Catching Creative Accounting and Preventing Financial Fraud

Carolyn graciously lent me a copy of “How to Lie with Statistics” by Darrell Huff. Despite its 1954 publication date, this book is remarkably relevant today. Below, I explain why the book, despite its high quality, will never achieve its aim, and my suggestion for a substitute.

How to Lie with Statistics is a gentle introduction to deceit with numbers. It is brief, the writing is elegant and light-hearted, and every single one of the lies described in the book is still in widespread use sixty years later. The book includes an informal catalogue of common statistical errors, reserving special scorn for the Precision Bias.

It is a valiant effort to craft an accessible and persuasive introduction to the issues. The author seems to believe that with sufficient widespread education, we can banish misleading numbers. I disagree. The problem is hard, in that the tiny individual payoff will never justify the effort needed to detect and oppose numerical deception. We need an easy way of certifying and enforcing honest data presentation.

The core of Statistics is the comparison of expectations to results. All of the lies present accurate and precise numerical results (technical honesty) but mislead about the appropriate comparable expectation (de facto dishonesty). The situation is complicated by the fact that even professionals frequently have difficulty crafting the proper expectations. Malicious numerists always have plausible deniability.

To put it another way, statisticians have considerable flexibility in methods and presentation. Special interests abuse the flexibility for their own purposes.

There is an analogy to accounting. Accountants have considerable flexibility in methods and presentation of financial results. Accounting is about leveraging that flexibility to avoid taxes. In response to the inevitable plethora of abuses, accountants developed the Generally Accepted Accounting Principles (GAAP), a catalogue of rules to govern the business.

I propose the development of Generally Accepted Numerical Principles. We must formalize the Expectation side of the statistical Expectation-Results dichotomy so that we may call out a liar and impose consequences where necessary.

How might such a system work? I would leave the details to the expert statisticians, but one way would be to develop a formal catalogue of Expectations given specific Results. It might look like something like the following (though this is not the formal proposal):

Use of “Average”

A number called an “average” in isolation entails the following assumptions:

• The number presented is an arithmetic mean.
• The sample of the average is an unbiased representative of the stated population
• The population has a normal distribution in the variable.
• The median is within 0.1 standard deviations of the mean.
• p <>

N out of M/Percentages

A statement of the form “N out of M Practitioners ” or “X% of Practioners ” implies:

• The sample is an unbiased representative of the stated population
• The population has a normal distribution in the variable
• p <>

Line Graphs

A line graph must:

• Have axes labelled and units included
• y-axis has 0 at the origin and no discontinuities
• All data points collected with equal sample characteristics

Appropriate uses could be given a trustworthy logo or stamp. Publications could be “GANP 2011 certified” indicating that they obey the rules of the GANP. It would become easy for lay people know what numbers to trust.

Obviously, the development of such a catalogue would be a monumental task. The organizing committees would be subject to perpetual corruption and interference attempts. The first several iterations of the GANP would permit rampant abuses while loopholes were found and closed. Chaos, confusion and doubt would run amok. During the development of the rules, at least 452,235,239 people will die and more than 1.37 billion will suffer in poverty. Nevertheless, four out of five University of Toronto experts agree, this is a good idea.

College Student Recipe - Tex-Mex Chicken Soup

This is my all-time favorite dish that I make. You're gonna love it, too. Here's how to do it:
4 chicken breasts on the bone (thighs work great, too)
1 onion, chopped
1 (each) red, green, yellow bell pepper- chopped
I made pinto beans the night before and used 4 cups of the leftovers ( cooked from dry w/onions, peppers, garlic)....or use 2 cans, rised and drained.
1 can black beans, rinsed
6 cups frozen corn, divided
4 TBS chili powder,2 TBS cumin,1 TBS salt, black & cayenne peppers to taste
limes, fresh jalapenos (not pickled in the jar- there IS a difference), sour cream, tortilla chips.
Boil the chicken. Skim & discard foam from pot. Debone when cool and tear into bit-sized pieces.
In a large pot- the one the soup will be in ( I use a big cast iron enamled pot), heat some olive oil. add the onions and peppers. Fry for 5 min. Add the chili powder, cumin, salt & peppers.
Strain the broth into this pot.
Take 4 cups of the corn + 1 cup broth and puree in blender until smooth. Add to broth. (do this in 2 batches if need be)
Add the chicken and remaining 2 cups of corn and simmer for 30 minutes.
Take a cup of sour cream and add 1/2 chopped jalapeno, a handful of chopped cilantro, juice from 1/2 lime & the "meat" from the other half of the lime. Mix well.
Now- this part is just as important!- crush a handful of tortillas into your bowl. Add desired amount of soup. Add a spoonful of the prepared sour cream, sprinkle w/shredded cheese and a slice of avocado.
Oh...my....Lord....talk about DELISH!!!
Let me know how it comes out if you make it!

