey the money and records it as a liability (answer D). However, if the initial charity is giving variance powers so that it does have the ability to change beneficiary, then it has genuine control over the money. Under that situation, Charity A records the gift as contribution revenue and not as a liability.
Auditing & Attestation
A CPA is performing an independent audit of the Longston Corporation. The CPA is currently doing a test of the controls surrounding the recording of accounts receivable. Shirley Jones is the internal auditor for Longston and has offered to help in performing these tests of controls. Which of the following is true?
A – The CPA cannot allow the internal auditor to provide any direct assistance in the tests of controls.
B – The CPA should not have let the internal auditor know what testing was being considered.
C – The CPA can allow the internal auditor to provide direct assistance in the tests of these controls.
D – The CPA can allow the company accountant to be of direct assistance but not the internal auditor.
Answer is C.
The CPA may receive assistance from the internal auditor in providing tests of controls (and also substantive testing procedures) with proper oversight. The CPA will probably be interested in making sure the internal auditor is properly competent by verifying her education, certification, and work experience and by examining her previous work for this client. The CPA will also need to ensure that her work is properly reviewed. However, if all of that seems appropriate, the CPA can get direct assistance from the internal auditor in doing tests of controls.
Regulation
Ligano serves as an agent for Boswell. Boswell has only given Ligano the authority to carry out 4 specific actions on his behalf. However, Ligano carries out an action in Boswell’s name that is not one of those four. The agent (Ligano) lacked authority to legally bind the principal (Boswell). Boswell decides to affirm the act and do the specified work despite Ligano’s lack of authority. What action has Boswell taken?
A – Reimbursement by judgment
B – Ratification
C – Reference by priority
D – Reference by remainder
Answer is B
Whenever an agent (such as an employee) takes an action without proper authority, once informed, the principal must either ratify it (agree to be bound to the agreement) or repudiate it (inform the other party that the principal will not be bound by the agreement because the agent did not have proper authority).
BEC
The Swinton Company wants to open a new retail outlet in Manchester. Swinton officials go to the local bank and borrow $500,000 to start operations and agree to pay an annual interest rate of 8 percent. As part of the agreement, Swinton must maintain a cash balance in the local bank of $40,000. What is the effective cost to Swinton of borrowing this money for one year? (rounded)
A – 8.2 percent
B – 8.5 percent
C – 8.7 percent
D – 8.9 percent
Answer is C
Swinton only gets $460,000 from the bank to use because $40,000 must stay with the bank. The annual cost of the loan is an interest charge of $40,000 ($500,000 times 8 percent). If Swinton pays $40,000 per year to get $460,000, the annual cost of the loan is $40,000/$460,000 or 8.7 percent.
You’ve got roughly 8 weeks left in the July-August window. Let’s make the very best of that time to add points and get 75 and pass.
Joe Hoyle
Co-Founder and President
CPA Review for FREE
www.CPAreviewforFREE.com
Tuesday, June 14, 2011
New Practice Questions Added--Success Requires Courage
Try us FIRST before you spend your hard-earned money.
June 14, 2011
CPA Review for FREE
www.CPAreviewforFREE.com
Over 2,200 FREE CPA Review Questions and Answers Available for YOU
154 Weeks of Operation and 24,755,208 Page Views (an average of over 160,000 page views per week for approximately three solid years)
Lesson 98
From: Joe
(1) – Do you ever wonder whether all those other review programs ever pay any attention to CPA Review for FREE (www.CPAreviewforFREE.com)? If you ask them, they will tell you that they pay no attention to us at all.
Well, here’s some information you might find interesting.
---We are able to trace where the traffic to our website comes from. Last month, we had 269 visits from one of the major review courses—IN ONE MONTH! We don’t know what they were looking for but they sure were interested in our website.
---Another major review course now boasts on its website “Experience the best in CPA Exam Review for FREE. Just enter….” I even wrote that review program to suggest that they needed to hire someone who could come up with some new ideas of their own. At the very least, they could have made it sound different.
---Another CPA review website just recently started bragging that they are going to start giving away a “FREE study planner.” Oh my goodness, where did that idea come from, I wonder? What a coincidence.
Okay, here is my point – these other review programs are asking for thousands of your dollars. They have one goal: your money in their pockets And, yet, they can’t even come up with their own ideas.
--We are the innovative ones.
