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Don't Just Take Our Word For ItWe always love to get emails from our candidates. Heres one that we received recently (slightly edited).Thank you. I have been working the questions. They are doing the job, because the questions are really annoying me (i.e. forcing me to think) !! This is exactly what I want in preparing for the exam. I also use XXXXX, but find the CPAreviewforFree questions more challenging. I want tougher questions while studying.Love to get the positive words from someone who clearly understands what is needed to pass the CPA Exam.This email reminded me of a recent conversation that I had (at lunch one day at Taco Bell) with a friend of mine who also teaches accounting in college. He was quite mystified and was asking for clarification. Although I didnt take notes, here are the basics of that conversation.My friend: Last week, I went onto the website of several of the major CPA review programs because I wanted to get some questions to use in my class during the fall. All of the questions that I found were terrible. Many of them were over 25 years old. They looked like questions from the Civil War. And a lot of the questions were just poorly written and flawed. I could not have used any of those questions in my class. I really had expected better. Whats going on with these review programs and these poor questions?Me: Well, the CPA Exam became non-disclosed in 1994, about the time that many of the current candidates were born. The review courses dont want to spend the time and money to write new questions so they continue to use a lot of questions that were on the exam before 1994. That way they can say that they use questions that were on the CPA Exam even though it was 25 years ago. Youll occasionally see questions in their materials that were literally on the CPA Exam in the 1970s.My friend: Dont you write your own questions for CPAreviewforFREE?Me: Sure, we have over 2,500 free questions and we have written them all within the last couple of years. I probably wrote 2/3 of them myself. They are fresh. They are up to date. They have good answer explanations. But, remember, I have taught in college for 44 years now so I have an awful lot of experience at writing test questions.My friend: Why dont the other review courses write more of their own questions?Me: Well, you will have to ask them. My bet is that few of their people really have long term experience as classroom teachers who are forced to write test questions over and over for real tests and explain answers to real students. Teaching in college requires you to be able to write hundreds of test questions each year but working in CPA Review does not.My friend: But doesnt the AICPA release test questions each year from the current CPA exam?Me: Certainly, but there has always been a question about the ones that they are willing to release. If you were the examiners, would you release questions that were working well? My guess is that they tend to release questions that are flawed in some way. You and I have taught for a long time. We could actually read some of the questions they release and spot the problem with the questions. Some words are confusing or the question will just be too convoluted. Sometimes the questions are simply too easy and, therefore, dont show who should pass. The examiners track the questions on the exam carefully. They know the ones that have problems. Why realize great questions that are working well?My friend: What is the best thing about writing your own questions?Me: Oh, there are several advantages. You get a more complete coverage. You can look at a topic like accounts receivable and think about the different ways that a question can be asked and then you can write individual questions for each of those parts of the topic. I really like having an example of every possible question. That takes some professional thinking. I also like to write better explanations. Read some of the explanations of the other programs and they are terrible. I have often said that the single most important aspect of CPA Review is the answer to the practice questions. Reading those answers is how people learn to answer the next question correctly. And, you can make the questions hard enough that the candidate gets stronger and stronger. Weak questions produce weak candidates. Strong questions produce strong candidates.My friend: And, your 2,600 questions are available for free?Me: Absolutely free.My friend: And, some candidates still dont use them? I dont understand that.Me: I guess that is the reason that half the people fail each part of the exam.Practice Some Free QuestionsTime for a little practice. Have fun. Read the questions, come up with your best answer, and then read my answer (carefully) at the end.FARIn Year One, a company is found guilty by the government of violating certain environmental regulations