You can pass the CPA exam: get motivated

234 Pages·2005·1.596 MB·English

by  Debra R. Hopkins

You Can Pass
CPA
the
Exam
Second Edition
G E T
M O T I V A T E D
Debra R . Hopkins
JOHN WILEY & SONS
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Library of Congress Cataloging-in-Publication Data
Hopkins, Debra R.
You can pass the CPA exam: get motivated: knowledge and confidence-building
techniques/Debra R. Hopkins.—2nd ed.
p.cm.
Includes index.
ISBN 0-471-45389-7 (paper/cd-rom)
1. Accounting—Examinations. I. Title: CPA exam. II. Title.
HF5661 .H58 2005
657'.076–dc22 2004019370
Printed in the United States of America
10 9 8 7 6 5 4 3 2 1
This book is dedicated to the thousands of CPA candidates who have motivated me
to believe in my abilities. Special recognition goes to my favorite CPAs, Mortimer
Buckley, Beata Debek, Edward Gin, Mark Kramer, Leslie Kivi, Shyree Sanan, and
Jennie Wong. They make me believe!
CONTENTS
Page
Chapter Title No.
1 Believe That You Can Pass!.......................................................... 1
2 Content and Overall Exam Format................................................ 9
3 Scheduling and Applying for the Exam......................................... 32
4 A Time and Place for Everything.................................................. 43
5 Assessing Your Strengths and Weaknesses................................... 57
6 The Multiple-Choice Component.................................................. 65
7 The Communications Component—Formerly Called Essays...... 75
8 The Simulation Component: No Fear, It’s Here.......................... 82
9 The Research Component: How Many Hits?............................... 87
10 CPA Exam Grading........................................................................ 94
11 Developing Your Personal Study Plan.......................................... 99
12 Study Strategies to Improve Your Memory.................................. 111
13 Coping with Family, Friends, and Coworkers............................... 127
14 Revising Your Personal Study Plan............................................... 136
15 How Will I Ever Pass? Practice Makes Perfect!.......................... 143
16 The Art of Auditing and Attestation.............................................. 152
17 Financial Accounting and Reporting: Tough It Out..................... 160
18 Regulation: The Rule-Oriented Section....................................... 166
19 Business Environment and Concepts: It’s New, It’s Different.... 174
20 Surviving the Prometric Experience.............................................. 181
21 Nerves of Steel............................................................................... 187
22 Time Management......................................................................... 195
23 It’s Show Time............................................................................... 205
24 The Waiting Game......................................................................... 212
25 Regrouping after an Unsuccessful Attempt................................... 216
26 Congratulations—You Are a CPA!............................................... 226
PREFACE
Over the past twenty years, I have witnessed thousands of CPA candidates pass the Uni-
form Certified Public Accountant’s (CPA) examination. Although there are many manuals
and courses that outline the CPA exam’s technical material, there is not much available to
help CPA candidates manage the entire preparation process. This is especially true now that
the CPA exam is offered in a computerized format.
With so little information available about the new computer-based test (CBT), it is no
wonder that hundreds of candidates find themselves overwhelmed by the entire process. Now
that the exam is offered one section at a time over various time periods, more information is
needed. It is vital that CPA exam candidates understand the entire examination process, from
the simple question of: “Which section should I sit for first?” to the issue of how best to pre-
pare for the new simulation question format. Beginning with applying to sit for the CPA
examination, to the technical knowledge, and ending with the exam-taking process itself,
candidates need guidance. The purpose of this book is to provide such overall assistance.
With a pass rate of 40-45% per section, I know how important it is for candidates to meet the
demands of such a rigorous examination. Passing the computer-based CPA exam will con-
tinue to be a formidable undertaking. Use the strategy and study tips outlined in this book to
maximize your study efforts and minimize your exam-taking time. Knowledge is power.
Become fully informed about the entire examination process so that you can fulfill your
dream of becoming a CPA by acting in a commanding manner. Whether you enroll in a
formal CPA course or choose to self-study, this book will help you deal with the emotional
side of your preparation process. You have made a considerable investment in your career so
far. Why waste time and money in the last leg of the journey? Passing the CPA exam is the
crowning glory of the accounting degree. Save yourself time, anxiety, stress, and energy by
doing the right things to increase your chances of passing.