--We are the ones who have the ideas.
--We are the ones who care about you enough to do this week in and week out.
--All those other review programs have is just fancy marketing.
--Don’t be fooled.
--When’s the last time they had a creative educational idea that they didn’t get from us?
So, shouldn’t you go directly to the source?
Shouldn’t you trust the people who actually come up with the ideas and not the ones who follow 8 steps behind?
--Our 2,200 questions and answers are free – always have been, always will be.
--Our subscription service has hundreds of pages of content about each topic you need to know.
--Our subscription service has examples of ten task-based simulations per part and numerous written communication questions for BEC.
--Our subscription service provides a study guide to show you how to combine our free questions and our subscription service.
--Our subscription service cost $15 per month per part. Yeah – 50 cents per day.
What do we ask? Give us $15 and try one part for one month. At the end of that month, give us another $15 or give the other guys $2,500. That is a very reasonable approach. Worst case scenario – you lose $15. Best case scenario – you save thousands.
Why not go with the people who have all the real ideas and not the ones who obviously don’t?
(2) – In my last email, I talked all about our latest (and potentially greatest) addition to CPA Review: Points to Pass. Questions that you can work over and over until you can get them right every time. We have had a lot of questions about how soon that will be available. We plan to roll out the FAR version in the next week or two. Stay tuned.
(3) – If you are a college student, I want you to know that we will have an exhibit table at the Beta Alpha Psi convention in Denver this August. If you are a member of BAP and will be there, please stop by the booth and say hello. We have the niftiest gifts to hand out. I stole five of them for myself.
(4) – We posted the following note on our Facebook page a couple of days ago. This is exactly what we want to hear from each of you. This is what victory sounds like. This is what success feels like. This is what we want for you.
“I just wanted you to know that I used CPAreviewforfree.com and have just been issued my CPA license from the North Carolina Board of Accountancy. Thanks for all you have done to help me and so many others prepare for this exam. RB, CPA”
Our wants are simple – we want to see you get four grades of 75 so you can move on with your life and your career (with your money still in your pocket).
(5) – They played a great basketball game on Sunday night. It was a game that went back and forth. One team got ahead and then the other team caught up and got ahead. It proved to be the final game of the season because Dallas won and took the championship.
Those guys had been practicing and playing for at least 9-10 months day in and day out.
--Do you think they ever got tired along the way?
--Do you think they ever got discouraged?
--Do you think they ever wanted to slack off?
--Do you think they ever wanted to give up?
Of course they did – it is a long season that requires an incredible amount of work—day after day, week after week. But, they won the championship because they stuck with it. Even in the dark days, they kept pushing themselves on.
Giving up is easy. Slacking off is easy.
You know how it starts. One day you quit studying early and promise yourself to make up the time tomorrow. But, tomorrow, you study a bit less. Studying less feels good and you start to make excuses. When you don’t want to do something, any excuse will work. You start to give yourself permission to lose.
Sticking with it takes courage. Sticking with it takes heart.
If you ask the Dallas players today how success feels, I guarantee they will tell you it feels absolutely wonderful. They had a dream of being the champions and now they have the trophy. They will always know what being the champion feels like.
Your dream is to pass the CPA Exam.
Your dream is to get your scores and see 75 or more on all four parts.
Your dream is to be able to tell your friends and family that you have passed a very difficult test.
And, like a basketball championship, it is not easy. It is real work. They don’t give you points for smiling. They give you points because you are able to answer questions. And, you become able to do that through long hours of practice where you sit and answer questions and read answers and take notes.
They work in a hot gym for hours and hours. You sit in front of a computer screen and work question after question.
No, success is never easy. Success requires courage and heart.
Everyone wants success but not everyone is willing to do the work that it takes.
Dallas did it.
So can you.
(6) – To unsubscribe from these weekly email lessons, just scroll to the bottom of this screen or any other email lesson and click on “Unsubscribe.” We hope you’ll stay. We like talking with you. We appreciate it when you tell others about us (well, don’t tell those other review courses since they seem to like our ideas too much). We are glad to have you get these emails lessons.
Please stay just as long as you wish.
(7) – Let’s do some practice. More importantly, let’s add some points. My goal is always the same – after you read each of these questions and answers can you get them right the NEXT TIME you see them. If so, you are adding points and that’s the real secret to success on the CPA Exam.
