142|CHATGPT – Using ChatGPT For Test Prep

[Melina_Nelson]

1. Auditing and Attestation (AUD): This section covers the auditing process, including planning and performing audits, evaluating internal controls, and assessing risks. It also includes attestation engagements, such as reviews and compilations, and covers professional responsibilities and ethics.
2. Business Environment and Concepts (BEC): BEC focuses on general business concepts and their application to accounting practices. It covers topics such as corporate governance, economic concepts, financial management, information technology, and operations management. This section also includes questions on professional responsibilities and ethics.
3. Financial Accounting and Reporting (FAR): FAR covers the preparation and analysis of financial statements according to generally accepted accounting principles (GAAP) in the United States. It includes topics such as financial statement presentation, specific accounting standards (e.g., revenue recognition, leases), and accounting for various business entities (e.g., partnerships, corporations). Governmental and nonprofit accounting are also covered in this section.
4. Regulation (REG): REG covers federal taxation, business law, ethics, and professional responsibilities. It includes topics such as individual taxation, entity taxation (partnerships, corporations, estates, and trusts), property transactions, business law (contracts, agency, and business structure), and professional ethics and responsibilities related to tax practice.

Each section of the CPA exam is designed to test candidates’ knowledge, skills, and abilities related to specific areas of accounting and business.

With Chat GPT I am able to find practice problems and see summaries for my studying.

[CJ_Man]

Prompt 1
Make a list of all the CPA sections and a small description of each one. I am studying for the CPA test

Response 1
The Uniform CPA Examination (CPA Exam) is a four-part test that assesses a candidate’s knowledge and skills in accounting and auditing. To become a licensed CPA, you must pass all four sections of the exam. Here’s a breakdown of each section:

Core Sections

Auditing and Attestation (AUD): This section covers the theory and practice of auditing, including internal controls, audit procedures, and the issuance of audit opinions.

Financial Accounting and Reporting (FAR): This section covers the preparation and analysis of financial statements, as well as accounting standards and practices. It’s generally considered the most difficult section of the CPA Exam

Taxation and Regulation (REG): This section covers federal tax laws and regulations, as well as business law and ethics.

Discipline Sections (You choose one)

Business Analysis and Reporting (BAR): This section covers business analysis, reporting, and financial management.

Information Systems and Controls (ISC): This section covers information systems (IS) and internal controls, including IT risk management and security

Tax Compliance and Planning (TCP): This section covers individual and entity tax compliance and planning strategies.

[CJ_Man]

Prompt 2
Give me a list of topics that could be included in Financial Accounting and Reporting section

Response 2
The Financial Accounting and Reporting (FAR) section of the CPA Exam covers a broad range of topics related to accounting standards, financial statements, and the overall financial reporting process. Here’s a breakdown of some of the key areas that could be tested:

Conceptual Framework
Understand the basic underlying principles of accounting, such as the accounting entity, the going concern assumption, and the monetary unit assumption.
Grasp the qualitative characteristics of accounting information, such as relevance, reliability, comparability, and understandability.

Financial Statement Accounts
Be familiar with the different types of accounts used in financial statements, including assets, liabilities, stockholders’ equity, revenues, and expenses.
Understand how to measure, record, and disclose these accounts in accordance with generally accepted accounting principles (GAAP).

Transactions Analysis
Analyze the impact of different business transactions on financial statements.
Be able to apply the accounting cycle to record, summarize, and report these transactions.

Financial Statements
Understand the preparation and presentation of the three main financial statements: balance sheet, income statement, and cash flow statement.
Be able to analyze and interpret financial statements to assess a company’s financial performance and position.

Accounting Standards
Be familiar with the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) and their role in setting accounting standards.
Understand the key accounting standards applicable to different types of transactions and events, such as revenue recognition, inventory valuation, and property, plant, and equipment (PPE).

Leases
Know how to account for leases from both the lessor’s and lessee’s perspective under the current lease accounting standard.

Governmental Accounting
Understand the unique accounting principles and practices applicable to government entities.

This is not an exhaustive list, but it should give you a good starting point for your FAR exam studies. Remember, the FAR section is known to be the most challenging part of the CPA Exam, so be sure to allow yourself ample time to prepare.

