[jeff]

Welcome to the Q3 2017 CPA Exam Study Group for BEC. 🙂

Introduce yourselves and let your fellow NINJAs know when you plan to take your BEC exam.

The Five Steps (NINJA Framework): https://www.another71.com/pass-the-cpa-exam/

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

[BBHYX]

@summer I did do a few sims on becker but the sims on becker are all very simple. Each one has like 4 boxes to fill and takes only around 5 minutes, so not at all representatives of what we will see on the exam so I don't think it's helping much. I think I will just focus on MCQ as well…

Has anyone seen this question in their study material with a good explanation?

Generally, individual departmental rates rather than a plantwide rate for applying manufacturing overhead are used if
A. A company wants to adopt a standard cost system.
B. A company’s manufacturing operations are all highly automated.
C. Manufacturing overhead is the largest cost component of its product cost.
D. The manufactured products differ in the resources consumed from the individual departments in the plant.

To me, both C and D seem like plausible answers. The correct answer is D.

The reason I think C is right is because another MCQ:

A company would most benefit from using an activity-based costing (ABC) system as opposed to a traditional costing system under which of the following conditions?
A. When indirect costs are a high percentage of total costs.
B. When each department within the company has a single activity.
C. When different products use the different activities of the department in the same proportions.
D. When batch-level and product-sustaining costs are immaterial

I was applying a similar logic for the first one, thinking that if overhead costs are a large portion of the product cost, then you'd want to be more accurate, thus use department rates instead of plant wide.

[kenckang]

i see your point. maybe it comes down to which answer BEST fits?

For the second question, A is the right answer because ABC system is a good way to allocate overhead costs when there are multiple cost drivers. B is incorrect because if there is only one single activity, then an ABC system is a moot point. C is incorrect for the same reason as B. D is incorrect because it just sounds irrelevant. Therefore A is the best answer however it isn't the BEST reason to use ABC system, right? The best reason to use an ABC system is when there are multiple cost driving activities in manufacturing your product, right? Overhead will always exist regardless of whether you have multiple cost driving activities or not.

Maybe thats why D is the BEST answer in the first question although C is technically correct as well.

[Scared-cpa]

@kenckang No, the framework isn't from Wiley. I'm using this: https://www.another71.com/cpa-exam-forum/topic/template-for-bec-wc/

Do you see anywhere within CPAexcel where it discusses written communication?

[Smith]

Could someone Explain the following MCQ- Ratio related:

27. CPA-05168

A Corporation has $50,000 in equity and a debt to total asset ratio of 0.5. The firm wants to reduce this ratio to 0.2 by selling new common stock and using the proceeds to repay principal on outstanding loan. What amount of additional equity financing must the Corporation obtain to accomplish this objective?

answer: B $30,000

Choice B: If the current ratio is equal to 0.5 then debt must be equal to $50,000. By issuing additional $30,000 in equity and using the proceeds equity increases to $80,000 and debt decreases to $20,000.

How do I know that debt is $50,000? How do I came up to this answer at all?

[kenckang]

@summer thanks ill study that format. i didnt see anywhere in wiley that discussed WC writing strategies 🙁

@smith i guess its a matter of finding the number that will satisfy the D/A ratio of 0.5 and also satisfy the general BS equation of A = L + E. Debt = 40 wouldn't work because 80 = 40 + 50 is not true. Debt = 60 wouldn't work because 120 = 60 + 50 is not true. The only number that will work is Debt = 50.

I noticed that there are other MCQ in ninja and wiley where you have to assume a number to solve the problem. Especially for questions where you have to find total purchases.

[Anonymous]

@Smith It took a minute but I finally figured it out. You have to take it back to the basic accounting equation A = L + E. It sucks because I forget this all the time b/c we're so used to be tested on more complex equations and concepts. But I used that to get the denominator of the debt to total assets ratio, which was given as .5 .

Debt to total assets = .5
Liab. ÷ (Liab. + equity) =.5
Liab. ÷ (Liab. + 50) = .5
Liab = .5Liab + 25 (multiplied both sides by the denominator in previous step)
.5Liab = 25
Liab = 50

Hope this helps, I'm struggling make it in a good format.

[Scared-cpa]

@kenckang I don't understand how they can completely prepare you for BEC without a mention of the written communications section. I was expecting a video discussing the format to use, how to go about ensuring you're using proper keywords, a framework…something. I really don't care for CPAexcel but it's what I have so I use it. But I know I wouldn't have passed any of these exams so far if it wasn't for Ninja so that's where I am placing all of my faith.

[Smith]

@justEss OMG. I was struggling a lot trying to solve it and it was just A= L+E! hahaha thank you!

[kimphan]

Hello,

I need help with this question:

ABC need to buy 60,000 zipper for $.60 per zipper. American can purchase 5000 units a month or buy 60,000 units at the beginning of the year. Assuming ABC can invest cash at 8%. The company's opportunity cost of purchasing 60,000 units at the beginning of the year is:

Answer: 1,320.

Can you show me how you would solve this? Becker shows:

($33,000/2) * .08 * 12/12 = $1,320

I don't understand how Becker got this answer. Please advise.

Kim

[kenckang]

i understand how they got $33,000 but i dont understand why it is divided by 2.
60,000 zippers minus 5000 units purchased at the beginning of the month leaves 55000*0.6 = 33,000 remaining to invest.
not sure why it is divided in half…

[Anonymous]

@kimphan @kenckang you're dividing by 2 to get the average annual costs.

[kenckang]

@justess i see you got a 71 on bec the first time. where do you feel like you went wrong? what changes have you made to your studies?

[Smith]

Quick and maybe obvious question on IT Segregation of duties. Is it an error? Or I'm I missing something?

Becker Chapter 6 Module 5

CPA- 04601. Which of the following statements is not correct?

Answer D. The duties of system analysts and application programmers should never be combined.

The book says that a system analyst and a computer programmer duties should never be combined since a person in charge of hardware should never be the same person in charge of software.

[kenckang]

@Smith what are the other answer choices? I'm reading through my text book and I think the confusion here is the difference between an Application Programmer and a Systems Programmer. An Application programmer works under the direction of the systems analyst to write the actual programs that process data and produce reports. A Systems Programmer maintains the various operating systems and related hardware. Because the Systems Programmer's job requires they be in direct contact with the production programs and data, it is imperative that they are not permitted to have access to information about applicaiton programs or data files. Additionally, the three main functions that should be segregated are 1. Development 2. Admin & Programming and 3. Operations. Systems Analyst and Application Programmers fall under Development.

This is a really subtle and easy to make mistake to make. thanks for bringing it up. im going to remember this.

[Smith]

I think it is a wording issue in Becker's textbook. Quoting from Becker: “System analyst design an information system to meet user needs, whereas computer programmers use that design to create an information system by writing computer programs. If the same person is in charge of both could easily bypass security systems without anyone knowing”

So a system analyst and an application programmer actually work together. It makes more sense now. Will be easier to remember as the 3 segregated functions. I think I will use my Wiley trial to re-read that part.

Thanks!

[Author]

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