Building the Habit of Waking up Early

It has been said that it takes 21 days to form a habit, and that our habits shape our destiny. I have always admired those that had the habit of waking up early, partially because of the results they got from it and partially because it has so alluded me. Waking up early is a sign of a strong work ethic and excitement to start the day. Of all the other great reasons I could include to support why I want to do this, it is more important to actually do it. I will be documenting my progress and failures in this article over the next 7 days to help others gain insight on how to do this in their lives.


Day 1 - 10:45 am
I got to sleep late last night, sitting in bed unable to let it go. After waking up at 7 am for a brief moment to turn my alarm clock off, I decided to stay in bed and be awake until I could think of something I wanted to do that early. Obviously, after this I immediately fell back asleep and before I knew it, a brief nap turned into a late start to the day.

So I am currently brainstorming ideas for waking up early. I usually have little problem when I have an obligation with someone else, for example a meeting or work. Since I can't think of anyone to get together with that early, I am going to brainstorm exciting things going on early in the morning. I suppose there is some good news on in the morning, however I could justify watching that later in the day. I enjoy drinking coffee, which may be a decent motivator. I'm currently at a loss, but I'm sure something will come of it.

As for these sleepless nights I have been having, I am planning on reading a book until I can't keep my eyes open anymore. If I finish the book, I suppose I will get another one! If I am to be up for hours, I might as well be entertained. Here is to waking up closer to 7am tomorrow!

Day 2 10:04 am

Last night I stayed up in bed reading until I fell asleep - this worked out well, as I felt entertained and as if I was keeping myself mentally sharp. Late night television is not the best at helping me get to sleep, and most of what is on is just garbage anyway. This morning it was raining so I was a little less motivated to wake up - however I did wake up at 7am, only to fall back asleep.

Day 3 10:14 am

So I fell back a little on my goal today, largely in part because of staying up late last night visiting a friend. I went to his house earlier and had a few beers with him, and next thing I knew I was laying down in bed at 2am. A big part of the reason I didn't wake up earlier today, I believe, is that I still don't have ingrained in my mind a good idea of when I should be going to sleep in order to get up early. I am so used to staying up very late; midnight was around the time I used to finish studying and then take at least a couple of hours to wind down. I am now going to have to shoot for 11pm as my target bedtime if I hope to get up early.

On the positive side, this morning I did get up very shortly after I became conscious. No reluctance to waking up, getting out of bed, etc. Considering I took some sleep aid last night, and didn't hear any alarm clocks going off this morning, I am happy that I woke up naturally at about the time I have been the last couple of days. We must remember that I would normally wake up around noon, sometimes later.

Day 4 6:59 am

Success! I am really surprised that I ended up waking up this early today, it was actually one minute before my alarm clock went off! All this success and it only is Day 4, I must admit I was expecting it to take longer before seeing this much progress. Another reason I am surprised I woke up this early was the timing of my sleep - I went to bed a little after 2am this morning again, bad me. It is no surprise that after I jumped up out of bed this morning, I drove to the gas station and purchased a coffee energy drink to help wake up - I didn't want to risk falling back asleep!

Here is a short list of reasons I am excited about being up so early today:

• I can start working earlier (I make my own schedule), and in effect get done earlier in the day, leaving me more time for recreation later in the day.
• I am further ingraining the habit. Even though I may be a little groggy today, I know I will be able to do this with a higher degree of mental alertness in the future.
• I will not only feel like I "get more done," but get more important things done which will bring me closer to my goals. This is partially due to less outside distraction from people, entertainment sources and from the media.
  

