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Quick Study Tips for Pomodoro Technique | Maxwell CPA Review

What is one quick study trick you can implement to study more efficiently? The answer lies in taking more study breaks. In this article I will teach you about the Pomodoro Technique, a tried-and-true study approach.

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What is the Pomodoro Technique?

What is one quick study trick you can implement to study more efficiently? The answer lies in taking more study breaks. In this article I will teach you about the Pomodoro Technique, a tried-and-true study approach. 

Back in the 80s, an Italian college student named Francesco Cirillo coined a new form of studying. Here’s the main idea: Study for 25 minutes, take a 5-minute break. It’s that simple! You repeat this process four times before taking a longer break. Taking study breaks allows you to get your eyes off the screen and get a mental refresh. After your quick break you jump back into studying for another 25 minutes!

I like to modify this approach by doubling the numbers. I study for 50 minutes then take a 10-minute break. This longer timeframe helps me to better immerse myself in the content. 

Why is this called the Pomodoro Technique? Francesco studied in Italy, and next to his study spot, there was a timer in the shape of a tomato. He then decided to name this study method after the Italian word for tomato! 

Try out the Pomodoro Technique next time you’re studying and see the improvement in your results! 

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What is Inflation? A Brief Introduction

Have you ever thought about how cheap everything was in the time of your grandparents? Back then, $1 could buy you much more than it could now. The purchasing power of the dollar has decreased because it now requires more dollars to purchase the same good. And what causes this price increase? Inflation does, which is the topic of this article. Inflation is simply the rising of prices over time. Over time, goods and services naturally become more expensive. Inflation is important to pay attention to because it has a large impact on an economy. How do we measure inflation? In other words, when we hear that “inflation is at a historic 7%” where does this 7% come from? To track inflation, we use an index called the consumer price index (CPI). The CPI tracks the prices of 8 major groups of goods and services. If the prices of those major groups increase by 7%, then we say that inflation is 7%. Similar to inflation, hyperinflation is simply a rapid rate of inflation. In recent years, Argentina has faced hyperinflation, with inflation skyrocketing up to 50% in just one year. This means that if you earned $1 at the beginning of the year, it would only be worth $0.50 by the end of the year.

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A Brief Introduction about Inflation | Maxwell CPA Review

Have you ever thought about how cheap everything was in the time of your grandparents? Back then, $1 could buy you much more than it could now. The purchasing power of the dollar has decreased because it now requires more dollars to purchase the same good. And what causes this price increase? Inflation does, which is the topic of this article.

Visit Us:- https://www.maxwellcpareview.com/

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What is the Balanced Scorecard?

Purpose

Within accounting, we often focus only on the financial side of a company by performing ratio analysis and testing balances, etc. Yet to effectively analyze a company, we need to also consider its non-financial elements. For example, imagine a company is healthy from a financial perspective yet its customers are not happy with its products.

Because of this need for non-financial analysis too, we have the Balanced Scorecard. The Balanced Scorecard separates a company into four different areas: Financial, Customer, Internal Business Processes, and Growth.

4 Parts

The financial component might be the most familiar because it simply involves analyzing a company from a financial perspective (e.g. ratio analysis). The customer component analyzes a company through the lens of the customer. In this area, we ask questions such as, “How happy is the customer with our products?” and, “How good is our customer retention?”

The internal business processes component focuses on how a company operates from an internal process perspective. In this section, we ask questions such as, “How efficient are the company’s internal controls?” Lastly, the growth component focuses on the future of the company. It’s not enough to simply consider how a company is currently performing. Rather, a company must invest in innovation to still remain relevant in the future. For this area, we could ask, “How much is the company investing in research and development?”

In summary, the Balanced Scorecard analyzes a company beyond just its finances. Once we break out the company into four separate areas, we can analyze whether a company is truly meeting its goals.

About the Author

Kyle Ashcraft is a CPA that scored a 90+ on all four CPA exams. Kyle founded Maxwell CPA Review, which is an exam-prep company that offers a BEC course and private tutoring. Kyle can be reached at MaxwellCPAreview@gmail.com or by visiting MaxwellCPAreview.com

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What is the Capital Asset Pricing Model?

What is the Capital Asset Pricing Model?

What in the world is beta? And how does it relate to the risk-free rate or the risk premium? We need to understand these key terms to grasp the capital asset pricing model.

Let’s first take a look at the formula:

Capital Asset Pricing Model = Risk-Free Rate + Beta (Stock Market Return - Risk-Free Rate)

The risk-free rate is the return on an investment that is guaranteed to pay us back (e.g., U.S. Treasury Bills). In our example, imagine that we could invest in U.S. Treasury Bills and receive a 1% return. If we didn’t invest in risk-free investments, we could invest in the stock market and receive a 7% return. A 1% risk-free return or a 7% risk return. We are rewarded with 6% more of a return because we take on the risk.