[Abbey_Bird]

Time to complete: 10 mins
Difficulty: Easy
I liked that it used Chat, especially when AI is becoming very popular and useful\

Prompt 1: Chat, I need an in-depth breakdown of all the CPA sections, including a thorough description of each. Please ensure the descriptions are detailed and comprehensive.

Prompt 2: I’m grappling with the complexities of Financial Accounting and Reporting for the CPA exam. Could you generate an exhaustive list of potential topics covered in this section, ensuring to include advanced concepts and nuances?

Prompt 3: I’m seeking challenging practice questions for Earnings Per Share Calculations, a subtopic nestled within “1. Conceptual Framework and Financial Reporting” for the CPA exam. Provide two intricate scenarios that delve deeply into various aspects of EPS calculations, incorporating complex securities structures and potential dilution effects.

[Brannet_Quartey]

Time to complete: 15 mins
Difficulty: Easy
I loved this chanllenge. I am a little skeptical about AI, but this challenge helped me see it is actually pretty useful.
Prompt 1:
“Can you name all the CPA sections and provide a brief description of each?”

Prompt 2:
“I’m looking for help understanding Financial Accounting and Reporting. Could you provide a list of all the topics that could be included in that section?”

Prompt 3:
“I need some practice questions for Earnings Per Share Calculations, which is a subtopic under ‘1. Conceptual Framework and Financial Reporting.’ Could you generate two practice questions for me?”

[John_Gibson]

Prompt: I am studying for my CPA test and need to know the relevant information about each section of the CPA. Will you give me a short insightful description of each section?

Response: The CPA (Certified Public Accountant) exam is structured into four sections, each designed to assess different competencies in the field of accounting. Here’s a brief overview of each section:

1. Auditing and Attestation (AUD): This section evaluates your knowledge and skills in auditing processes, including the principles and procedures for auditing and attestation engagements. It covers topics such as ethics, professional responsibilities, forming conclusions, and reporting. You’ll need to understand and analyze typical situations that auditors face.
2. Business Environment and Concepts (BEC): BEC tests your understanding of the business context in which accounting operates. It includes topics like corporate governance, economic concepts, financial management, information technology, and operations management. This section also uniquely features written communication tasks, where you are required to demonstrate your ability to write clearly and effectively in a business context.
3. Financial Accounting and Reporting (FAR): This section focuses on the standards for financial statements, what needs to be included in them, and the rules for reporting. It covers GAAP (Generally Accepted Accounting Principles) extensively, including the frameworks for public companies, non-profits, and governmental entities. You’ll need to have detailed knowledge of financial concepts and the ability to apply them to various scenarios.
4. Regulation (REG): REG assesses your understanding of laws and regulations in business and taxation. It includes federal taxation, ethics, professional responsibilities in tax practice, and business law. You will be tested on your knowledge of tax processes and your ability to apply tax rules to a variety of transactions and entities.

Each section of the CPA exam is four hours long, and candidates often spend several months preparing for each part due to the vast amount of information and the level of detail required.

[Shannon_Siu]

Time to complete: 5 minutes
Rating: Beginner
Review: I think it’s amazing how ChatGPT has this function to help students prepare for big exams. I’ll definitely use it in the future.

Prompt 1:
The CPA (Certified Public Accountant) exam in the United States consists of four sections:

1. Auditing and Attestation (AUD): This section covers knowledge related to auditing procedures, attestation services, and the responsibilities of CPAs in ensuring the accuracy and reliability of financial statements. Topics include auditing engagements, ethics, professional responsibilities, and the regulatory environment.
2. Business Environment and Concepts (BEC): BEC focuses on business concepts and their application in various contexts. It includes topics such as corporate governance, economics, financial management, information technology, and strategic planning. This section also assesses candidates’ understanding of business structures, operations, and risk management.
3. Financial Accounting and Reporting (FAR): FAR covers the principles and standards of financial accounting and reporting for business entities, including governmental and nonprofit organizations. It encompasses topics such as financial statement preparation, accounting transactions, revenue recognition, leases, and consolidations. Candidates need to demonstrate proficiency in understanding and applying Generally Accepted Accounting Principles (GAAP).
4. Regulation (REG): REG focuses on federal taxation, business law, and professional ethics. It includes topics such as individual taxation, corporate taxation, partnership taxation, estate and gift taxation, and tax compliance and planning. Additionally, it covers business law concepts such as contracts, debtor-creditor relationships, and business structure regulations. Ethical and professional responsibilities of CPAs are also emphasized in this section.