and fined $1.4 million. The company has filed an appeal that will be judged in early in Year Three. At the end of Year One, the company believes that it is probable that the company will eventually lose between $100,000 and $500,000. No number within that range is a better estimate than any other. It is also reasonably possible that it will lose as much as $800,000. Near the end of Year Two, the company and the government agree on a $1 million penalty. What loss does the company recognize in Year Two at the time of settlement?A. $200,000B. $500,000C. $700,000D. $900,000AuditingThe CPA firm of Roberts Lynes is currently audited the financial statements of the Amsterdam Corporation. Below are four actions taken by the auditors. Which of these actions is most likely to have provided evidence about the valuation and allocation financial statement assertion in connection with the Amsterdam Corporations Inventory balance?A. Select inventory items found in the companys warehouse and trace them to the final inventory listing.B. Select items on the final inventory listing and make sure the item is physically present in the companys warehouse at the end of the year.C. Examine invoices received from the companys suppliers.D. Examine cancelled checks paid subsequent to the end of the year for inventory purchasesRegulationPaul and Art are equal partners in their partnership. For the current year, the partnership has revenues of $90,000 and ordinary expenses of $50,000. In addition, for the work that he does during the year, Paul receives a guaranteed payment of $24,000 each year. No other cash distributions were paid to the owners. What is the overall impact on Pauls individual income tax return for this year?A. Increase taxable income by $8,000B. Increase taxable income by $20,000C. Increase taxable income by $24,000D. Increase taxable income by $32,000BECA manufacturing company has a current ratio of 3:1. What can be said about the acid-test ratio (sometimes referred to as the quick ratio)?A. The acid-test ratio will be lower.B. The acid-test ratio will be higher.C. The acid-test ratio will be the same.D. The acid-test ratio could be either higher or lower.AnswersFARThe answer is D.When a contingent loss is probable within a range, the best estimate is recognized. If no amount within the range is better than any other, then the lowest amount should be recorded. Thus, in Year One, the company reports a loss and liability of $100,000. In Year Two, when the penalty is settled at $1 million, the other $900,000 loss must be recognized.AuditingThe answer is C.Here, the inventory account is being tested to see if the figure reported as an asset is properly valued on the balance sheet. For example, if a table is reported as $55, is that number valued according US GAAP? Valuation for inventory is normally the lower of cost or market. The invoices will show the cost of inventory items and, therefore, can be used in determining the proper valuation. Comparing inventory items that are present to the final listing does not relate to valuation but, rather, to completeness (no units have been left out) and existence (no units have been incorrectly added). Cancelled checks do not provide individual cost figures but rather show the impact on accounts payable and cash of the payment being made.RegulationThe answer is D.First, the guaranteed payment to the partner of $24,000 was paid for work done and is taxable income to Paul. The partnership has income of $40,000 ($90,000 less$50,000) but that figure is reduced by the $24,000 which is taxable directly to Paul and leaves the ordinary income at $16,000. As an equal partner, Paul is taxed on half of that amount or $8,000. His taxable income is increased by $32,000 ($24,000 plus $8,000). BECAnswer is AThe current ratio is found by taking a companys current assets and dividing the amount by its current liabilities. It is a measure of liquidity. The acid-test ratio is a more immediate measure of the ability to pay debts and is found by removing inventory (and, sometimes prepaid expenses and supplies) from the current ratio equation. A manufacturing company would have inventory. Remaining that balance from the asset side will reduce the size of the resulting acid-test ratio Joe HoylePresident, CPAreviewforFREE17 comments: Tuesday, June 23, 2015 Be a Verb; New Practice QuestionsTry us FIRST before you spend your hard-earned money.CPA Review for FREEOVER 2,500 FREE CPA Review Questions and Answers Available to YOU (for FREE)June 23, 2015Lesson 163From: JoeArticle: Be a Verb and ChangeI have a few sayings in my life that I really like. They inspire me to do the things I want to do (or should do). I was reading a book yesterday by one of my favorite authors (David Mitchell) and came upon a likeness of one of these wonderful quotes: The soul is a verb. . . . Not a noun.My version of that sentiment: I want to be a verb and not a noun.A