Now let’s move on to what beta represents. Beta is how volatile an individual company’s stock is relative to the entire stock market. Let’s say the stock market returns 7% but then the individual company International Airways returns 14%.  This means we have a beta of 2 (14/7). In other words, the individual company International Airways is twice as sensitive as the overall stock market. This might seem like a positive situation, but the same applies if the stock is decreasing in value. Meaning that if the stock market were to decrease by 10%, then International Airways would lose 20%. A beta of 2 means that a stock is twice as sensitive as the overall stock market.

Now let’s plug these numbers into the formula. We first need the beta to show the individual stock’s volatility, which is 2. Then we take the difference between the stock market return of 7% and the risk-free rate of 1%, so our risk premium is 6%. We multiply the beta of 2 by the 6% risk premium to get 12%. And finally, since we initially took out this risk-free rate, we add it in at the end, so we add back the 1%.

Capital Asset Pricing Model = 1% + 2 (7% - 1%) = 13%

This means that, with this investment in International Airlines, we expect to make a 13% return. I hope that this article has been as helpful as possible!

About the Author

Kyle Ashcraft is a CPA that scored a 90+ on all four CPA exams. Kyle founded Maxwell CPA Review, which is an exam-prep company that offers a BEC course and private tutoring. Kyle can be reached at MaxwellCPAreview@gmail.com or by visiting MaxwellCPAreview.com.

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How I Scored a 98 on the BEC Exam?

Student Questions on the Written Communications Section

Since the BEC Exam is the only CPA exam with a section on business writing, then students naturally have a lot of questions on it. The most common questions I hear include: “How do I start preparing for it?” “How is it graded?” and “Do you have any tips on passing it?”

When I took the BEC exam, I passed with a near-perfect score of 98, and in this article, I am going to share the same study tools with you that I used myself. We will address the exam structure, how the exam is graded, tips for preparing, and an outline strategy.

Exam Structure

After completing the first four testlets on the BEC exam, students move to the fifth and final testlet, which is on written communications. In this section, students write three business documents (essays) that make up 15% of the student’s BEC score. Keep in mind that only two of the three essays count toward the student’s score, since one of the essays is “pretested,” meaning that it’s being tested to officially include in future CPA exams. Of course, you will not know which essay is pretested, so give each one your best.

Grading of the Written Communications Section

You might be surprised to learn that the written communications section is almost always graded by a computer instead of a human, which we can use as a strategy for preparing. If a student is close to the passing threshold, then a human scorer will grade the essay instead.

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How I Passed the REG Exam with a 91?

Back in 2019, I passed the REG exam with a score of 91. I also scored a 98 on BEC, 95 on FAR, and 90 on AUD. So I decided to launch my company Maxwell CPA Review to help students pass the CPA exams. In this article, I’m going to guide you through which REG topics to focus on to pass the exam! At a high level, I will introduce important REG topics and even include a few study tips. So let’s jump in,

My Study Approach

Throughout my 8 weeks of studying, I spent two-and-a-half hours studying each day Monday–Friday and 5 hours each day Saturday–Sunday, totaling around 20 study hours a week. The recommended number of study hours for REG is around 110, and I spent around 140 hours preparing for REG.

REG Exam Structure

Even though the REG exam has a lot of rules and details, the good news is that there are certain inflation-adjusted numbers that you do not have to worry about memorizing. For example, the standard deduction amounts change every year, so you would not have to memorize them for the exam.

Individual Taxation

The first area of taxation is individual taxation, which is for how each person is taxed on their 1040 form. You want to know how adjusted gross income (AGI) is calculated because it’s used for several tax deduction and credit limits. Know the difference between pre-AGI and post-AGI.

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How I Passed the AUD Exam with a Score of 90?

Back in 2019, I passed the AUD exam with a score of 90. I also scored a 98 on BEC, 95 on FAR, and 91 on REG. So I decided to launch my company Maxwell CPA Review to help students pass the CPA exams. With the AUD exam, students often rush into specific concepts before understanding the overarching elements of audits.

AUD Exam Structure

The AUD exam is unique from the other exams in that it is conceptual. There are not many numbers throughout the AUD exam, making it different from the FAR exam. The AUD questions are based on processes, so students have to visualize what they are reading. Even though many multiple-choice questions are one sentence long, every word matters, because a simple not or no could change the entire meaning of the question.

What Is an Audit?

