[jeff]

Welcome to the Q3 2016 CPA Exam Study Group for BEC.

Some BLITZ videos to help your exams: https://www.another71.com/ninja-blitz

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

[Anonymous]

2 Methods of Measuring GDP
1. Expenditure Approach
[GICE]
G – Government Purchases of GAS
I – Gross Private Domestic Investment [GPDI]
……..a. Nonresidential Fixed Investment
……..b. Residential Fixed Investment
……..c. Change in Business Inventories
C – Personal Consumption Expenditures
……..a. Durable Goods
……..b. Nondurable Goods
……..c. Services
E – Net exports (Exports minus Imports) >>> or Subtract Net Imports

2. Income Approach GDP = GDI
[IPIRATED]
I – Income of Proprietors
P – Profits of Corporations
I – Interest (net)
R – Rental Income
A – Adjustments for net foreign income and miscellaneous items
T – Taxes
E – Employee Compensation (wages)
D – Depreciation = Capital Consumption Allowance

[RE2PECT]

Awesome! Thank you!

FAR: 75 Roger & Ninja (notes/flashcards/audio/MCQ)
AUD: 73, 81
BEC: 71, retake 8/29
REG:

[LedgerL0ver]

I take the BEC exam on Tuesday, a day before the cutoff for receiving results by Sept 10. What are the chances that I will receive my score on that date and not have to wait until the next round? Assuming I dont fall into the bubble….

FAR 4/24/16 --85--
AUD 7/5/16 --84--
BEC 8/30/16 --?--
REG

[RE2PECT]

You should get your score by the 10th, assuming it doesn't have to be reviewed. Prometric sends the file over to NASBA the same day you take your exam.

FAR: 75 Roger & Ninja (notes/flashcards/audio/MCQ)
AUD: 73, 81
BEC: 71, retake 8/29
REG:

[Finally_a_CPA]

Hey everyone!

I'll be taking BEC in two weeks and don't feel prepared at all. I'm hoping that if I do a ton of mc question from here on, I'll feel a bit more confident.

I'm using Roger Review and I just hate the chapter on internal control and corporate governance. I have read it a couple of time and it just doesn't make any sense to me. I honestly don't know how I will ever pass audit.

Does anyone know of a good resources to help me understand COSO and ERM?

[RE2PECT]

https://www.coso.org/guidance.htm

https://coso.org/documents/COSO-2015-3LOD-PDF.pdf

https://www.coso.org/documents/990025P_Executive_Summary_final_may20_e.pdf

FAR: 75 Roger & Ninja (notes/flashcards/audio/MCQ)
AUD: 73, 81
BEC: 71, retake 8/29
REG:

[sancasuki]

Which part of BEC is the most difficult?

[Finally_a_CPA]

Thanks Re2pect! I'll take a look at those and see if they help.

[Anonymous]

Thanks, Spartan. I save those links in my email inbox. But dang, how am I going to study them all? Haha.

My compiled notes for COSO alone (after my 4 attempts for BEC) are all 20 pages in MS-Word.

[Anonymous]

Fin. Mgt. – NPV

So the net cash proceeds of $180,000 from sale of asset on 1/1/08 is not taxable?

[mckan514w]

@amorD- you have a tax basis in the property of 150,000 thus your taxable gain is your sales price less your tax basis

Your tax basis is what is used to figure out your gain / loss on a transaction, amortization etc…

Work your journal entries for a question like this

so
DR Cash 180
CR Equipment 150
CR Gain on Sale of 30— this is the amount you pay taxes on– had it been a loss it would be a “tax savings”

Good God I can't believe i have to study for this again…. grrrr…

and they ask me why I drink...

FAR- 61-next time I'll ask for lube instead of a calculator
REG-75- Never been so happy to see such a low grade
BEC- 8/11
AUD- 9/2

[Anonymous]

Yes, I hear you! It feels like more of a punishment and torture. This is my 5th attempt for BEC and I am so burnt out!!

Thanks for the (much clearer) explanation and JE. I missed the gain computation of $30k ($180k-$150k). I thought it was from the expected annual sales.

[Anonymous]

Hello fellow Ninjas, before Jeff changed to the new website format, someone posted a list of all the pertinent formulas in July. It looks like the post did not make it to the new format. Did anyone copy that list? In studying I referenced it frequently and should have copied and pasted it to a word doc.

Thanks

[Anonymous]

Net present value = (expected after tax inflows x PV factor) – Investment cost
PV for 1 year = cash flow / (1 + discount rate)^n
PV factor = investment cost / annual cash inflows
payback period = net initial investment / annual after tax cash flow
Initial investment = annuity x PV factor
Financial Leverage = % change in EPS / % change in EBIT
DCL = DFL x DOL
weighted average interest rate = cost of debt x (1-tax rate)
earnings before tax = after tax income / 1 – tax rate
CAPM = risk free rate + beta * (market return – risk free rate)
interest payment per year = par value x %
before tax cost = interest payment per year / discounted or premium proceeds
after tax cost = before tax cost x (1 – tax rate)
degree of financial leverage = % change in net income / % change in operating income
operating leverage = (Quantity x (selling price – variable cost) / (quanity x (selling price – variable cost) – fixed cost
total leverage = (Quantity x (selling price – variable cost) / (quanity x (selling price – variable cost) – fixed cost – Interest expense – (preferred dividends / (1 – tax rate)
dividend capitalization model common stock = dividend / (selling price per share – underpricing – flotation) + expected annual growth
gordon growth model = dividend / (price x (1 – flotation)) + expected annual growth
cost of forgoing discount = (discount % x 365) / ((1 – discount%) x (pay period – discount period))
cost of debt = (interest expense – tax benefit) / carrying value of debt
accounting rate of return = net income / average investment
economic order quantity = Square root ((2 x demand per year x production setup) / (cost per unit x carrying cost))
reward to risk ratio = return / standard deviation
Sharpe portfolio measure = (portfolio return – risk free rate) / standard deviation
Treynor index = (portfolio return – risk free rate) / beta
cost of preferred stock = (dividend% x par) / (issue price – issuing cost)
cost of common equity = (dividend / price) + growth percentage
CPI = (current / base ) x 100
payback reciprocal = 1 / payback period

