[jeff]

Welcome to the Q4 2016 CPA Exam Study Group for AUD.

If this is your first post in the study group – please post your target exam date (just the time frame to preserve your anonymity), and your past history with this exam (optional, of course).

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Forem004]

Good luck to those of you that took it. @spartans92. Inv turnover is decreasing, correct? Bc as you said, inventory is overstated. ROE is is understated as well right?

[Spartans92]

the answer actually said the impact is increase… I dont get the explanation in becker. Here is what it says, A decrease in inventory and an increase in COGS will cause inventory turnover ratio to increase..

But here is my take. Invt. included when it isn't suppose to causes an overstatement in Inventory which understate COGS. Equation is COGS/ Avg. Invt. Let say original is 100/50 = 2 Now with the over and understatement we got 90/60 = 1. 5.. how is it increase the ratio?? Does that make sense..

BEC- PASS

[KaliKingz]

@spartans92 let's use your assumption. Original is 100/50=2, inventory is overstated, so assume 100/40= 2.5. If COGS increase, 120/50= 2.4.
In your example you increased avg inventory and decreased COGS( opposite of the becker explanation)

[Forem004]

For the Becker example, they are explaining it as what happens if it's corrected. So you have less inventory and higher cogs. In the first example, you are being asked what effect the mistake has on the ratios. At least thats how I'm reading it.

[Spartans92]

Ohh I see what its saying.. Thanks guys. I was confused.. I thought if its originally 100/50 let's say and if Inventory is being included it overstates then it should have been 100/60 disregarding COGS. I was misunderstanding and was working backwards.. I think I got it now.

BEC- PASS

[TheblackCPAseeker]

@Sticky Nicky glad to hear you feel you passed I hope I will be able to say the same this Sunday.

FAR - 80 (05/2015)

AUD - 68 (08/2015, Retake (07/03/16)

REG - 77 (11/2015)

BEC - Sometime in 2016

We are destined for this.

[JT]

Good luck StickyNicky and Theblackcpaseeker!

REG-80-1X
BEC-80-1X
FAR-73-1X
FAR-75-2X
AUD-September 2016

[Spartans92]

Good Luck Guys!! time is ticking.. Hopefully we all hear good news for this Quarter's release. I really wanna have AUD done! Going through the second time is not any easier than the first. A4 is so troubling! I will definitely target this with ninja. Onto the last Chapter. WOOT!! On the side note, please spread some love. I have been seeing too much hate these last 2 days.. two of my family relative just fought today over some political Beliefs.. that is total nonsense, fighting over something that can't be undone. Much love, guys!!

Good Luck!

BEC- PASS

[TheblackCPAseeker]

@JT thanks I want to get this over with. I'm ending this year on a high

FAR - 80 (05/2015)

AUD - 68 (08/2015, Retake (07/03/16)

REG - 77 (11/2015)

BEC - Sometime in 2016

We are destined for this.

[Alejandro Garcia]

Why must a new A Tribe Called Quest album come out the right before my final review/cram weekend 🙁

[JT]

The album will be there waiting for you after your done with your exam!

Good luck!

REG-80-1X
BEC-80-1X
FAR-73-1X
FAR-75-2X
AUD-September 2016

[Mary Coots]

I don't know if this helps but remember that in Auditing, the turnover equation may not use average in the denominator, just the current ending inventory. From my Gleim book, “Auditors often calculate this ratio using ending inventory as the denominator because it is the balance being audited. Changes in COGS or inventory affect this ratio.” 79

Reg 79
FAR 79
BEC 77
AUD 85

[Forem004]

Congratulations Mary! I see you've passed all four!

I've asked this question before and it was ignored. Why is the OMB133 being referenced in questions rather than the uniform guidance?

[Forem004]

Does anyone prepare financials? I just did a few ninja problems about related parties and that got me thinking about the audit I'm working on at work. The executive directors husband made a small operating loan to the organization so I have to add a note for that. Since I have to disclose who, what and how much, should I list him by name or the ED's husband? The name seems inappropriate since he's only the husband yet “the ED's husband” also seems inappropriate.

[GiniC]

@Forem004 –

I don't prepare financials, but based on the information below from FASB FAS 57, his name is irrelevant but the relationship itself is what needs to be disclosed.

“The disclosures shall include:

a. The nature of the relationship(s) involved

b. A description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other nformation deemed necessary to an understanding of the effects of the transactions on the financial statements

c. The dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period

d. Amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of
settlement

e. The information required by paragraph 49 of FASB Statement No. 109, Accounting for Income Taxes”

[Author]

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