verb is an action word (either physical action or mental action) that tells what is happening. Runs is a verb. Thinks is a verb. Studies is a verb.A noun is a person, place, or thing. Dog is a noun. Teacher is a noun. Apple is a noun.I have always wanted to think of myself as a verb. I like the idea that I am heading some place. I like the idea that I am getting better. I like the idea that every day, every hour, every minute can be a step forward. I try to live my life with that improvement in mind.I am not really interested in being defined as a noun. Theres nothing wrong with nouns. I just feel like they put me in a box and restrict what I can become. I do not want to be limited and the best way I can avoid that is to think of myself as a verb. I am always moving beyond my present state to become better.It amazes me that, when I talk with students or with candidates taking the CPA Exam, they will often start to define themselves and they frequently do so in very negative ways. They put themselves into a box.--I am a weak student.--I am not a very organized person.--I am slow worker.--I am a poor test-taker.To me, it just seems like they are climbing into a big personal box that restricts their advancement. That noun is a limitation on what they can become. That box holds them back from the success they want.How does a person become a verb? How do you push yourself to get better?William Faulkner once famously wrote: Try to be better than yourself. To me, that is the essence of being a verb. You are not locked in a box. You are moving toward your goals.Okay, how can you get better? Well, you can pay a consultant $500 per hour to tell you this or I can just tell you for free. Lets go with free. I like free. Here are 5 Steps:Step One Have goalsboth short term and long term. What do you want to accomplish in the next 24 hours (be specific)? What do you want to accomplish over the next two weeks (be specific)? What do you want to accomplish over the next one to five years (be specific)?In fact, I have my 24 hour list sitting right here beside of me on this desk as I type.I often tell my students that if they dont have goals any action is okay. You cannot get lost if you are not going anywhere.Step Two Make good use of your time. We all have 168 hours each week. If you eat and sleep for 70 hours per week, that still leaves you with 98 hours to accomplish stuff. How well you use those 98 hours is probably the key difference between success and mediocrity. Too many people just let those hours wash away without benefit. Dont do that. Be aware of what you are accomplishing. As you move through your day, think about what you are doing at the current moment and whether it is moving you toward your goal. Awareness is a great attribute to possess. Steps 3-5...
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Check it OutWe often have people write in to us to ask: I want to use your products so I can pass the CPA Exam without paying much money. How can I do this? We received an email this past week from a person who passed all four parts of the CPA Exam and paid virtually nothing. She told us exactly how she did it. This is a roadmap that can clearly work. If you are infinitely rich and want to spend several thousand dollars to pass the CPA Exam, then go for it. But, if you value your money and dont see a good reason to throw it away, heres a strategy that you should consider.Since don't advertise, we depend on people like YOU to spread the word. If you know someone who is getting ready to start preparing for the CPA Exam, send them this message. Thanks!!!The following message comes from Tamara M:Im finally done! I passed all four parts of the CPA exam on the first try, using only CPA Review For Free questions and materials. The materials are designed to help you make a 75 and thats all I needed to pass! It took many hours of studying on top of working at least 50 hours a week, so I know it can be done!My study plan:1. I set up a spreadsheet to track my scores. I listed out the exam area and every testing section within that area. Then I weighted my scores by the number of questions in that section compared to the total number of questions in the entire exam area.2. I went through every single free question and documented my scores so I would know which areas needed more study. Most of the time, all of the areas needed more study!3. I read the answer explanations on every single question and took bullet point notes to help me remember the main ideas.4. I used the downloadable materials that can be purchased from the website to study any areas that I did not understand after taking the tests and reading the explanations. I just read the areas I didnt understand, not the entire book. I didnt want to get bogged down in reading and lose precious time. I spent less than 5 hours of study time in each section reading the materials. Almost all of my time was