Day 5 - 11:10 am... ouch

Okay, so my day up early yesterday turned into a night out late too. The more I see how it is affecting me the next day, especially in relation to the time I woke up, the more I can see why staying out late is something to avoid. My whole day felt like it was slowed down and as if I was playing catch-up the whole time. This doesn't mean I can't go out and see friends, but I have to set reasonable deadlines for when I need to be home by.

Day 6 - 8:24 am

I got to bed at a reasonable hour last night, closer to 11:00 pm than I felt comfortable doing. Going to bed early is something I haven't done in so long that it felt alien, and it was especially difficult because of my excitement from the Cavaliers winning the basketball game that was over right at bedtime. However, it didn't take me as long as I expected it to in order to fall asleep. That is one thing I must battle in order to keep a regular schedule, falling asleep in a respectable amount of time. I have incorporated cardio back into my workout, which should help. I believe a foot injury was the reason I took it out, and I never got around to putting it back in.

Day 7 - 6:00 am (and 11:00 am)

Wow, I got up really early today! Surprisingly enough, I didn't get to bed until fairly late last night and woke up without the alarm this morning. However, to be completely honest, I did go back to sleep at around 8:30 am and woke up again once and for all at 11:00 am.

I think the main problem I have with waking up early is saying no to staying out late visiting with friends. Most of my friends don't like to get together earlier in the evening or afternoon, which is probably a large reason for why I end up staying out so late - they are and they don't make it seem like a big deal.

Accounting Theory - History of Accounting

Accounting is one of the oldest professions around and dates back to the earliest days of civilization. It has been driven by the trade system of crops and products necessary for survival. As the barter system expanded to include the exchange of money, methods were formalized by 2000 BC. to include the creation of accurate records of the quantities and relative values.

Early Accountants - What were their Influences?

Through archaeological discoveries of artifacts, researchers are learning more about the true influence the earliest accountants had on civilization. Through their discoveries, archeologists have discovered accountants participated in the development of:

• trade – expand market for and access to goods and services

• cities – as trade grew, so did the marketplace

• concepts of wealth and numbers – personal and governmental planning

• writing – understandable system of accurate recordkeeping

• double entry bookkeeping – associated with birth of Italian Renaissance

• money and banking – helped businesses avoid bankruptcy in Industrial Revolution

Who is the Father of Accounting?

The history of accounting is not complete without Luca Pacioli (1445 - 1517), also known as Friar Luca dal Borgo and the “Father of Accounting”. Pacioli is credited for the “birth” of accounting. In 1494, he wrote a textbook that was a compilation of the mathematical and accounting knowledge of his time. His textbook provided the first printed description of the double-entry accounting system used by Venetian merchants in the late 15th century including a similar accounting cycle as we know it today. The system described journals and ledgers with sections for assets, liabilities, capital, income, and expenses found on the modern accounting balance sheet.

What about Modern Accounting?

As civilization evolved, businesses grew and so did capital markets and with that…accountability. Successes depended more and more on accurate and dependable financial documents. Through time, the role of the accountant has become an integral part of almost every aspect of day-to-day business and governmental regulation. The history of accounting has led modern accounting to become a global, real-time integrated information system driving the direction of accounting expertise and emphasis on the importance of the accounting profession.

Dealing with a Bad Roommate

Do you have the roommate from hell? You have come to the right place! I have put up with numerous intolerable roommates over the years, and have developed the techniques to tolerate, infuriate, and eventually prevent situations like this from arising.

Tolerate
So your roommate is bugging the crap out of you with his loud music, late nights, and poor cleaning habits? You've talked with him and he still hasn't changed? Try some of these ideas:

• Buy a box of ear plugs to drown out his loud music, talking, etc. Make sure that he knows that you are using them, so that if you still have a disturbance after this then it is obvious you are not overreacting.
• Get out of the house as much as possible. If you aren't there to be bothered, then problem solved. This could have a positive impact on your social life also.
• Stop cleaning up after him, only cleaning up after yourself. After a while, he will notice the mess and realize it is his. With any luck, he will clean this up out of courtesy - this may take patience on your part.
  