Each year I have the pleasure of assisting over 1,000 CPA candidates. I have put all my
experience as a faculty member and director of one of the highest-achieving review courses
in the nation into this book. I want the information and guidance made available to as many
people as it can reach. I believe that candidates from all over the world have made a consid-
erable investment of time and money in preparing for the exam, and they deserve the best
guidance when it comes to the preparation process. Enjoy the book, the CD recording, and
even taking each exam section. It’s much easier when you know what to expect and how to
handle the difficult areas.
I am grateful to those who have inspired me to continue to help people from all over the
world pass the CPA examination. Gratitude is expressed to Mary Hamell, my office assistant,
for her strong belief in my abilities. I thank Leslie Kivi, a fellow CPA Review faculty mem-
ber, for her capable editorial assistance. I thank Judy Howarth and John Deremigis of John
Wiley & Sons for their expert guidance. Special thanks go to the thousands of CPA candi-
dates who encourage me to share my exam-taking techniques. Finally, a heartfelt thank-you
to Megan, Lorraine, Tony, and Roger. Without their loving support, I would accomplish
nothing.
Good luck to you in achieving the worthwhile goal of becoming a CPA!
Debra R. Hopkins, CPA, CIA
ABOUT THE AUTHOR
Debra R. Hopkins directs the nationally acclaimed Northern Illinois University (NIU)
CPA Review course in the Chicago, Illinois area. For over twenty years she has taught fi-
nancial accounting and auditing topics and for the last three years she has taught govern-
mental and nonprofit accounting topics.
As director, she assists over 1,000 CPA candidates each year. She has skillfully com-
bined her education, experience, and enthusiasm into a format that is easy to follow and un-
derstand. In the classroom she works directly with busy candidates who work full-time or
are completing demanding accounting programs. She knows firsthand how frustrating the
exam-taking experience can be for a person who is unaware of how the CPA exam functions.
She has seen and heard directly from the candidates.
1
BELIEVE THAT YOU CAN PASS!
Passing the Uniform Certified Public Accountant (CPA) examination is
not easy. Ever since 1917, the CPA exam has been challenging candidates.
With a first-time passing rate of 12 to 18% on the pencil-based exam and a
less than 50% per exam section passing rate on the computer-based test
(CBT), it is assumed that most people will fail one or more sections on their
first attempt. That’s right, the odds are against you. Yet the only way to be-
come a CPA is to keep on trying. Completing the exam is one of the greatest
accomplishments an accountant can achieve. Completing a degreed ac-
counting program is an accomplishment to be proud of, but passing all four
sections of the CPA exam is the crowning glory. The old story goes, anyone
can earn an accounting degree, but only the best accountants can pass the
CPA exam. Without the three initials CPA, you are just another accountant.
How could three initials mean so much?
Being a CPA sends certain signals. People know that you have achieved
a very difficult goal—you have passed the Uniform Certified Public Ac-
countant exam, one of the most difficult certification examinations in the
nation. In the business world, the CPA designation instills confidence and
trust. Compared to an accounting graduate who has not yet attained certifi-
cation, CPAs command higher salaries, are in greater demand in the work-
force, and are given greater respect by the general public. The recent ac-
counting problems experienced by a few large corporations have made the
CPA certificate more valuable, rather than less valuable. With the Securities
and Exchange Commission and various oversight boards watching the pro-
fession, the CPA designation sends the signal of professional achievement.
You have attained a minimum level of competence required to perform your
work.
Who wouldn’t want more money, more job choices, and more respect?
The desire to become a CPA should be yours. You must believe that you
have the skills and knowledge necessary to pass this exam. If you can look
at yourself in the mirror and say, “I can pass the CPA exam,” you are ready
to proceed. Believing that you can pass the exam is the first step. Now,
what’s next?
STEPS TO CPA EXAM SUCCESS
In today’s highly technological and informational age, it is amazing how
many people take the CPA exam without knowing much about the process.