spent taking the free tests, making notes, and reviewing.5. I kept taking the tests, reading the answer explanations, and reviewing my notes until I made at least an 85 on each testing section.6. I made flash cards for topics I had a hard time remembering and kept those cards with me so I could study anytime I had two free minutes. I studied standing in line at the grocery store, waiting for clients, at the doctors office, waiting for meetings to start and while cooking dinner.7. I tried to make my study time as pleasant as possible. I wanted to be able to spend time with my family and still have a little bit of a life during this process, so I made every effort to spend time weekly doing something I love while studying. I studied at the beach. I studied at the pool. I studied on my back patio around the fire pit with my family and dogs. I studied in the living room with ear plugs and white noise so that I could still be with my family, but couldnt hear the TV or noise. One of the things I loved about CPAReviewforFree.com was I could take the tests on my iPad so it made studying anywhere possible. I had to stay motivated and I knew being isolated and away from my family would make me lose momentum, so I made it work for me and had a little bit of fun during the process.8. I put in LOTS of hours of studying. I studied over 200 hours for FAR, 175 for BEC, 130 for REG and 120 for AUD.Here are my scores:AUD: 81 05/03/14BEC: 77 02/04/15FAR: 78 05/05/15REG: 84 06/09/15It was all worth it, because I have finished all of the tests, only had to take each test once, and will be a CPA this month!Thank you CPA Review for Free for helping me achieve my dreams!
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Practice, Practice, PracticeOkay, it is hard to beat TMs message above. She knew what she wanted to do and she went out and did it. Congratulations to her and all of the other candidates who have nailed down this exam.But now it is your time so lets practice a little bit. Read the questions below, come up with your answer and then read our answer very carefully.FAROnJanuary 1, Year One, the Hector Company issues bonds with a face value of $100,000 and a stated annual cash interest rate of 5 percent for $95,000 to yield a negotiated effective annual interest rate of 6 percent. Interest is paid everyDecember 31and the effective rate method is being applied. This issuance was on a date when the annual market rate of interest was 7 percent for the other companies in the same industry as Hector. Which of the following is true?A. The $95,000 is the present value of the future cash flows discounted at the 7 percent market rate.B. Interest paid onDecember 31, Year One, is $4,750.C. Interest expense for Year One will be reported as $4,750.D. On aDecember 31, Year One, balance sheet, the payable will be reported as $95,700.REGMr. and Mrs. Fallon made several contributions to qualified charities this past year. Land (which had been held for four years) with a tax basis of $5,000 and a fair value of $8,000 was donated to a church. Cash of $6,000 was given to a university. Household items (primarily furniture) with a cost of $2,900 and fair value of $1,050 were given to a hospital. The taxpayer's adjusted gross income is $70,000. What total can this couple include within its income tax itemized deductions as charitable contribution for the year?A. $12,050B. $13,900C. $15,050D. $16,900BECIrena Andersons income goes up during a period of time by 17 percent. Over the same period, the quantity of product G that she buys increases by only 10 percent. Which of the following statements is true?A. Product G is neither a necessity nor a luxury good for her.B. Product G is a necessity for her.C. Product G is a luxury good for her.D. Product G is both a necessity and a luxury good for herAUDITINGThe Hernandez Corporation is audited by Miley and Cyrus CPAs. The audit team is attempting to assess the control risk associated with the companys inventory system before starting any substantive testing of the inventory accounts. During the current year, 350,000 receiving reports were created and recorded in the companys perpetual inventory system. Based on prior audits and an evaluation of the complexity of the tasks involved, the audit team expects an overall error rate of 1.5 percent. The audit team has decided to view control risk at an acceptably low level if it is believed that the population of receiving reports contains 4.5 percent errors or less. A sample of 400 of these documents is selected randomly and 4 errors are found. Statistical techniques are applied to this sample of 400 items and an upper deviation rate of 3.0 percent is calculated. What is the allowance for sampling risk?A. 1.5 percentB. 2.0 percentC. 3.0 percentD. 