Infuriate
Before purposely pissing off your roommates, you should make sure you exhaust every other option and are willing to take the consequences of what might happen.

• Start doing what the same inconsiderate things. If he stays up late making noise on nights you have important things to do the next day, do the same.
• Report them to the landlord for violations of the lease or local ordinances, such as noise complaints.
  

Prevent
They say an ounce of prevention is worth a pound of cure.

• Create a list of must-have qualities in roommates, and make sure that you communicate these to them. You will have to make sure to live up to the same standards you demand.
  
• Make sure to screen your roommates very carefully before moving in. Get to know them and spend time before making the commitment. This could be as simple as a few meals. If you can't handle them in social settings, how will you be living with them?
• Move in with people of similar background, age, and values. Most problems occur surrounding these.

The benefits of having a roommate are many but they come with added responsibility. Use these tips for dealing with bad roommates, or preventing getting them in the first place, in order to reap the rewards without the crisis.

Pass the CPA Exam - Financial versus Cost versus Management Accounting

When you are studying for the CPA, you have to keep in mind the different types of accounting that are out there and keep them separate in your mind. There are three areas of accounting to consider in modern day accountancy for business. These three areas are cost, finance and management accounting.

Financial accounting, is used mainly for discerning the results of any such business on a periodic basis, such as every year. This should help the company determine the future goals and plans in the long term. From an economic perspective, financial accounting treats money as a factor of production.

Management and cost accounting are basis of accountancy used to help the management of a company make decisions on a day to day basis. These are widely tested in the Business section of the CPA exam, and include efficiency and productivity. Is the business meeting budgeted goals? How much of a variance from stated goals and standards (in a positive or negative way) is there? Cost accounting's purpose is to measure the value of direct and indirect costs involved in production. From this information, management can make an informed decision on improvement in production performance. From an economic perspective, cost accounting measures economic performance. Thus, this information gives management a clearer indication of the performance of the product resources in the business.

Costing also helps the sales manage in setting the correct price. But, because costing is solely a measurement of economic performance, it can not be considered as an accurate basis for setting prices. This is because selling prices is more of an economic decision. It would not be wrong for me to mention that pricing is basically determined by market factors. Prices are influenced mainly by demand, supply and competition, less on costs. For i.e. high demanded plus lack of competition would result in the business charging higher prices for its product, well above the costs.

The third area is management accounting, which is related closely to cost accounting. Although it has essentially evolved from cost accounting, management accounting plays a much broader role in management decisions. It measures the performance, economically, of the whole business, vis-à-vis the economic environment that the business operates in. This area of accounting, seeks to combine both financial and cost information into a much broader function.

Lastly, management accounting, this area is instrumental in advising and assisting management in making vitally important business decisions. It essentially makes management more self aware of the economic implications and consequences of decisions made. From an economic perspective, it looks at the study of money as an economic resource, while at the same time, treating it as a measure of economic performance. This allows the management to measure it as an economic factor of production, for i.e. the rate of return on capital employment.

It is then seen that accounting plays a vital role in three distinct areas, which are equally as important for those wanting to pursue a career in accounting. With the advent of computerised accounting, it has made it much easy for management to monitor the accounting information. Financial accounting software, allows you to make financial statements and various cost and MIS statements almost instantly with just one push of a button, the only laborious aspect of accounting is data entry. A financial manager must bring it upon himself or herself to make sure that meaningful data is input into the system. Proper categorisation must be done and all key based errors avoided, in order to ensure management is receiving accurate financial information.

Pass the CPA Exam - Why? Firms Provide Bonuses

With staggering pass rates of the CPA exam in the 40% range on individual exams, and as low as 10% for all candidates passing the first time through, many people lack motivation to stand up to this kind of punishment. The study material is expensive, time consuming, and generally not very fun. So why does anyone put themselves up against this exam? Other than the obvious long term benefit of career advancement, many firms provide short-term incentives for their employees to pass the exam either before they start or in the first few years at the firm.

Positive thinking and reward psychology is what gets many through. How much does the firm you are working at, will be working at, or want to work at offer? One employee for a major accounting firm reported a $5,000 bonus for entering the firm with a CPA license. If you break this down, that is $1,250 per section of the exam. He told me that he stays motivated by reminding himself exactly how much money he is making for each section, and treats it like a job.