An audit is an examination of a company’s numbers to make sure that the financial statements are correct. The purpose of an audit is basically to hold a company accountable for what they are reporting. For an audit, a third party that is independent of the company (the auditors) examines the company. When a company creates financial statements, it makes certain management assertions about those financial statements, which auditors want to verify.

Who Needs an Audit?

The Securities and Exchange Commission (SEC) requires all publicly traded companies to be audited every year. A publicly traded company is a company that is traded on the stock exchange, like Amazon. Every company must publish their audited annual financial statements online, which can be found by simply searching for “10K Report” then typing the company’s name.

Private companies need audits when they have specific needs. For example, if a private company needs a line of credit, then its bank may require an annual audit. This is to help prevent the bank’s risk that the company defaults on its debt. Sometimes, banks will require a review rather than an audit, which is much less expensive than an audit.

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How I Passed the FAR Exam with a Score of 95?

The FAR exam can be daunting, given both the quantity of content and the wide range of topics. This article will walk you through my study approach for FAR along with a brief intro to governmental accounting.

Back in 2019, I passed the FAR exam with a score of 95. I also scored a 98 on BEC, 91 on REG, and 90 on AUD. So I decided to launch Maxwell CPA Review to help students pass the CPA exams. Let’s now jump into the content.

My Study Approach

Throughout my 8 weeks of studying for FAR, I spent 2.5 hours studying each day Monday–Friday and 5 hours each day Saturday–Sunday, totaling around 22 study hours a week. So I studied a total of around 180 hours for FAR.

What’s the difference between the Monday–Friday study routine versus the Saturday–Sunday routine? Monday through Friday, I focused solely on new content by watching new video lectures, doing a few practice questions, and creating a summary outline of what I was learning. Then on the weekend, I first reviewed the content I learned during the week by reviewing my study outline, and then I did as many practice problems as possible.

Governmental Accounting

Governmental accounting alone can make up 5–15% of the FAR exam content, so I will explain governmental accounting and what makes it different from for-profit accounting (GAAP accounting).

Governmental accounting can be challenging even for someone with years of experience in public or private accounting. Why? Because for-profit company accounting (i.e., GAAP accounting) is quite different from governmental standards issued by the Governmental Accounting Standards Board (GASB).

Governmental accounting is all about accountability. Since the government’s funds come from the general public, then governmental accounting attempts to increase confidence in how those governmental funds are used.

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Straight Line Method of Depreciation | Maxwell CPA Review

Learn the straight-line method of depreciation in this video by Kyle Ashcraft of Maxwell CPA Review! Topics include the definitions of “Depreciation” and “Net Book Value,” how to calculate the straight-line method of depreciation, and how to record the journal entries for acquiring an asset and depreciating it.

Watch for More Information:- https://www.youtube.com/watch?v=qjdlKfZoGQc

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How I Scored a 98 on the BEC Exam in Three Weeks?

The BEC Exam is probably the most obscure exam of the four CPA exams. Learn about the exam structure and how to study for each major topic of the exam.

Watch for More Information:- https://www.youtube.com/watch?v=-yGjwCELRbQ&t=175s

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How to Record Disposal of Fixed Assets Accounting Basics?

Learn how to dispose a fixed asset (aka property, plant, and equipment)! Examples are given to help you record depreciation and make the journal entries for selling fixed assets. I’ve included two different ways to calculate gain and loss journal entries.

Watch for More Information:- https://www.youtube.com/watch?v=cfQlrHiwU2s

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Tips for Passing the BEC CPA Exam | Maxwell CPA Review

Product Costs are an important part of the Cost Accounting section of the BEC exam. The best place to start is by learning about the three types of product costs: Direct Materials, Direct Labor, and Manufacturing Overhead.

Watch for More Information:- https://www.youtube.com/watch?v=kTSd6t4CUIU

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Tips for Passing the BEC CPA Exam | Maxwell CPA Review

Product Costs are an important part of the Cost Accounting section of the BEC exam. The best place to start is by learning about the three types of product costs: Direct Materials, Direct Labor, and Manufacturing Overhead.

Watch for More Information:- https://www.youtube.com/watch?v=kTSd6t4CUIU

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How I Scored a 90 on the AUD Exam?

Auditing is its own world. If you have never performed an audit, then wrapping your mind around it all can be quite daunting. I hope that this video helps you to understand audits with slightly less confusion.

Watch for More Information:- https://www.youtube.com/watch?v=LgqK5rRsVdo

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How I Scored a 91 on the REG Exam?

The REG Exam is a black-and-white kind of exam; it has a lot of rules, and a lot of small details to learn. Learn about the exam structure and how to study for each major topic of the exam.

Watch for More Information:- https://www.youtube.com/watch?v=MNE2_R_DF2Y