Okay, here’s what I decided to do this week. I wanted to give you a feel for the information available in our subscription service. So, for each part of the exam, I went into our subscription service and picked a general topic (like inventory or contract law). Then, I randomly scrolled down through that topic and stopped. Wherever I landed, I took that material and used it to write the following questions for you. If you are using our subscription service, the answers to each question are readily available
FAR
The Lutz Company is using IFRS to prepare its annual financial statements. Under IFRS, revaluation of fixed assets is permitted but it must be done for an entire class of assets. One class of the company’s fixed assets has gone up in value. Another class of fixed assets has gone down in value. What is the impact of revaluation under IFRS?
A. Decrease in value reduces net income; increase in value increases accumulated other comprehensive income.
B. Decrease in value reduces net income; increase in value increases net income.
C. Decrease in value reduces accumulated other comprehensive income; increase in value increases accumulated other comprehensive income.
D. Decrease in value reduces accumulated other comprehensive income; increase in value increases net income.
Answer is A
Probably because of the conservatism that is inherent in much of financial accounting, if a class of assets goes down in value, IFRS reflects that revaluation as a reduction in net income. However, if a class of assets goes up in value, IFRS reflects that revaluation as an increase in accumulated other comprehensive income (within stockholders’ equity on the balance sheet) rather than in net income.
Auditing and Attestation
In auditing, what is meant by the term “inherent risk?”
A. It is the chance that a reporting entity will go bankrupt regardless of its current financial position.
B. It is the chance that a material misstatement will exist in a financial statement assertion, assuming no re¬lated internal controls are in place.
C. It is the chance that an independent auditor will make a mistake purely because of being a human being.
D. It is the chance that an independent auditor will see a material misstatement but not recognize that it a material misstatement.
Answer is B.
When an audit is started, the independent auditor needs to assess the inherent risk which is the chance that a material misstatement exists in one of the financial statement assertions. Companies with great accounting systems, well-trained employees and transactions that do not contain a lot of risk may have virtually no inherent risk. Material misstatements probably will not occur. Other companies with poorly designed accounting systems or untrained employees or very risky transactions may have an incredible amount of inherent risk. As you can imagine, the work that the independent auditor does to reduce audit risk to an acceptably low level is impacted significantly by the assessed level of inherent risk.
BEC
The Jones Corporation is publicly-held and subject to the rules of the SEC. In the current period, to reduce its registration costs, the company issued unregistered bonds directly to a specific number of accredited investors. This practice is common. What is it called?
A. Undisclosed sale
B. Private placement
C. Accredited sale
D. Approved sale
Answer is B
The SEC has certain rules that permit the private placement of securities. These rules allow the sale of securities with only a limited amount of registration and disclosure information which will save the company money. Such an issuance is referred to as a private placement.
Regulation
The Lambert Company bought a piece of equipment this year on October 9. The company’s tax return is filed on a calendar year basis. MACRS (the Modified Accelerated Cost Recovery ) is used to determine depreciation for income tax purposes. Which of the following is true as to the amount of depreciation that can be recognized in this initial year?
A. Lambert can take no depreciation
B. Lambert should take a full year of depreciation.
C. Lambert can take depreciation for 3/12 of the year.
D. Lambert can take depreciation for 1/2 of the year.
Answer is D.
According to the rules of MACRS, personal property is treated as placed in service or disposed of at the midpoint of the taxable year, resulting in a half-year of depreciation for the year in which the property is placed in service or disposed of by the company.
Hey, it is a beautiful day here in Richmond. I hope it is beautiful wherever you are today.
Work hard
Add points
We really do want you to pass and get on with your lives.
Do me a favor – give someone a hug today and tell them that you are cheering for them. It might make all the difference in the world to that person.
Joe Hoyle
Co-Founder and President
CPA Review for FREE
www.CPAreviewforFREE.com
June 14, 2011
CPA Review for FREE
www.CPAreviewforFREE.com
Over 2,200 FREE CPA Review Questions and Answers Available for YOU
154 Weeks of Operation and 24,755,208 Page Views (an average of over 160,000 page views per week for approximately three solid years)
Lesson 98
From: Joe
(1) – Do you ever wonder whether all those other review programs ever pay any attention to CPA Review for FREE (www.CPAreviewforFREE.com)? If you ask them, they will tell you that they pay no attention to us at all.