Reminding yourself with positive thinking techniques is important while studying for long hours. Several candidates preparing for the exam come down with common cold-like symptoms because of negative stress. Positive thinking can prevent these, giving you more up time for the exam preparation. Some of these can be:

• This exam is only temporary, but the benefits of passing will be lasting.
• I will make more money with my CPA
• I will get more respect from those in my profession
• And the list goes on... see my list of reasons to pass the exam now!
  

Wake Up Early and Study | Study Tips for Students

When trying to get ahead and get better grades, it is always good to have a few techniques to help yourself get the edge. After all, school is competitive and you need to do anything (positive) you can do to get the grade. So why is waking up so beneficial to not only studying but life in general?

Waking up early gives you more time to prepare. The more prepared we are for any given thing, the better we generally do with less effort. Sure, it is possible to prepare the night before, however our brains need time to wake up as well. Getting a jump start on things is a great idea.

Arriving early places looks good. Have you ever wondered how come you never get the good seats in the class? Why your teachers look at other students in a more positive light? Part of it is because you didn't show up early enough to beat them there - the early bird gets the worm. Fashionably late is no longer fashionable.

More time to plan your day. Instead of just rushing into your day without any type of idea what you are doing half asleep, get up a little early and set out a plan for yourself and what you hope to accomplish. If you already have your day or week planned out, review it and work out the details. After you build up some confidence executing these plans, you might decide you want to get a masters degree in accounting.

Less distractions. In the morning most everyone is either asleep, working or getting ready to leave for work. There aren't any good TV shows on (unless you count the news), friends going out to movies, sporting events, etc. Your neighbors and/or roommates more than likely aren't blaring music either!

Get more done. People that wake early always talk about how addicting it is because of much they get done. I'm not exactly sure how it happens, but my experiences and observations hold this to be true. Perhaps you could use this extra time to get involved in a leadership role on campus?

Pay more attention. Have you ever noticed that when you wake up early, grab a shower, eat breakfast, and pick out a nice outfit for school then you are more alert in class?

Beat them to the punch. If you can get to a limited resource before other people, then you have the opportunity to get it instead of them. For example, if you show up to the breakfast line before they run out of eggs, then you managed to beat the other late risers. Think about it, what if you had a mortal enemy out there in this world, would you want them to be awake before you taking your eggs?

Older people get up early. Crazy thought, I know, but older people usually wake up early. Why does this matter? Think about it! Older people have much more experience in life than us, hopefully have learned from it. You will likely encounter more of them in the early morning, in which you will have the opportunity to inquire advice. Also, these people tend to have much more money than young people do, and you will likely have the opportunity to find out why.

But what about the night life? If you think about it, staying up late isn't really that enjoyable of a thing. Some college students get used to staying up late partying, causing negative side-effects of drinking, spending excessive amounts of money, and making poor decisions which lead to real consequences. Staying up late studying, cramming for a test isn't always bad as long as it is not the night before the test. However, a friend of mine who gets great grades and has fun told me his secret - wake up early and get all your studying out of the way, that way you can go out and have fun drinking with all your friends and not be stuck inside all night studying. For him, it is his chance to take his mind off the books and socialize a bit.

Pass the CPA Exam - Business Section - Test Prep

With under a week left of preparation for taking the Business section of the CPA exam, I am starting to put my last push in. Studying the day before the exam, and especially the day of the exam, don't work very well so if I don't learn it in the next few days I probably won't know it. So how am I studying?

First off, I have an exam test prep course I am taking which provides exam questions and reading material. I have gone through and read these once so far, and some of the more difficult sections twice. I generally approach these using the SQ3R method, which is a commonly used reading technique today to improve reading comprehension.

The practice questions included in the package were my next step in test prep. I went through a trial run on them and answered them to the best of my ability. Now, I am going back through and answering the questions I got wrong or skipped the first time through. Some of these questions I answered in haste, due to impatience or missing the key of the question. The best way to learn from these questions is to sit back, think, and understand the question. Consider each option and take your time - only the final exam is timed, right now it is most important that you get your form right and next you can work on speed. There is no prize for getting done early with every question wrong!

