[jeff]

Welcome to the Q4 2017 CPA Exam Study Group for FAR. 🙂

Introduce yourselves and let your fellow NINJAs know when you plan to take your FAR 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

[Anonymous]

I have never re-written my notes or Ninja Notes. Actually, I don't even think making notes, outside of flashcards is useful for me. I have found them extremely useful for AUD, because I was very diligent about making them, but for all other sections, my notes are all over the place. But I do like homemade flashcards.

[Recked]

Anyone have tips for the cash to accrual and accrual to cash?
I understand the concept, its very straight forward, but it feels like I'm having a stroke or aneurysm every time I try to mentally sort out on of these questions and I usually end up flipping things around the wrong way. I think I just need to memorize it for one way, and adjust as needed for the question.

[Anonymous]

@ReckedRacing-it's the one I am struggling with too! It's embarrassing actually…. I have used t-accounts and that helped, but that's very time-consuming….I am working on it, and if I find something fail proof I will be sure to share!!! This is definitely on my list of things to hone.

[Wannafree]

@cash to accrual and accrual to cash :Let me try.
first thing you should know what is revenue ( not income ) and capital .
What is revenue :Benefits last in a year ( or operating cycle ).example : you paid rent for the year and you can't stay more than year.
Capital :Benefits last more than a year.example ,you paid rent for 2 years ,you can stay more than a year.
Now suppose rent is $100/month . Year is Jan to Dec and you are in year 01.
Accrual : What is the rent expense for the year ( it does not matter paid or not ,it is still due or accrued) = $1200.(that's accrual ,you don't care what has been paid or not ).Let us say you have not paid any rent but stayed whole year.You know you have to pay $1200 ( accrue or due ).Simple for accountant.
Cash basis : Whatever was paid in year is expense .example say you paid $1800 as rent for year one and six month of year 2.Under cash basis your rent expense will be $1800 in year 1 and Zero in year 2.Rule (Cash basis ) is whatever paid in that year is exp and whatever you got in your accounting year is revenue for the year.Under Cash basis no distinction is made for capital or revenue ( cost matching revenue ).
So under cash basis rent exp for year 1 = $1800 .
under accrual basis rent exp for year 1 = $1200 (paid or not but $100 X12 is due ).

Now convert cash to accrual (cost matching revenue or benefits ) : Given : you paid $1800 ($100 X 18 months ,total payments made ) for year 1 and year 2 under cash basis.So rent exp under cash basis $1800 in year 1.
For accrual , you take out payment made for next year ( $100 X 6 = $600 ) because the benefits will accrue next year for the extra payment you made (600) .At the rate of $100 for 6 months (Benefits to stay next year ). So deduct next year payment from 1800 and that will be (1800 -600 ) = 1200.
Where you will show the $600 ? In BS as pre paid exp (asset ).

Tips :Start with either one and reach the other end with the above logic.Keep in mind in accrual you paid or not is not important ,due ( accrue ) will be calculated with common sense.
Under cash ,payment is important , if paid its exp ,if received its income in the same year.You can't say I am staying free next year for 6 months because you really paid in advance.You will get the benefits of stay next year without incurring cost and that will be not true .

[jeff]

Ask the NINJAs: When to Start Studying MCQ

Ask the NINJAs: When to Start Studying CPA Exam MCQ

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

[Ana]

I use this for cash to accrual (it's the exact opposite trick used for indirect method for cash flow):
A – increase +
A – decrease –
L – increase –
L – decrease +

[Recked]

thanks ana, i'll try to put this to use the next time i come across one of these questions.
much appreciated.

I've jumped from Roger's IPQ's over to Gleim test bank for FAR.
Sweating it out. 200 MCQ's down, 68% so far.
Lots of repeat questions, but some new/different ones.
Shock to the ego, but helps to keep me focused and not get too sure of myself.

[Ana]

@recked hope it works for you. most of the time when I get the cash to accrual questions wrong it's because I didn't really read the question. They're tricky in the sense it could be asking accrual to cash, or not saying accrual to cash (and we assume otherwise), it's so damn easy to get these wrong.
When is your test?

[Recked]

Nov 9th. Sitting for my first part. Graduated 2002.
Picking up on the stuff well, but the devil is in the details I'm afraid.

[Ana]

Right around the corner! I'm going to the guillotine tomorrow. Graduated business school in '07 and post degree in accounting in '11. Great decision to take FAR first. I regret my decision not to everyday.

[Recked]

EDIT: JUST NOTICED THE QUESTION SAYS FLAX CORP USES THE DIRECT METHOD TO PREPARE cash flows. disregard my using your cheat for indirect, derp…
Came across a cash flow question, tried to use opposite of above, but did not work out. Might be missing something.
Resorted to logic and journal entry.
Question is asking for cash used for income taxes.

Relevant details.
Income Tax Expense 20400
Inc Tax Payable Ending 21000 beginning 27100
Deferred Inc Taxes ending 5300 beginning 4600

Inc Tax Expense 20400
Tax Asset 6100
->Tax Liab 700
->PLUG 25800

Asset Decrease by 6100 means cash was paid out.
Liab Increased by 700, means cash was NOT paid out.
20400
+6100
-700
= 25800

Not sure the journal entry method is the proper approach for this problem but it worked this time.

[Ana]

the opposite will not work for the direct method, only the indirect. Sorry don't have any tricks for the direct method. Just gotta learn it 🙂

[Wannafree]

Is there any settings by which I get email notification for new post rather than to log on the url. earlier there used to be a check box near submit button which I don't see now.

[Recked]

Sorry wanna, I think that was disabled.

[Lentilcounter]

I took FAR today. I gave myself 45 minutes for each MCQ testlet and 2.5 hours to do the sims. I gave myself 30 minutes for the first 2 sims, and 1 hour for each testlet of 3 sims. I actually finished the entire test with 30 minutes to spare.

MCQ = Very reflective of NINJA MCQ. Becker and Wiley MCQ are definitely harder. I flagged a couple questions in both testlets that I didn't know. I don't think they were left field pre-test questions. I just think with some more polish in my studying, I could have answered them.

Simulations = No surprises here. If you follow the blueprints and that FAR thread I created with Ana's help, this is what you will see on the test day.

I could not identify the pretest questions in this exam. Not sure if that is a good thing or bad thing. There was one SIM where I know I got something wrong because I couldn't get something to balance. However, I chose to suck it up and move on. I hate that you can't see all the SIMs at once. I would have definitely came back to that SIM with the 30 minutes I had left at the end. Finally, I would be surprised if I didn't pass or at a minimum my score didn't break the 70s.

Off for the evening and starting REG tomorrow!

BEC = 72 (6/08/16)
FAR = ?
REG = ?
AUD = ?

[Author]

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