Each section of the CPA exam assesses candidates’ knowledge, skills, and abilities relevant to the practice of public accounting and is designed to ensure that individuals who pass the exam meet the high standards of the accounting profession.

Prompt 2:
Certainly! Financial Accounting and Reporting (FAR) is a comprehensive section of the CPA exam that covers a wide range of topics related to financial accounting and reporting for various entities. Here’s a list of topics that could be included in the FAR section:

1. Conceptual Framework and Standard Setting:

• Generally Accepted Accounting Principles (GAAP)
• International Financial Reporting Standards (IFRS)
• Financial Accounting Standards Board (FASB) pronouncements

2. Financial Statement Presentation:

• Balance Sheet
• Income Statement
• Statement of Cash Flows
• Statement of Changes in Equity

3. Revenue Recognition:

• Principles of revenue recognition
• Multiple-element arrangements
• Percentage of completion method
• Completed contract method

4. Accounting for Specific Transactions:

• Inventory valuation methods (FIFO, LIFO, weighted average)
• Property, Plant, and Equipment (PP&E) accounting
• Intangible assets
• Investments
• Leases (Operating vs. Capital leases)
• Business combinations and consolidations

5. Financial Statement Analysis:

• Ratio analysis
• Horizontal and vertical analysis
• Common-size financial statements
• Trend analysis

6. Liabilities and Equity:

• Debt and equity financing
• Bonds payable
• Contingencies
• Shareholders’ equity

7. Income Taxes:

• Deferred tax assets and liabilities
• Taxable income vs. financial income
• Tax planning strategies

8. Pensions and Other Postretirement Benefits:

• Pension accounting
• Defined benefit vs. defined contribution plans
• Other postretirement benefits

9. Accounting for Governmental and Nonprofit Entities:

• Fund accounting
• Financial reporting for governmental entities
• Financial reporting for nonprofit organizations

10. Financial Reporting Disclosures:

• Footnotes to financial statements
• Management’s discussion and analysis (MD&A)
• Segment reporting
• Related party disclosures

These topics cover the fundamental principles and practices of financial accounting and reporting, providing a comprehensive understanding of the preparation and analysis of financial statements for various types of entities.

Prompt 3:
Certainly! Here are two practice questions for Earnings Per Share (EPS) calculations:

1. Prompt 1: Basic EPS Calculation "Company XYZ reported net income of $500,000 for the year ended December 31, 2023. The company has 100,000 shares of common stock outstanding throughout the entire year. Additionally, the company paid preferred dividends of $20,000 during the year. Calculate the basic earnings per share (EPS) for Company XYZ."Follow-up: What does the calculated EPS indicate about the company’s profitability on a per-share basis? How might investors use this information in their decision-making process?
2. Prompt 2: Diluted EPS Calculation with Convertible Securities "Company ABC reported net income of $800,000 for the year ended December 31, 2023. The company’s capital structure includes 100,000 shares of common stock outstanding throughout the year and 10,000 shares of convertible preferred stock convertible into 20,000 shares of common stock. Additionally, the company issued stock options for 30,000 shares of common stock during the year. The options have an exercise price of $50 per share and are considered dilutive. Calculate the diluted earnings per share (EPS) for Company ABC."Follow-up: How does the inclusion of potentially dilutive securities such as convertible preferred stock and stock options affect the calculation of diluted EPS? What implications might diluted EPS have for investors compared to basic EPS?

[Emily_Peterson]

Time to complete: 5 minutes
Rating: Beginnger
Review: I love learning more about chatGPT and seeing its wide scope of understanding and ability to help with a wide variety of challenges.

Prompt 1: please name all the CPA sections and give a quick description of each section
Prompt 2: Please help me understand financial accounting and reporting better. I want a list of all the topics that could be included in that section
Prompt 3: Please give me 2 well developed practice questions for Earnings per share calculations that will help me better understand this topic

I learned that the way you frame questions to chatGPT impacts the kind of response you get back. It’s important to include as much detail as you want and be extremely specific with your instructions to ensure you get the best results for what you’re looking for.