3.5 percentAnswersFARAnswer is DThe price paid for the bond will be computed as the present value of the future cash flows discounted at the 6 percent rate negotiated by the buyer and seller. After that, the interest paid for each year will be the $100,000 face value times the cash rate of 5 percent or $5,000. The interest expense will be the $95,000 book value times the effective rate of 6 percent or $5,700. The additional $700 ($5,700 less $5,000) is compounded (not paid so it is added to the balance) and brings the book value up from $95,000 to $95,700.REGAnswer is CThe Fallons can deduct all of the $6,000 cash donated but only the $1,050 fair value for the household items. Long-term capital gain property (such as the land) is deductible at fair value if this amount does not exceed 30 percent of the couples adjusted gross income (30 percent of $70,000 or $21,000). Thus, the entire $8,000 fair value of the land can be included as an itemized deduction. That brings the total deductible amount to $15,050 ($6,000 plus $1,050 plus $8,000).BECAnswer B is correctWith a luxury good, the person buys little when income is low but buys more and more as income goes up. With a necessity, the person buys a lot even when income is low but buys less and less as income goes up. Here, she has bought less and less as her income rose. Product G is a necessity. AUDITINGThe answer is BThis question is checking to see if you understand the vocabulary used in statistical sampling. The sample drawn by the auditor found that errors occurred at a rate of 1 percent (4 out of 400). Statistical sampling techniques indicated that the population could actually contain errors at a rate as high as 3.0 percent (the upper deviation rate). The difference between the deviation rate of the sample (1 percent) and the possible upper deviation rate for the population (3.0 percent) is known as the allowance for sampling risk. Here, the allowance is 2.0 percent (3.0 percent minus 1 percent). Statistically, the actual population characteristics are not expected to be more than 2.0 percent above that of the sample. Although not addressed by this question, the audit team should accept this population as having a reasonably low error rate because the upper deviation rate of the population (3.0 percent) is lower than the audit teams tolerable deviation rate of 4.5 percent. According to this one test, control risk appears to be acceptably low for these documents.To see more FREE questions, clickhere.Go for it! You can do it!Joe HoylePresident, CPAreviewforFREENo comments: Friday, May 29, 2015 I Shall Astonish You AllMay 27, 2015Lesson 162From: JoeI Shall Astonish You AllMy wife and I went to the movies on Saturday night to seeFar From the Madding Crowd. The movie was set about 150 years ago. A young woman is poor but inherits a large but failing farm. It is obvious that no one expects her to save the placefailure seems inevitable. As one of her first actions, she calls all the workers together and tells them the following.Don't anyone suppose that because I'm a woman, I don't understand the difference between bad goings-on and good. I shall be up before you're awake, I shall be afield before you're up, and I shall have breakfasted before you're afield. In short, I shall astonish you all.I just loved that quote. As soon as I got home that evening, I looked it up on Google just to get the words correct. Why did I love her words so much? Gosh, there are many reasons.Reasons...
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Create a Challenging CompetitionI get up each morning and stretch. At my age, I need to stretch once or twice every day just to keep my body from becoming brittle. In the morning, I stretch at about 5:50. On the local PBS radio station at that time, they have a short show by Garrison Keillor called The Writers Almanac where he discusses writers and reads a poem, all in just five minutes per day. This morning he informed his listeners (and me) that it was the birthday of Ralph Waldo Emerson who said nothing great was ever achieved without enthusiasm. Ah, another fabulous quote and I had written it down before 6 in the morning.When I talk with people about passing the CPA Exam, I am always surprised by how unenthusiastic they often seem. I dont want to study. I dont want to learn. I dont want to take those tests. I always think to myselfoh my gosh, this must be so difficult for you to do. No one with that attitude can possibly want to do the necessary work. Every day of study must seem like sheer drudgery.But we all love to see competitionfor many, it is one of the most interesting things in their lives. Two tennis players battle for hours and we watch spellbound. Two basketball teams play into overtime to determine the championship and we can hardly look away. Baseball players go at each other for 9 innings trying to show who is most deserving. Who wouldnt love that level of great competition?More...