Well, here’s some information you might find interesting.
---We are able to trace where the traffic to our website comes from. Last month, we had 269 visits from one of the major review courses—IN ONE MONTH! We don’t know what they were looking for but they sure were interested in our website.
---Another major review course now boasts on its website “Experience the best in CPA Exam Review for FREE. Just enter….” I even wrote that review program to suggest that they needed to hire someone who could come up with some new ideas of their own. At the very least, they could have made it sound different.
---Another CPA review website just recently started bragging that they are going to start giving away a “FREE study planner.” Oh my goodness, where did that idea come from, I wonder? What a coincidence.
Okay, here is my point – these other review programs are asking for thousands of your dollars. They have one goal: your money in their pockets And, yet, they can’t even come up with their own ideas.
--We are the innovative ones.
--We are the ones who have the ideas.
--We are the ones who care about you enough to do this week in and week out.
--All those other review programs have is just fancy marketing.
--Don’t be fooled.
--When’s the last time they had a creative educational idea that they didn’t get from us?
So, shouldn’t you go directly to the source?
Shouldn’t you trust the people who actually come up with the ideas and not the ones who follow 8 steps behind?
--Our 2,200 questions and answers are free – always have been, always will be.
--Our subscription service has hundreds of pages of content about each topic you need to know.
--Our subscription service has examples of ten task-based simulations per part and numerous written communication questions for BEC.
--Our subscription service provides a study guide to show you how to combine our free questions and our subscription service.
--Our subscription service cost $15 per month per part. Yeah – 50 cents per day.
What do we ask? Give us $15 and try one part for one month. At the end of that month, give us another $15 or give the other guys $2,500. That is a very reasonable approach. Worst case scenario – you lose $15. Best case scenario – you save thousands.
Why not go with the people who have all the real ideas and not the ones who obviously don’t?
(2) – In my last email, I talked all about our latest (and potentially greatest) addition to CPA Review: Points to Pass. Questions that you can work over and over until you can get them right every time. We have had a lot of questions about how soon that will be available. We plan to roll out the FAR version in the next week or two. Stay tuned.
(3) – If you are a college student, I want you to know that we will have an exhibit table at the Beta Alpha Psi convention in Denver this August. If you are a member of BAP and will be there, please stop by the booth and say hello. We have the niftiest gifts to hand out. I stole five of them for myself.
(4) – We posted the following note on our Facebook page a couple of days ago. This is exactly what we want to hear from each of you. This is what victory sounds like. This is what success feels like. This is what we want for you.
“I just wanted you to know that I used CPAreviewforfree.com and have just been issued my CPA license from the North Carolina Board of Accountancy. Thanks for all you have done to help me and so many others prepare for this exam. RB, CPA”
Our wants are simple – we want to see you get four grades of 75 so you can move on with your life and your career (with your money still in your pocket).
(5) – They played a great basketball game on Sunday night. It was a game that went back and forth. One team got ahead and then the other team caught up and got ahead. It proved to be the final game of the season because Dallas won and took the championship.
Those guys had been practicing and playing for at least 9-10 months day in and day out.
--Do you think they ever got tired along the way?
--Do you think they ever got discouraged?
--Do you think they ever wanted to slack off?
--Do you think they ever wanted to give up?
Of course they did – it is a long season that requires an incredible amount of work—day after day, week after week. But, they won the championship because they stuck with it. Even in the dark days, they kept pushing themselves on.
Giving up is easy. Slacking off is easy.
You know how it starts. One day you quit studying early and promise yourself to make up the time tomorrow. But, tomorrow, you study a bit less. Studying less feels good and you start to make excuses. When you don’t want to do something, any excuse will work. You start to give yourself permission to lose.
Sticking with it takes courage. Sticking with it takes heart.
If you ask the Dallas players today how success feels, I guarantee they will tell you it feels absolutely wonderful. They had a dream of being the champions and now they have the trophy. They will always know what being the champion feels like.
Your dream is to pass the CPA Exam.
Your dream is to get your scores and see 75 or more on all four parts.
Your dream is to be able to tell your friends and family that you have passed a very difficult test.
And, like a basketball championship, it is not easy. It is real work. They don’t give you points for smiling. They give you points because you are able to answer questions. And, you become able to do that through long hours of practice where you sit and answer questions and read answers and take notes.