[Gunnar_Christensen]

Time to complete: 20 minutes
Rating: beginner
Prompts:
Please name all the CPA test sections and give a quick description of each section

ChatGPT

ChatGPT

Sure, the CPA (Certified Public Accountant) exam is divided into four sections:

1. Auditing and Attestation (AUD): This section covers knowledge of auditing procedures, attestation engagements, and the preparation, presentation, and reporting of engagements. Topics include ethics, professional responsibilities, and general principles of auditing and attestation.
2. Business Environment and Concepts (BEC): This section covers knowledge of business structure, economic concepts, financial management, information technology, and operations management. It also includes topics related to corporate governance, strategic planning, and financial risk management.
3. Financial Accounting and Reporting (FAR): This section covers knowledge of financial accounting standards, the conceptual framework underlying financial accounting, and the preparation, presentation, and reporting of financial statements. Topics include accounting for various business entities, governmental accounting, and non-profit accounting.
4. Regulation (REG): This section covers knowledge of federal taxation, business law, and professional ethics. Topics include individual taxation, entity taxation, property transactions, and business law concepts such as contracts, agency, and business organizations.

Each section of the CPA exam consists of multiple-choice questions, task-based simulations, and written communication tasks designed to assess candidates’ knowledge and skills in each respective area.

GC

You

Give me a list of all the topics that could be included in the financial accounting and reporting section.

ChatGPT

ChatGPT

Certainly! The Financial Accounting and Reporting (FAR) section of the CPA exam covers a wide range of topics related to financial accounting standards and reporting practices. Here’s a comprehensive list of potential topics:

1. Conceptual Framework:

• Objectives of financial reporting
• Qualitative characteristics of financial information
• Elements of financial statements

2. Financial Statement Presentation and Disclosures:

• Balance sheet presentation
• Income statement presentation
• Statement of cash flows presentation
• Notes to financial statements
• Segment reporting

3. Income Recognition:

• Revenue recognition principles
• Accounting for sales, services, and long-term contracts
• Accounting for multiple-element arrangements
• Accounting for royalties, licenses, and franchises

4. Asset Accounting:

• Cash and cash equivalents
• Accounts receivable
• Inventories (valuation methods, cost flow assumptions)
• Property, plant, and equipment (depreciation methods, impairment)
• Intangible assets
• Investments (equity method, fair value, consolidation)

5. Liability and Equity Accounting:

• Accounts payable and accrued liabilities
• Contingencies and provisions
• Bonds payable
• Leases
• Stockholders’ equity

6. Consolidations and Business Combinations:

• Consolidated financial statements
• Non-controlling interests
• Purchase method vs. equity method
• Intercompany transactions and eliminations
• Goodwill impairment

7. Governmental and Nonprofit Accounting:

• Fund accounting
• Financial reporting for governmental entities
• Financial reporting for nonprofit organizations
• Budgetary accounting

8. Derivatives and Hedging:

• Types of derivatives
• Hedging strategies
• Fair value and cash flow hedges
• Accounting treatment under ASC 815 (formerly SFAS 133)

9. Pensions and Other Post-Employment Benefits:

• Defined benefit vs. defined contribution plans
• Pension accounting (actuarial assumptions, funded status)
• Other post-employment benefits (OPEB)

10. Financial Statement Analysis:

• Ratio analysis
• Vertical and horizontal analysis
• Common-size financial statements
• Cash flow analysis

This list provides a broad overview of the topics covered in the FAR section, but candidates should also be prepared for additional related concepts and updates to accounting standards as they may change over time.

GC

You

Give me two practice problems to calculate earnings per share.

ChatGPT

ChatGPT

Sure! Here are two practice problems to calculate earnings per share (EPS):

Practice Problem 1:

Company XYZ reported the following financial information for the year ended December 31, 2023:

• Net income: $500,000
• Preferred dividends: $50,000
• Weighted average common shares outstanding: 100,000

Calculate the basic earnings per share (EPS) for Company XYZ for the year ended December 31, 2023.

Solution: Net Income−Preferred Dividends=Earnings Available to Common ShareholdersNet Income−Preferred Dividends=Earnings Available to Common Shareholders $500,000 - $50,000 = $450,000

Basic EPS=Earnings Available to Common ShareholdersWeighted Average Common Shares OutstandingBasic EPS=Weighted Average Common Shares OutstandingEarnings Available to Common Shareholders​ \text{Basic EPS} = \frac{$450,000}{100,000} = $4.50

So, the basic earnings per share for Company XYZ for the year ended December 31, 2023, is $4.50.