Perhaps this is the reason why over half of the people taking the exam fail
on their first attempt. To complete the CPA exam successfully, you must
understand much more than the technical material. The three to four hours
2 Chapter 1 Believe That You Can Pass!
that it will take you to read this book will save you countless hours of study
time, not to mention the stress and anxiety that goes along with a high-
stakes exam. Get Motivated is designed not only to keep you pumped
throughout the study process, but also to help you
• Increase your memory power
• Design a personalized study plan that is customized to fit your busy
lifestyle
• Eliminate the fear of failure by understanding the exam process
• Decrease test anxiety by increasing your overall knowledge of the
exam process
• Improve your study habits for the CPA exam, other professional
certifications, and other study programs, such as graduate and certifi-
cation programs
• Maximize the efficiency and effectiveness with which you study
Taking the CPA exam is a costly venture. When you add up the cost of a
review course, textbooks, software, the exam application and related fees,
the time off work, and the cost of travel to and from review courses and the
exam, the total investment can easily exceed $3,000. Yet many exam candi-
dates have the attitude that they will just “go try the exam to see what I can
learn.” If you were running a business, would you waste time and money
just to understand the process? I doubt it. You would hire a consultant who
not only understands the process but who can quickly teach you how to
make the most out of the experience. This book provides you with just such
tips and strategies. For over twenty years I have assisted thousands of people
from all over the world pass the CPA exam. I have witnessed firsthand what
it takes to pass. I know why people fail. I know how the successful people
proceed. Why take chances? Learn how to attack the CPA exam and beat
the odds of failure. Learn from other people’s mistakes. Learn from other
people’s successes. Why reinvent the wheel? Utilize a best practices man-
agement plan that has been developed, tested, and found to be successful.
Use the tips in this book as if a CPA exam consultant personally developed
them for you.
You are ready to proceed. You have the desire to pass the CPA exam.
The next step is to understand why so many people fail; failure is what you
want to avoid.
FAILURE
Failure is the act of nonperformance. Failure means you were not suc-
cessful at this attempt. Failure is temporary. Failure does not last forever. If
you did not pass the exam, you are not awful, stupid, or careless. You just
did not perform in the manner that was required. There is no need to provide
excuses as to why you did not or will not pass the CPA exam. Making
excuses takes time, bores the person who is listening to you, and reminds
Chapter 1 Believe That You Can Pass! 3
you that you were not successful. Move on; failure is the wrong focus.
Spend a brief amount of time analyzing why you or others before you have
failed. Then use your knowledge to move on. Learn from other people’s
mistakes.
Why do so many candidates fail the exam? Less than half of the people
taking each exam section pass. What makes this exam so difficult?
First, the exam probably is not similar to any other exam you have ever
taken. The total exam time is fourteen hours; the longest section, Auditing
and Attestation is four and one half hours. Most exams you took in college
were much shorter in length, perhaps one to two hours. A four and one half-
hour exam would be considered very long.
Next, the exam is given in a place and format that is unfamiliar to you.
You are accustomed to taking your exams in a college classroom, not at a
Prometric test center. Not only is the place unfamiliar to you, but the format
of taking an exam on a computer is new to most CPA exam candidates. The
exam is administered under the rules set by the American Institute of Certi-
fied Public Accountants (AICPA) and the Prometric test center using a well-
defined navigational process. Most CPA candidates are not informed about
the exact exam-taking rules or of how to navigate the computerized format.
Finally, the exam covers material you learned over four to five years
during your college studies. Although you are permitted to schedule each
exam section over several testing windows, you must successfully complete
all four sections within an eighteen-month period. Learning about the exam
process, the format, and then reviewing course content and material that you
learned several months or years before is a daunting task. If you stack up
your college textbooks and professional reference materials that support
each of the four CPA exam sections, you will have a pile that is at least a
foot high. Add the four piles together and you quickly see the tremendous
amount of material that is tested. Dealing with such breadth of material is
enough to destroy your confidence.
After the exam, you must wait for your scores. Unlike the timely feed-
back you received in college, receiving your CPA exam score may take as
long as six to eight weeks. Your kind college professor will not be grading
the exam. Accounting professionals and AICPA examinations staff, who do
not personally know you, will be grading your responses using a predeter-
mined grading guide. You will be expected to achieve at a certain level that
has not been clearly demonstrated or defined for you. The passing level of-
ten is established well before the exam is given. When the scores are re-
leased, you will not see your answers. You will see only your overall score
for each section and a brief summary of your performance called the “Uni-
form CPA Examination Performance Information” report. The uncertainty
of the content, the exam format and environment, the grading process, and
the sheer volume of material may make you want to give up. Don’t give up!