Related Articles:
Best Reasons to Take the CPA Exam Now!
Pass the CPA Exam - Business Section - Economics
Pass the CPA Exam - Overview of the Business Section

Student Obesity in the USA

As Americans, we face one of the most frightening problems among the entire world: Obesity. Everywhere we turn is fast food deep fried in grease, extra large Coca-Colas with free refills, and the option to get the value-meal super sized. In the USA, it is even worse because our schools are inviting fast food companies into our cafeterias from grade school to the university level.

Is it any wonder that obesity in the USA is such a problem? What can we, as concerned students do in order to prevent gaining weight? Often times it can be tempting to snack on something tasty while reading that book, fight off stress by indulging in a box of cookies, or simply save time by running by the drive-through on the way home from class. However, time and time again we have seen that this can cause our bodies to fight back. Here are a few easy rules and obesity solutions fin check for American students when dining out:

1. When at restaurants, only drink water. This can not only save you from calories, sodium, and brain function stealing sugar, but also help out your pocket book. The cost of cola is on the rise, and what used to be fairly inexpensive is now an arm-and-a-leg due to the addiction many Americans have developed.
2. Never order the value meal. If you want to watch your calories, don't spring for the value meal. Who needs deep fried french fries filled with fat, calories, and covered in salt? As if the burger you were ordering wasn't bad enough, this just adds on to the mess.
3. Order fresh cuts over processed meat. Often times if you can get a grilled chicken sandwich, this will have less fat than ordering a "crispy" chicken sandwich, because there is less room for them to hide inexpensive fillers and fat.
4. Always ask for nutritional information. Most restaurants are required to have this information available, and nearly all chain restaurants have it on hand. Of course, you will need to ask since they may not want to advertise that their best seller is also their best killer.
5. Don't eat on the go. I know that picking something up from the drive-through can be tempting to eat on the way home, but avoid the temptation. One cause of obesity is that people don't really sit down and enjoy their food when they eat it, so they don't feel as if they have really eaten. When it is time to eat, make sure to sit down at the table with the television off and do nothing else but eat.

Waiting on CPA Exam Results

Waiting can seem like the most difficult process sometimes, especially when there is nothing you can do to speed things up. All throughout my collegiate career, the longest I have had to wait for an exam seems in my memory to be about a week. Nonetheless, this is not so with the CPA exam. Tediously I wait, day in and day out for my scores to be posted. So far I have taken the regulation and audit sections of the CPA exam and as many are, not too confident as to what will come back.

I took my two sections of the exam the week before the blackout period, which leads me to believe that I should receive them fairly soon. Since there are no exams being taken during this month, all they should be doing is grading and posting exam results, right? I suppose that may be a bit presumptuous, however I do know some people who received their exam results back in as little as two weeks after taking the exam. One thing I certainly am is motivated, having completed a list of reason to pass the CPA exam.

Well, I'm in the middle of week 3 after taking the CPA exam and no results back yet. It is really starting to get to me, because I am not sure if I should plan to retake one or both of them yet. Will I need to pay another several hundred dollars, and spend another one-hundred or so hours studying for this thing? I am unsure of how individuals can take this while working full-time and pass on the first try; I already feel brain drain and a lack of energy while doing it in parallel to my graduate course work which covers similar material as to the CPA exam topics.

One thing I take comfort in is that once I have passed, I will not have to take it again. The CPA exam is not one test, if you can call it one, I ever wish to take again. This, if anything, is excellent motivation to do as well as possible the first time around.

Best Reason to take the CPA Exam Now!

Reasons to take and pass the CPA Exam Now!

• The sooner you take it, the easier it is. After finishing an undergraduate degree in accounting, all of the knowledge is still fresh in your head. The exam is mostly academic and real world experience is not as useful as book knowledge.
• Get it over with now. Studying for the CPA exam sucks, no question about it. You might as well get it over with now, do it right the first time, and get it out of the way. It is like peeling off a band-aid.
• You will make more money. Over the course of your career, you will make more money and be eligible to be promoted higher. Think of it as a time value of money proposition, the sooner you do it, the sooner you will be making more money and you will be able to make that higher salary for a longer percentage of your lifetime.
• The further you get in your accounting career, the more distractions and responsibility you will have. There has never been a better time than now, because it will only become more difficult later.
• You will get more respect in your profession - the more credentials and qualifications you can get in this highly competitive business world, the better you look.
• The requirements might change. When the 150-credit hour requirement went into effect, some of those without CPAs had to go back to school for another year in order to get this achievement. What if accounting rules change, especially likely as tax regimes change, and the exam becomes even more difficult? Once you pass it, you won't have to worry about this.
• If you are still in college, or just out, many firms give large cash bonuses for those who enter, or pass within the first year or so. If a large cash payout isn't enough to motivate you, then you can give it to me!
  