They work in a hot gym for hours and hours. You sit in front of a computer screen and work question after question.
No, success is never easy. Success requires courage and heart.
Everyone wants success but not everyone is willing to do the work that it takes.
Dallas did it.
So can you.
(6) – To unsubscribe from these weekly email lessons, just scroll to the bottom of this screen or any other email lesson and click on “Unsubscribe.” We hope you’ll stay. We like talking with you. We appreciate it when you tell others about us (well, don’t tell those other review courses since they seem to like our ideas too much). We are glad to have you get these emails lessons.
Please stay just as long as you wish.
(7) – Let’s do some practice. More importantly, let’s add some points. My goal is always the same – after you read each of these questions and answers can you get them right the NEXT TIME you see them. If so, you are adding points and that’s the real secret to success on the CPA Exam.
Okay, here’s what I decided to do this week. I wanted to give you a feel for the information available in our subscription service. So, for each part of the exam, I went into our subscription service and picked a general topic (like inventory or contract law). Then, I randomly scrolled down through that topic and stopped. Wherever I landed, I took that material and used it to write the following questions for you. If you are using our subscription service, the answers to each question are readily available
FAR
The Lutz Company is using IFRS to prepare its annual financial statements. Under IFRS, revaluation of fixed assets is permitted but it must be done for an entire class of assets. One class of the company’s fixed assets has gone up in value. Another class of fixed assets has gone down in value. What is the impact of revaluation under IFRS?
A. Decrease in value reduces net income; increase in value increases accumulated other comprehensive income.
B. Decrease in value reduces net income; increase in value increases net income.
C. Decrease in value reduces accumulated other comprehensive income; increase in value increases accumulated other comprehensive income.
D. Decrease in value reduces accumulated other comprehensive income; increase in value increases net income.
Answer is A
Probably because of the conservatism that is inherent in much of financial accounting, if a class of assets goes down in value, IFRS reflects that revaluation as a reduction in net income. However, if a class of assets goes up in value, IFRS reflects that revaluation as an increase in accumulated other comprehensive income (within stockholders’ equity on the balance sheet) rather than in net income.
Auditing and Attestation
In auditing, what is meant by the term “inherent risk?”
A. It is the chance that a reporting entity will go bankrupt regardless of its current financial position.
B. It is the chance that a material misstatement will exist in a financial statement assertion, assuming no re¬lated internal controls are in place.
C. It is the chance that an independent auditor will make a mistake purely because of being a human being.
D. It is the chance that an independent auditor will see a material misstatement but not recognize that it a material misstatement.
Answer is B.
When an audit is started, the independent auditor needs to assess the inherent risk which is the chance that a material misstatement exists in one of the financial statement assertions. Companies with great accounting systems, well-trained employees and transactions that do not contain a lot of risk may have virtually no inherent risk. Material misstatements probably will not occur. Other companies with poorly designed accounting systems or untrained employees or very risky transactions may have an incredible amount of inherent risk. As you can imagine, the work that the independent auditor does to reduce audit risk to an acceptably low level is impacted significantly by the assessed level of inherent risk.
BEC
The Jones Corporation is publicly-held and subject to the rules of the SEC. In the current period, to reduce its registration costs, the company issued unregistered bonds directly to a specific number of accredited investors. This practice is common. What is it called?
A. Undisclosed sale
B. Private placement
C. Accredited sale
D. Approved sale
Answer is B
The SEC has certain rules that permit the private placement of securities. These rules allow the sale of securities with only a limited amount of registration and disclosure information which will save the company money. Such an issuance is referred to as a private placement.
Regulation
The Lambert Company bought a piece of equipment this year on October 9. The company’s tax return is filed on a calendar year basis. MACRS (the Modified Accelerated Cost Recovery ) is used to determine depreciation for income tax purposes. Which of the following is true as to the amount of depreciation that can be recognized in this initial year?
A. Lambert can take no depreciation
B. Lambert should take a full year of depreciation.
C. Lambert can take depreciation for 3/12 of the year.
D. Lambert can take depreciation for 1/2 of the year.
Answer is D.
According to the rules of MACRS, personal property is treated as placed in service or disposed of at the midpoint of the taxable year, resulting in a half-year of depreciation for the year in which the property is placed in service or disposed of by the company.
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Joe Hoyle
Co-Founder and President
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