10% discount!!Fast Forward AcademysCPA review program offers you a comprehensive approach to passing the CPA exam.This course offers all types of methods to help you pass--intelligent learning to focus on the right subjects,books, online, mobile, study calendar, text message reminders, and many more.We are offering a10% discountif you redeem the coupon code:CPAREVIEWFORFREEduring checkout.
Practice Makes Perfect (Or Good Enough to Pass the CPA Exam)Okay, lets practice a bit. Read the following four questions and see how well you do. After you have selected your answers, scroll down and read my answers. If you get a question correct, thats great/wonderful/super but it does not do you much good. But, if you miss a question and then study how to arrive at the correct answer, you have a chance to hit an important goal: Moving your score that much closer to the passing score that you want on the CPA Exam. FARThe Farena Corporation has 100,000 shares of $5 par value common stock outstanding. In the past few years, these shareholders have been paid a $.30 per share dividend each year. The company also has 20,000 shares of $40 par value preferred stock outstanding. These shares are entitled to a $1 per share cumulative cash dividend each year. That dividend has been paid every year since the stock was issued. In the current year, because of operating problems, the companys board of directors did not declare or pay a dividend on either the common stock or the preferred stock. Which of the following statements is true?A. The company should report a liability of $20,000.B. The company should report a liability of $30,000.C. The company should report a liability of $50,000.D. The company should not report any liability.REGRegina Everton is filling out her current federal income tax return. Which of the following is deductible as an itemized deduction as a gift to charity?A. Value of her time in helping do the primary work of a qualified charity.B. The monetary value of blood given to a qualified blood bank.C. Cash gifts to civic leagues, labor unions, and chambers of commerce.D. A gift to the federal government if the gift is solely for public purposes.BECA company is considering the possibility of buying equipment. It will cost $500,000 and be depreciated over 5 years with no residual value for both tax and financial reporting purposes. The equipment is expected to generate cash operating revenue of $280,000 each year and cash operating expenses (without income taxes) of $130,000 each year. The effective tax rate is 40 percent. For convenience, assume straight-line depreciation. In deciding whether to make this investment, what is the best estimate of the payback period?A. 3.33 YearsB. 3.85 YearsC. 4.20 YearsD. 5.00 YearsAUDITINGAn independent auditor is working with a client company and is currently seeking answers to an internal control questionnaire. The next question is: Are paid notes canceled, stamped Paid, and the filed away? What is the most likely concern that prompts the auditor to ask this question?A. The auditor wants to ensure that debts are paid as they come due.B. The auditor wants to ensure that paid debts are removed from the accounting records.C. The auditor wants to ensure that the same debt is not paid multiple times.D. The auditor wants to ensure that interest is properly calculated on the note and then paid.AnswersFARAnswer is D.Until a dividend is declared by the board of directors, it is not reported as a liability. If a dividend had been declared on either the common or the preferred stock but not paid, then a liability would have been reported. If a preferred stock dividend is cumulative and missed, then the company must pay that amount first in the future before any dividends can be paid on the common stock. That information must be disclosed. However, no liability is reported until the board actually declares the dividend.REGAnswer is DAs might be imagined, these four examples are taken almost verbatim from the IRS book of instructions. To be deductible as a gift to charity, there must be the sacrifice of an asset that is conveyed to a qualified charity. Time and blood are not considered assets in the traditional sense because they do not have a direct cost to the taxpayer (like a car would have or shares of stock would have). A civic league, labor unions, and chambers of commerce are not viewed by the government as qualified charities. A gift to the federal government is an itemized deduction as long as it is for a public purpose. For example, a cash gift to reduce the federal budget deficit qualifies as does a gift to a national park. BECThe answer is B.For an investment, the payback period is the length of time it takes the buyer to collect net cash inflows equal to the cost. A quick payback period is viewed as a better investment. If cash is generated evenly over time, the payback period is the cost of the asset divided by the annual cash inflow. Here, the company makes a cash profit of $150,000 each year ($280,000 less $130,000). Annual