[Anonymous]

For anyone who’s interested or is taking BEC soon and wants to practice. We did this in the Q2 FAR group and it was really helpful, especially for memorizing formulas, which as we all know, BEC is heavy with. Answer or ask your own question! Just be sure to come back on here and let the person who answered know if they were right or wrong 🙂

I’ll start it off:

What is the formula to calculate Marginal Propensity to Consume (MPC)?

[Tux]

I am studying for BEC, so want to keep up with this thread.

to M.O.D. – I am also considering taking the EA after the CPA, but unsure of the benefits of having both. Is it worth the time to focus on the EA? What will it give me above the CPA?

BTW – I definitely plan to focus on tax in my CPA career.

FAR - 86 - 2/27/14
AUD - 75 - 5/29/14
BEC - 80 - 8/31/14
REG - 89 - 2/27/15
Praise Jesus! I'm done!!

Study resources:
Becker
Wiley test bank

[Anonymous]

Application Controls – control totals, batch totals, edit tests, sequence check, limit check, range check, validity check, reasonableness check, check digits, etc.

What is the times interest earned calculation?

[M.O.D.]

@ Tux

An EA is helpful as it is more focused than REG. It also gives you respect with the IRS (in representation) and allows you to practice across state lines. Plus, some employers give bonuses for it. Furthermore, it does not require experience.

I have a friend who started a tax practice with just an EA. She is working on the CPA, but needs the experience.

Times interest = EBIT (earnings before interest and taxes) / interest expense

(it calculates interest coverage)

What are the formulas for Operational and Financial leverage?

What does it measure?

BA Mathematics, UC Berkeley
Certificates in CPA and EA preparation, College of San Mateo
CMA I 420, II 470
FAR 91, AUD Feb 2015 (Gleim self-study)

[Anonymous]

Let's see if I can recall…..Degree of Operating Leverage (DOL) is % change in operating income/% change in unit volume or sales volume and it has to do with how much debt you have. The higher the DOL the riskier you are (the more leveraged you are). Degree of Financial Leverage (DFL) is % change in EPS/% change in EBIT. This formula relates to the amt of fixed asset a firm has. The more fixed assets you have the riskier you are. When sales are good you can do very well but when sales are bad things are VERY bad.

[M.O.D.]

It is close. The formulas are correct, but you reversed the meaning.

Financial has to do with debt vs equity (the company is financed with more debt than equity if it is highly leveraged),

Operating with fixed assets (company operates with factories, etc.) Indeed the higher the PP&E, the higher the fixed charges: maintenance, rent, depreciation.

BA Mathematics, UC Berkeley
Certificates in CPA and EA preparation, College of San Mateo
CMA I 420, II 470
FAR 91, AUD Feb 2015 (Gleim self-study)

[Anonymous]

What does the NYSE and NASDAQ require of the Board of Directors?

[Anonymous]

Hmm..a compensation committee??

My test is in two days; keep the questions coming! 🙂

[Anonymous]

Nope, that's Dodd Frank Act. Shoot. Does it have something to do with independence?

[Anonymous]

What's the profit margin ratio?

[M.O.D.]

SOX requires the BOD to have an audit committee formed of independent members (not company officers).

This audit committee oversees the independent auditors.

At least one member of this committee must be a financial expert.

Profit margin ratio = gross profit/sales

BA Mathematics, UC Berkeley
Certificates in CPA and EA preparation, College of San Mateo
CMA I 420, II 470
FAR 91, AUD Feb 2015 (Gleim self-study)

[Anonymous]

NYSE/NASDAQ require something do to with 3 years. I'd know it on the exam if I saw it 😉

[M.O.D.]

What is the difference between absorption and variable costing?

BA Mathematics, UC Berkeley
Certificates in CPA and EA preparation, College of San Mateo
CMA I 420, II 470
FAR 91, AUD Feb 2015 (Gleim self-study)

[Anonymous]

Absorption – GAAP; used for external reporting. Separates product costs from period costs. Sales – Product Costs = Gross Profit, GP – Period Costs = Operating Income. Fixed manufacturing overhead IS included in the cost of ending inventory.

Variable – not GAAP; used for internal reporting. Separates variable costs and fixed costs. Sales – Variable Costs = Contribution Margin; CM – Fixed Costs = Operating Income. Fixed manufacturing costs are expensed and not included in ending inventory.

[Anonymous]

Variances: Material price, materials usage, labor rate, labor usage(efficiency) –

Which two use Actual for the multiplier, and which two use Standard for the multiplier?

[Anonymous]

According to Wiley, profit margin is net income/sales.

[Author]

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