[jeff]

Welcome to the Q2 2017 CPA Exam Study Group for FAR. 🙂

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

[Shelby]

I'm just working some SIMS in Becker. Does it freak anyone else out that you could answer a simulation journal entry question correctly but they were looking for it to be answered as two separate amounts and that when they are grading – they could miss that and we'd never know? (Ask is coming from someone who had a 71 and then a 73 – retaking FAR tomorrow):

Example:

Dr. Inventory 12,000
Dr. Cost of Sales 2,000
Cr. Accounts Payable 14,000

Becker said i was “wrong” because they were looking for:

Dr. Inventory 12,000
Cr. Accounts Payable 12,000
Dr. Cost of Sales 2,000
Cr. Accounts Payable 2,000

(Missed because I had combined the 2 accounts payables into one.)

I assume the actual exam has mechanisms in place that would count this as correct — HOWEVER, it's still in the back of my mind and was even in my previous exams. I wonder if other accountants think that way or if it is only my crazy brain? 🙁

[jonm857]

NOL is a deferred tax asset, correct?

So when you carryback the NOL, you have to debit deferred tax asset and credit tax benefit. Got that.

What I don't get is when you go compute total income tax expense in the a year with profit, why do you ADD (temporary difference X enacted rate) instead of SUBTRACTING it? Is it because the deferred tax asset is being reversed, and therefore, you do the opposite of subtracting???

B - 81
A - 87
R - 73
F - July 5th

[CPAIN2K17]

@priyanka93 You can use the basic accounting equation to solve those problems.

Assets= Liabilities + Stockholder's Equity

Change in Assets = Change in Liabilities + Change in SE

Further, you can break “Change in Assets” down to Change in Cash + Change in Other Assets

So the equation would be :

Change in Cash + Change in Other Assets = Change in Liab + Change in SE.

Now lets say you are given the accrual basis net income and need to solve for cash basis income. In the equation, you need to isolate “Change in Cash”, so your equation would be:

Change in Cash = Change in Liab + Change in SE – Change in Other Assets

Now when it gives you the list of account balances, you simply plug the info into the equation. So if they tell you that accrual basis net income is 100,000 and accounts receivable increased by 10,000 you would subtract the 10,000 from 100,000 because you subtract increases in other assets in our equation. If accounts payable increased by 5,000 you would add 5,000 because increases in liabilities are added in our equation.

If you had a decrease in AR, you would add it because you are subtracting a negative. So on and so forth, your ending number is the cash basis income.

The equation to go from cash to accrual is :

Change in SE = Change in Assets – Change in Liab

You are solving for change in SE… so you pretty much do the opposite in this equation of what you did in the previous one. Add increases in assets, subtract decreases in assets. Subtract increases in liabilities, add decreases in liabilities.

If you can remember the basic accounting equation, these questions will be no problem.

[Wannafree]

When Deferred tax asset was created it was Debited.
So JE would be
Tax exp DR 120
Deferred Tax asset Dr 30
Tax Payable CR 150 This is okay , right ?
Next year you reverse the Tax asset so it will be Credit

Now JE would be
Tax Exp Dr X+ 30
Tax Payable Cr X
Deferred Tax asset CR 30
You can see Tax expense = Payable + deferred Tax asset
Basically you are reversing the asset hence you are adding to payable.
I hope I have not confused you further.

[Anonymous]

Hi, just wondering if anyone here has done the Becker final review MCQs or the CPAReviewforfree MCQs? If so, how were they – do you think it's a good review? Like is it worth it to spend time on these?

[Pawn Maker]

WannaFree, thanks for posting the JE. That makes sense. I haven't run across any questions requiring me to do the JE for that so I haven't done that one yet. I will it add it my list 🙂

One of the things I have found to be useful when trying to make sure I calculate a number of different accounts correctly as a net Deferred Tax Liability (DTL) or Deferred Tax Asset (DTA) is by using this table.
For example: If Book depreciation expense is 50 and Tax depreciation expense is 100 then you have a DTL of 50.

Revenue Expense
Book > Tax = DTL Book > Tax = DTA
Book < Tax = DTA Book < Tax = DTL

[HottyToddy]

@Caueen123 I always do Becker Final Review a day or two before my exams. It's pretty much like 1 or 2 questions on every topic, so I find its good to refresh my memory for a broad range of different subjects right before the test, and point out things I've forgotten. That being said, I wouldn't recommend spending any additional money on it if you haven't already or if its on your own dime.

[Pawn Maker]

I used CPAReviewforfree before I took my AUD exam. I thought it was pretty good, especially for a free resource.

[Jj]

Side question-Does anyone else wish they invested in bitcoin back in 2010-2012, so you would be a multimillionaire today and wouldn't have to take this test…

[mtaylo24]

@beantown23 Me! Me! I definitely regret pursuing Accounting, sometimes I even regret going to college lol, but I'm in too deep smh

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[Jj]

Bitcoin was like 2$ a coin back in 2012, it's at like $2500 a coin right now….lmao

[mtaylo24]

@Beantown23 “If you’d bought $1,000 of Bitcoin in 2010, you’d be worth $35M” OMG!!!!

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[Pawn Maker]

Beantown & mtaylo24 – Funny, I heard on the news this morning how much it was and did a calc to see what I would have now if I had just invested a couple grand…if only!

[Jj]

Lol right, now I'll just get back to studying and hopefully make .5% of that…face/palm combo

[Pri93]

Thank you so muchhh @wannafree, @mtaylo24 and @CPAIN2K17. This doubt was from chapter 2, special purpose frameworks. I did all the MCQs regarding that section and got them all right, by passing the JE and making T accounts. Even tho I'm the last person to love T accounts, I think it works great and no matter what question I did, got them all right!! 😀

[Author]

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