depreciation is $100,000 ($500,000/5 years) so taxable income is $50,000 (cash income of $150,000 less depreciation of $100,000). The annual tax payment is $20,000 ($50,000 times 40 percent). The actual cash collection is $130,000 after subtracting the $20,000 paid in taxes from the $150,000 net operating cash inflow. The payback period is the $500,000 cost divided by the net annual cash inflow of $130,000 or 3.85 years.AUDITINGAnswer is CThe key words in the question being asked by the auditor have to do with canceling the debt, marking it paid, and then filing it away. Those actions by themselves do not ensure that the debt is paid when it comes due (it might have been paid very late and had the same actions taken). Those actions by themselves do not ensure that the debt is removed from the accounting records (those actions can be taken and the debt still not be removed from the accounting records). Those actions by themselves have nothing to do with the computation and payment of interest. However, by canceling the debt and marking it paid and then safeguarding it in the files, a dishonest employee cannot try to use the document to get the amount paid a second time. In questions like this, always connect the key words to what the auditor is hoping to prevent.To see more FREE questions, clickhere.Go for it! You can do it!Joe HoylePresident, CPAreviewforFREENo comments: Wednesday, May 13, 2015 Success is Not How Much More Money You Spend; Free Practice QuestionsTry us FIRST before you spend your hard-earned money.CPA Review for FREEOVER 2,500 FREE CPA Review Questions and Answers Available to YOU (for FREE)March 3, 2015Lesson 160From: JoeSuccess is Not on How Much Money You SpendIt is snowing here in Richmond, Virginia, today. We have at least 6 inches of snow on the ground. It is cold and still snowing. So, I have a day that I can use. I am stuck here at the house. How should I spend my time? I have decided to talk with you about how to achieve success on the CPA Exam. For me, thats an extremely good use of time.After being in the CPA Review business now for 35 years, what is my advice to you? Not the person beside of you, or the person in front of you, or the person behind you. No, what is my advice to you?This morning my wife and I were having breakfast at our kitchen table. The newspaper did not arrive so she was reading from her iPad. Here is something she informed me that sounds like advice that you might pass along to CPA Exam candidates.It was a few words from John C. Maxwell. And, she was right. This is what I want to say to you today.Youll never change your life until you change something you do daily. The secret of your success or happiness is found in your daily routine.At the university, I am always amazed by how many students want to make better grades without making any changes in their study habits.--Study a little, make a bad grade.--Study a little, make a bad grade.Then, they come to me, often in tears, and confess I guess I am just not cut out for this accounting stuff. Thats pure nonsense. No one ever makes improvement without making change. And that improvement will be much more effective if it becomes part of your daily regimen.I have always argued that I could help anyone learn to pass the CPA Exam but that is true only if the person is willing to change.Lets say that you are planning to take a part of the CPA Exam at the beginning of Aprilin about five weeks. However, youve already failed that part previously. And, you dont see how you can improve. You are stalled. You are sure you are going to fail yet again. Unfortunately, for most candidates, their next response seems to be: SPEND MORE MONEY. They assume that they need another expensive study program that will show them exactly the same information that the last expensive program provided. Thats not a change. It is just throwing money away.Success is not based on how much money you spend. Success is based on how efficiently you spend your moments on this planet. If things are not going as you would prefer, YOU MUST MAKE A CHANGE. Daily life should be built in such a way as to bring you the success that you truly want. If you are not willing to change, you probably dont really want the success.So, what is my advice?First,