Pass the CPA Exam - Business Section - Economics

Introduction to Economics

The economics section, while one of the smaller parts of the exam, can be fairly difficult for accounting students. The concepts within can be foreign and many students have not taken economics classes since freshman or sophomore year. Keynesian economics appears to be the topic which is most useful.

Notes from my CPA Exam Study Session

Vocabulary

Gross Domestic Product (GDP) - The market value of goods and services produced inside a nations borders.
Nominal GDP - This is GDP unadjusted for inflation, and shown in the actual dollars.
Real GDP - This is GDP adjusted for inflation over time, so that it more accurately reflects true measurements between time periods.

Formulas

Real GDP Price Index (GDP Deflator) - This is the formula used to get real (inflation adjusted) GDP.

Real GDP = (Nominal GDP/GDP Deflator) * 100

Pass the CPA Exam - An Overview of the Business Section

Introduction

Just to give everyone a little background, I am currently a full-time graduate student pursuing a masters degree in Accounting as well as taking a classroom CPA exam courses. I currently attend a University which is ranked in the top 25 for student scores on the CPA exam (undergraduate and graduate combined) and will be working for a public accounting firm after graduation. I decided to write this thread on the CPA exam because I noticed a lack of community resources available on the web currently. I welcome everyone to post their questions, concerns, and general comments in response to my posts by clicking on the "comment" button at the bottom of all posts. I will do my best to respond to each legitimate one to the best of my ability.

Business Section Overview

I have currently started the course for the Business section of the CPA exam, and this section looks different than every other one. As you may have heard, this section is entirely multiple choice - that's right, no simulations! I'm looking forward to that aspect because the simulations seem intimidating based on the potential open-ended questions they could spring on candidates.

Topics Covered

Some of the general topics covered in this section of the CPA exam are:

• Structure of businesses, such as the Corporation, LLC, sole proprietorship, partnerships, etc. This is mostly the legal advantages and disadvantages.
• Economics - mostly Keynesian economics it appears
• Business strategy - mission statements, value chains, etc.
• Finance - calculating cost of capital, net present value, debt versus equity, etc.
• IT in Business - databases, segregation of duties, IT maintenance and management
• Business planning, measurement and follow up

Come Back for More

I will be posting more articles relating to my studying of this section, as well as some of the more complicated topics I encounter which may give you problems. Hopefully after going through this myself I can make it easier on someone else. Good luck in your studies!

Check out tips on the Business section of the exam!

Spanish Dialogues

Are you a student studying Spanish? Here are some dialogues to review:

Hello! So you are a Native Spanish speaker. If you do not mind my asking, where are you from? How did you learn English? I am always fascinated by people who are able to speak both Spanish and English and that is my goal. I was born in Jamaica, West Indies and presently live in Orlando, Florida where it is smart to know both of those languages. I did Spanish in High School but really did not pay attention as I should have. Don't get me wrong I did pass it but should have continued my studies. But it is never too late to learn it.

¡Hola! Entonces usted es un altavoz español Natal. ¿Si usted no hace caso de mi petición, de dónde están usted? ¿Cómo aprendió usted el inglés? Siempre soy fascinado por la gente que es capaz de hablar tanto español como inglés y es mi objetivo. Nací en Jamaica, Antillas y actualmente vivir en Orlando, Florida donde es elegante saber ambos de aquellas lenguas. Hice el español en la Escuela Secundaria, pero realmente no presté la atención cuando yo debería tener. No consígame incorrecto que yo lo pasé realmente, pero debería haber seguido mis estudios. Pero nunca debe aprenderlo demasiado tarde.

