 Hello and welcome to this session. This is Professor Farhad and this session we would look at previously used CPA questions that were recently released by the AI CPA. These questions are the real deal. These questions were actually used on the actual CPA exam. They may or may not be used again in the future, but definitely the concepts and the topic will be tested again on the CPA exam. Specifically, we're going to be looking at FAR CPA questions. As always, I would like to to remind you to connect with me on LinkedIn. If you haven't done so, YouTube is what I house my 1500 plus accounting, auditing, finance and tax lectures. This is a list of all the courses that I cover, including CPA questions on my website. You will have access to additional resources such as PowerPoint slides, through false multiple choice, 2000 plus CPA questions. And I do have the PDF file for the recently, recently released questions on my website as well. So let's take a look in the first, take a look at this question. As always in blow, I will tell you in which course and in what chapter this topic is covered. If you'd like to learn more about the topic itself during year two, pipe company incurred the following costs to develop and produce a routine, lowest computer software product. Completion of detailed program design, $10,000. Cost incurred for coding and testing to establish technological feasibility, $15,000. Other coding and testing costs incurred after establishment of technical feasibility, $44,000. And pipes December 31st year two balance sheet. What amount should be capitalized as a software cost? Now we need to know something about software cost. We only start to capitalize the cost after the technological feasibility has been reached. So the $10,000 completion of detailed design program. Well, we didn't even start yet. We're designing the program. That's out. That's going to be expensed. Cost incurred for coding and testing to establish technological feasibility, $15,000. So we have not reached technological feasibility. That's out. Other coding and testing costs incurred after establishment of technological feasibility. After that we can capitalize. The answer is C44,000. Which characteristic of information and the statistical tables include an a comprehensive annual financial report, CAFERS differentiated from the information contained in the financial statement. Data covering financial trends. Does CAFERS include this? And the answer is yes. Here you have to memorize. It's remembering and understanding. So immediately we'll take out C and D. Does it include physical year? Yes it does. So the answer is data covering financial trend and physical year. Both of them are acceptable. And this topic is covered in my governmental and not for profit chapter two. Next question. The city of Cobb has two trust funds for the benefit of the city's library. Trust fund A and trust fund B. Only the earning from trust fund A can be expensed and both the principle and the interest from trust B can be expensed. So trust A you can only spend the earnings and trust B you can spend everything. How should the city report each trust? Well think about it. For trust A, since you can only spend the earnings, it's a permanent fund. This is the definition of a permanent fund. Immediately I take out C and D because C and D does not say trust A as a permanent fund. Now we're down to 50-50. It's either A permanent or both permanent fund or one is a permanent fund and the other one is a special revenue fund. Well guess what? B you can spend both. Well if you can spend the principle and the interest, it cannot be a permanent fund. It must be a special revenue fund. Therefore the answer is B as in boy. Again this is chapter 2 governmental accounting on my website. Let's take a look at this question. The city of Windenmere decided to construct several large windmills to generate electrical power. The construction was financed through a general residential property tax levied for the next 10 years. Utility revenues are offset to offset all expenses associated with the windmills. The land for the windmills were donated to the city by a local farmer. The land from the farmer should be reported in which fund. So simply put, what are we looking at here if we are constructing this electrical power? Well look, if you read it carefully, the utility revenue are intended to offset all expenses. What does that mean? It means we're going to be running this operation as a business, okay? If it's running like a business, it must be an enterprise fund. It must be an enterprise fund. So the answer is C. You want to make sure you know the difference between special revenue, capital fund, permanent fund. Again you can go to my governmental not-for-profit chapter 2 and I have those covered. Now although I have them covered in chapter 2, I have them covered in chapter 2 as basics, then for each of these funds I have a separate chapter to learn more about them, okay? But this is just to know the difference between them and those are the questions that you might see on the exam. So basic information, these are actual questions that appear on prior exams. So you're looking at basic questions, basic questions. Let's take a look at this question. In the statement of activities for a governmental entity, revenues such as charging for building permits, garbage collection, dog licenses are reported as which of the following? So notice here those are revenues from specific sources, garbage collection, dog license. So where should they be reported? Well they sound like if you really think about it, dog license is a program revenue, garbage collection is a program revenue, okay? Therefore we could take out C indeed because those are the definition of program revenue. Now down to A and B, program revenue in the category of capital grants and contribution, well grants means somebody else has given you this money, no one's given you this money. Program revenue in the category of charges for services, yes, you will charge for dog licenses in garbage collection to do what? To perform services, charges for services, therefore the answer is B. Once again, this test your knowledge about the program revenue. You know what a program revenue is? Again, you can go to my chapter two and learn more about this topic and test yourself to prepare for the exam. I know governmental, my governmental accounting course is very popular because students that tend to take prep courses, CPA prep courses, they always go back to my governmental and not-for-profit because generally speaking the test prep courses don't do a good job or because they did not learn the material in college or they did not take a governmental and not-for-profit altogether. Anyhow, on my website you will find additional lectures and resources for this course as well as on my YouTube. I strongly suggest you subscribe to have access to additional premium information. It's an investment in your career. You study for your CPA once, do it right, invest in your career, get it done, use all your resources and I'm here to help you. Good luck.