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Super now lets do a little practiceAnswering questions and reading answers is always the perfect way to add points. The answers are below all questions.FARThe Allen Company reports the disposal of a discontinued operation in its financial statements. Which of the following is least likely to qualify for that type of financial reporting?A. The sale of a subsidiary.B. The sale of all businesses within a major geographical areaC. The sale of a major line of businessD. The sale of a major equity method investment.REGULATIONSusan James has graduated from college and is now paying off her student loans. This past year, she paid interest on those loans and plans to take this interest as a deduction to arrive at her adjusted gross income for federal income tax purposes. Which of the following is true?A. The interest can relate to the cost of tuition but not room and board.B. The interest can relate to the cost of room and board but not books and suppliesC. The interest can relate to the cost of tuition but not books and supplies.D. The interest can relate to both the cost of tuition and books and supplies.AUDITINGAccording to the standards of the Public Company Accounting Oversight Board, which of the following is not a reason for the independent auditor to establish an understanding with the audit committee of the client company in connection with the appointment or retention of the independent auditor?A. To communicate the objective of the auditB. To communicate the cost of the auditC. To communicate the responsibilities of the auditorD. To communicate the responsibilities of the management of the reporting entity.BECThe Logan Corporation produced 1,000 widgets during the past year at a total cost of $165,000. After the job had been completed, an inspection indicated that 100 of these units were seriously defective and would have to be destroyed with no residual value. Which of the following is true?A. If the spoilage of these 100 units was considered abnormal, the cost of the companys inventory should be recorded at an amount greater than $165 per unit.B. If the spoilage of these 100 units was considered abnormal, the cost of the companys inventory should be recorded at an amount less than $165 per unit.C. If the spoilage of these 100 units was considered normal, the cost of the companys inventory should be recorded at an amount greater than $165 per unit.D. If the spoilage of these 100 units was considered normal, the cost of the companys inventory should be recorded at exactly $165 per unit.AnswersFARAnswer is AThis area of US GAAP has been adjusted recently. The applicable Accounting Standards Update states: Only those disposals of components of an entity that represent a strategic shift that has (or will have) a major effect on an entitys operations and financial results will be reported as discontinued operations in the financial statements. The disposal of a major geographical area, the sale of a major line of business, and the sale of a major equity method investment are all listed as examples. A subsidiary is not included because, without more information, it is not possible to tell whether the sale of a single subsidiary is a significant shift in an entitys operations and financial results. The company might have multiple subsidiaries that perform similar functions so that a current disposal is made purely for economic and efficiency reasons.REGULATIONAnswer is DAccording to Publication 970 of the Internal Revenue Service (IRS): For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. They include amounts paid for the following items.--Tuition and fees.--Room and board.--Books, supplies, and equipment.--Other necessary expenses (such as transportation).AUDITINGAnswer is BAccording to paragraph 5 of PCAOB Auditing Standard Number 16, the auditor should establish an understanding of the terms of the audit engagement with the audit committee. This understanding includes communicating to the audit committee the following:--The objective of the audit;--The responsibilities of the auditor; and--The responsibilities of management.BECAnswer is CIf the spoilage is viewed by the company as abnormal, the cost of these 100 units should be separated and reported directly as a period cost to reduce current net income. The remaining 900 units should still cost $165 per unit because they have not absorbed any of the cost of the lost units. Those units are neither penalized nor rewarded because other units were lost in some unexpected way. However, if the spoilage is viewed as normal, the cost of the remaining good units must absorb this additional cost. The $165,000 total cost was spent to create 900 good units, an amount that is greater than $165 per unit.Joe Hoyle, Presidentwww.CPAreviewforFREE.com29 comments: Older PostsHomeSubscribe to:Posts (Atom)Accounting ResourcesAuditSenseAGN International - North America, Inc.AccountingWEBFinancial Accounting Standards BoardNASBAAmerican Institute of CPAsAccountingcoachSmartprosPopular LinksFT.com - WorldMako Komuro, the quietly defiant former princess marries for love - The newly-wed has lost her title and challenged the constraints of Japans imperial family59 minutes agoWSJ.com: Most Viewed WeekBaby Cured of HIV for the First Time, Researchers Say - A baby born with the AIDS virus was apparently cured after an aggressive drug regime, only the second reported cure of an HIV-infected patient.3 years agoNYTimes DealBookDealBook Briefing: Will G.O.P. 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