[jeff]

Welcome to the Q1 2016 CPA Exam Study Group for FAR.

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

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

[BF98]

Hello I've been doing MCQ's on NINJA along with the SIMS while I think I'm getting better with the MCQ's I think the SIMS I'm not real sure how to start as far as solving them if its a research one that I have no issue with obviously but for those with more complex calculations how did you start solving them I feel when you solve the first part the rest should follow but at the same time I get concerned with whether I'm doing it correctly if you get the first part wrong the rest will follow.

[Fk]

Hello, I do not understand compensated absences , could any one explain me and what the vesting means.

[ZoyaFanatic]

I ran across one of the most confusing MCQs and with no idea why the answer is the answer. Would someone here know why it's not reported? It seems if you paid for a 3 month treasury bill, the payment itself should be an outflow?

Mend Co. purchased a 3-month U.S. Treasury bill. Mend's policy is to treat as cash equivalents all highly liquid investments with an original maturity of 3 months or less when purchased. How should this purchase be reported in Mend's statement of cash flows?

A. As an outflow from operating activities
B. As an outflow from investing activities
C. As an outflow from financing activities
D. Not reported

I thought the answer would be B but the answer is D and the explanation given is not helpful. Why would a purchased 3 month U.S. Treasury bill not be reported? Is it because the cash outflow was negated by now-ownership of a cash equivalent?

[Larry]

I may be wrong but I believe its because the cash equivalents are not reported in the statement of cash flows. They are reported in the beginning and ending balance when reconciling the cash flows. I know I'm not explaining it correctly. Wish I could help.

REG - 82
FAR - 78
BEC - 76
AUD - 8/27/16

[MaLoTu]

I could also be wrong, but cash and cash equivalents are listed on the B/S. I don't think that it can be an outflow or inflow because you just turned cash into a cash equivalent… I think that is what Zoya mentioned.

[trish_1234]

hey guys 🙂 how is the studying coming along

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[trish_1234]

any updates on who took the exam?

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[Lidis]

The primary purpose of this statement are to provide information about an entity's cash receipt and cash payments and to
disclose information about financing and investing activities of an entity.

The purchase of a 3 months TB does not represent an increase or a decrease of cash in the statement of cash flow. It is a an exchange of one type cash for another type of cash, It is not reported.

[Anonymous]

I am mising something here, I hate getting questions like this when I am tired,.

In financial statements prepared on an income-tax basis, how should the nondeductible portion of expenses, such as meals and entertainment, be reported?

A.
Included in the expense category in the determination of income

B.
Included in a separate category in the determination of income

C.
Excluded from the determination of income, but included in the determination of retained earnings

D.
Excluded from the financial statements

Taxable income is an amount resulting from the application of tax rules governing revenues and expenses. Some revenues/expenses are specifically excluded or subjected to limitation(s). When determining net income using the income-tax basis, a fair determination necessitates using the nondeductible (for taxes) portion of expenses (such as meals and entertainment) as long as they are legitimate business expenses.

I wanted to throw my pencil away when I got it wrong lol! The ans is A What does “a fair determination necessitates using the nondeductible (for taxes) portion of expenses (such as meals and entertainment) as long as they are legitimate business expenses” mean? 50% of those expenses are not deductible, why I am supposed to include them to determine Net Income under Income tax basis?

[nib]

hello @ cortes123,

lets take an example.

meals and entertainment = $ 12000

for income tax purpose , we deduct 50 % of it .
so now there are 2 parts of meals and entertainment
1) deductible 50 % = $ 6000
as deductible from income to arrive at taxable income . It is Included in the expense category .

2) non deductible 50 % = $ 6000
As non deductible ignore this $ 6000.

I hope this helps .

[Lidis]

Kell Corp.'s $95,000 net income for the quarter ended September 30, 20X1, included the following after-tax items:

A $60,000 extraordinary gain, realized on April 30, 20X1, was allocated equally to the second, third, and fourth quarters of 20X1.

A $16,000 cumulative-effect loss resulting from a change in inventory method was recognized on August 2, 20X1.
In addition, Kell paid $48,000 on February 1, 20X1, for 20X1 calendar-year property taxes. Of this amount, $12,000 was allocated to the third quarter of 20X1.

For the quarter ended September 30, 20X1, Kell should report net income of:

A. $91,000.
B. $103,000.
C. $111,000.
D. $115,000.

Question: The $16,000 cumulative effect loss should recognize on the first quarter not in the third quarter

[Anonymous]

@bin thanks for the reply, but my confusion came with the answer being A not in which part is deductible. My confusion was that If its not deductuble why are we supposed to include them in the expense category to arrive at Net Income if we are preparing the F.S. in income tax basis? Obviously I am not seeing something here but as of now I still do not know what it is.

[nib]

hello @ revenue ,

what is correct answer for this question ?

95000+20000-12000=103000 if i ignore 16000 cumulative effect loss . ???

[Anonymous]

Unless the was a specific space for the non deductible part and a space for the deductible part on the expenses section for the meals and entertainment. Is that what you meant bin?

[rp 12]

Can you please help me understand this solution?

Duke Co. reported cost of goods sold of $270,000 for the current year. Additional information is as follows:

Inventory:
December 31
$60,000
January 1
$45,000
Accounts Payable:
December 31,
$26,000
January 1
$39,000

If Duke uses the direct method, what amount should Duke report as cash paid to suppliers in its current year statement of cash flows?

Solution: To reconcile cost of goods sold to cash paid to suppliers, a two-step adjustment is needed. First, determine purchases by adding the increase in inventory to cost of goods. Second, determine cash paid for goods sold by adding the decrease in accounts payable to purchases. Thus, cash paid for goods sold equals $298,000 [$270,000 + ($60,000 – $45,000) + ($39,000 – $26,000)].

"Success in life comes when you simply refuse to give up, with goals so strong that obstacles, failure, and loss act only as motivation"

AUD: 68, 62, 77✔ (expires 10/31/16)
FAR: 53, 48, XX (retake 6/16)
REG:
BEC: 53

[Author]

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