APR (annual percentage return) = Effective Interest Rate * # of periods in year
 Asset turnover = Sales / Total Assets
 Breakeven Point in terms of units = fixed costs / Contribution Margin
 Breakeven Point in terms of dollars = fixed costs / contribution margin ratio
 Cash conversion cycle = inventory conversion period + receivables collection period – payables deferrable period
 Current ratio = current assets / current liabilities
 Contribution Margin = revenue – variable costs
or = sales – variable costs
 Cost of Goods Sold = Beg. Inventory + Inv. Purchases – End. Inventory
 Dividend Payout Ratio = cash dividend per share / Earnings per share
 Economic Value Added = net operating profit after taxes (NOPAT) – cost of financing
 Effective Interest Rate = (principle * rate * time) / principle
 Gross Margin = revenue – cost of goods sold (or gross profit)
 Inventory conversion period = Average Inventory / Cost of sales per day
Average inventory = (Beginning inventory + Ending inventory) / 2
Make sure to use 365 days per year unless stated otherwise
 Inventory Turnover = cost of goods sold / average inventory
 Marginal propensity to consume = change in spending / change in disposable income
 Marginal propensity to save = change in savings / change in income
* MPC + MPS = 100%
 Number of Days Sales in Inventory = # of days in year (usually 365 or 360) / Inventory Turnover
• Quick Ratio = Quick assets (cash, marketable securities, and A/R) / current liabilities
• Residual Income (RI) = operating profit – interest on investment (or required rate of return)
• Times interest Earned Ratio = earnings before interest and taxes / interest expense
• Total costs = fixed costs + variable costs or y = mx + b, where m = slope, x = variable value, and b = y intercept
– Variances – plug in the corresponding units:
• Material Price – AQ * (SP – AP). Actual Quantity Purchased/Consumed *(standard price per unit – actual price per unit)
• Material Efficiency – SP * (SQ – AQ). Standard price per unit * (standard quantity used – actual quantity used)
• Labor Efficiency – SR * (SH – AH). Actual Quantity Purchased/Consumed *(standard price per unit – actual price per unit)
• Labor Rate – AH * (SR – AR). Standard price per unit * (standard quantity used – actual quantity used)
• Fixed overhead spending – (budgeted-standard fixed overhead to incur – actual fixed overhead incurred)
• Fixed overhead volume – (budgeted-standard fixed overhead to incur – ((actual production * standard labor hours)*(budgeted-standard fixed overhead to incur/budgeted labor hours))
• Weighted Average Cost of Capital = [(cost of capital A / Total Amount)(rate of cost)(1-Tax Rate)] + [(cost of capital B / Total cost amount)(rate of cost)]
• Work in process = Direct Material used + Direct Labor + Manufacturing Overhead
• Average accounts receivable = (Beg. A/R + End. A/R) / 2
• Average accounts receivable collection period = sales on credit / average accounts receivable
• Average total assets = (Beginning total assets + Ending total assets) / 2
• Book value per share = common stock equity / common stock shares outstanding
• Common stockholders’ equity = stockholders’ equity – preferred stock liquidation value
• Contribution Margin Ratio = (sales – variable costs) / sales
• Cost of financing= (Total assets – current liabilities) * Weighted average cost of capital
• Cross-Elasticity = % change in demand for certain product A / % change in price of certain product B.
• Debt to equity = Total debt / total equity
• Debt to total assets = total liabilities / total assets
• Discounted Payback Period = multiply by Present Value factor until initial invested amount reached. Disregard salvage value
• Fixed asset turnover = sales / average net fixed assets
• Gross Profit = revenue – cost of goods sold
• Income Elasticity = % change in quantity demanded / % change in income
• Internal Rate of Return = Initial Investment + Cash Flow in Period n/ (1 + Discount Rate) to the nth power (# of periods).
• Marginal utility = change in total utility / change in quantity
• Market/Book Ratio = common stock price per share (or market value)/ book value per share
• Market Capitalization = Common stock price per share * common stock shares outstanding
• Operating leverage= % change in operating income / % change in unit volume
• Operating Profit Margin = Operating profit / net sales
• Preferred Stock Valuation – dividend per share / required rate of return
• Price/Earning (PE) Ratio = common stock price per share / Earning per share
• Profitability Index = project net present value / cost of project
• Receivables Collection Period = Average Accounts Receivable / Credit Sales per day
• Receivable Turnover = Net credit sales / average accounts receivable
• Reorder Point= delivery time of stock + safety stock or could be stated as = average daily demand * average lead time
• Return on Assets (ROA) = net income / average total assets
• Return on Equity (ROE) = net income / Average common stockholders’ equity
• Return on Investment (ROI) = Net Income / Total Assets
• Return on sales (ROS) = net income / Sales
• Safety Stock= (Max. Daily demand * Max. Lead time) – reorder point
• Total asset turnover = sales / average total assets

[Anonymous]

@ modesto – gracias, mucho apreciar

[Author]

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