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Hello! Would you be interested in practicing both Spanish and English? If you do not mind my asking, where were you born? I was born in Jamaica, West Indies where we speak English and a broken version of English called Patwa. I did Spanish in High School and with living in Orlando, Florida I am working on getting back to speed with Spanish as alot of jobs and intereactions require both Spanish and English.

¡Hola! ¿Estaría interesado usted en la práctica tanto español como inglés? ¿Si usted no hace caso de mi petición, dónde fue nacido usted? Nací en Jamaica, Antillas donde decimos el inglés y una versión rota del inglés llamado Patwa. Hice el español en la Escuela Secundaria y con la vida en Orlando, Florida trabajo en el regreso a apresurarme con el español como alot de empleos e intereactions requieren tanto español como el inglés.

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Hola Alex,

Que tal? Si! Yo quiero practicar espanol. Estudio espanol con Rosetta Stone. Rosetta Stone es un programma. Sí, estoy interesado. Qué le parece la vida en Nueva York? De donde eres?? Trabajos o estudante?? Yo trabajo. Yo estoy encantado de conocerte.

Adios,

Linda

Hi Linda, how are you donig, I live in New York, I moved here four years ago. If you want i can help you practice your Spanish, let me know if you are interested.

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Your Spanish is very good, I am currently attending Queens College, my major is Finance. I am Peruvian, I like living here, but I would prefer to live in my country; and, the pleasure its all mine.

Tu espanol es muy bueno. Actualmente estoy tomando clases en el Queens College. Mi carrera es Finanzas. Me gusta vivir aqui, pero preferiria vivir en mi pais, y el placer es todo mio. Saludos.
ALEX.

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Hola Alex,
Como estas? Yo estoy bien. Yo hablo espanol un un poco!! Estudie espanol en la escuela hace muchos anos. Estado estudiando espanol durante cuatro semanos. Mi hijo, Jonathan, esta estudiando en la Argentina. Tengo previsto vistarlo en la verano y quiero apprender espanol para la vista.
¿Te gusta el estudio de las finanzas. Vives en Queens?
Un Saludo,
Linda

Hi Alex,
How are you. I am well. I speak spanish very little! I studied spanish in school many years ago. I am studying spanish for the past 4 weeks. My son Jonathan is studying in Argentina. I plan to visit him in the summer and I want to learn spanish for the visit. Do you like studying finance? Do you live in Queens?

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10 Tips of Social Advice for College Students

After deciding to go to college in a completely different city than I went to High School, I understand how students coming to a new environment can feel. Luckily, growing up I was in a military family and very familiar with moving around and making new friends on a regular basis.

1. Go around and meet people that live near you. Knock on doors, introduce yourself.
2. Say hello to everyone. People in class, people on the bus, etc.
3. Organize fun time - have people over to your place, set up group outings to the bars or movies.
4. Get on Facebook and Myspace, add your friends and acquaintances
5. Join social groups on campus - social clubs and fraternities / sororities
6. Find common interests with others and get together to do them
7. Stop by a local church and inquire about college groups
8. Join an intramural sport at your college

As you can see, there are plenty of ways to get out of the house. Try to come up with your own list (and feel free to add a comment below).

Getting Involved in Student Activities

As a college student, getting active in student activities is the way to go. Clubs and organizations are an important part of your education. Why get involved with student organizations?

• Social Networking Opportunities (make friends, network). Why not make a few friends while in college? You don't have to stick to your old methods of meeting people. Often times you can better connect with people that you have certain interests in common with through student activities.
  
• Build Resume for your future career. It never hurts to have a little extra padding for your resume when you graduate. Getting involved in student activities is a good way for a student in college to get some resume material.
  
• Get Leadership Experience - if you take an office, you will start to develop these skills. Don't expect to be perfect right away, you will have mistakes but stick to it anyway.
  

How to do it?

• Look around campus for bulletin boards, advertising clubs, organizations, activities. Nearly every college campus have these, all you have to do is keep your eyes open.
  
• Inquire about an organization for your college major, this is invaluable. Occupation specific college clubs care great for making connections for future jobs.
  
• Ask teachers, professors, and other students about which activities are good. Every campus has a few star programs and a few stinkers too.