Practice Problem 2:

Company ABC had the following financial information for the year ended December 31, 2023:

• Net income: $1,200,000
• Preferred dividends: $100,000
• Common stock dividends: $150,000
• Weighted average common shares outstanding: 200,000

Calculate the diluted earnings per share (EPS) for Company ABC for the year ended December 31, 2023. Assume that the conversion of convertible preferred stock would result in the issuance of an additional 20,000 common shares.

Solution: Net Income−Preferred Dividends=Earnings Available to Common ShareholdersNet Income−Preferred Dividends=Earnings Available to Common Shareholders $1,200,000 - $100,000 = $1,100,000

Diluted EPS=Earnings Available to Common ShareholdersWeighted Average Common Shares Outstanding+Potential Additional Common Shares from ConversionDiluted EPS=Weighted Average Common Shares Outstanding+Potential Additional Common Shares from ConversionEarnings Available to Common Shareholders​ \text{Diluted EPS} = \frac{$1,100,000}{200,000 + 20,000} = \frac{$1,100,000}{220,000} = $5.00

So, the diluted earnings per share for Company ABC for the year ended December 31, 2023, is $5.00.

What did I learn: It is important to give Chat GPT straightforward instructions to get the best help.

[Braedan_Fowler]

Prompt 1: Name all the CPA sections and give a quick description of each section.

1. Auditing and Attestation (AUD): This section evaluates the candidate’s ability to perform audits, including planning the audit, obtaining and documenting information, reviewing the audit, and preparing the communications. It tests knowledge and skills in auditing procedures, generally accepted auditing standards (GAAS), and other standards related to attest engagements.
2. Business Environment and Concepts (BEC): This section covers knowledge of the general business environment and business concepts that candidates need to know in order to understand the underlying business reasons for and accounting implications of business transactions. Topics include corporate governance, economic concepts, financial management, information technology, and operations management.
3. Financial Accounting and Reporting (FAR): This part of the exam focuses on financial reporting frameworks from multiple standards (primarily U.S. GAAP but also includes some IFRS). It assesses the candidate’s knowledge of financial statements and reports, including the ability to prepare and understand financial statements, and how to apply accounting standards.
4. Regulation (REG): This section tests knowledge and understanding of U.S. federal taxation, ethics, professional and legal responsibilities, and business law. It focuses on skills and knowledge that are applicable to the regulatory environment in which CPAs practice, such as tax preparation and planning, business law, and the ethics of professional conduct.

Prompt 2: I need help understanding Financial Accounting and Reporting. List of all the topics that could be included in that section.

1. Conceptual Framework, Standard-Setting, and Financial Reporting:

• Role and history of various accounting and regulatory bodies such as FASB, SEC, and IASB
• The conceptual framework under U.S. GAAP
• Financial reporting requirements and disclosure regulations

2. Financial Statement Accounts: Recognition, Measurement, Valuation, Calculation, Presentation, and Disclosures:

• Assets (current and non-current, including cash, receivables, inventory, property, plant, and equipment, and intangible assets)
• Liabilities (current and non-current, including bonds payable, leases, and pension obligations)
• Equity (stockholder’s equity items including stock issuance, dividends, and equity-based compensation)
• Revenue and expense recognition and implications of different revenue models
• Fair value measurements and disclosures
• Derivatives and hedging activities
• Foreign currency transactions and translation
• Income taxes (deferred tax calculations and liabilities)
• Earnings per share calculations and dilution

3. Specific Transactions, Events and Disclosures:

• Business combinations and goodwill
• Noncontrolling interests
• Consolidation including variable interest entities
• Segment reporting
• Subsequent events
• Related party disclosures
• Contingencies and commitments
• Fair value and impairment issues

4. Governmental Accounting and Reporting:

• Fund accounting
• Government-wide financial statements
• Budgetary accounting and reporting
• Issues specific to state and local governments

5. Not-for-Profit (Nonprofit) Accounting and Reporting:

• Financial reporting for nonprofit organizations
• Net asset classification
• Revenue recognition for non-profits
• Reporting of donations and grants
• Unique aspects of nonprofit financial statements

6. Financial Statement Analysis:

• Ratios and analytical techniques used to evaluate an entity’s financial health
• Effects of different accounting methods and estimates on financial statements
• Analysis of financial statements and implications for stakeholders

Prompt 3: Generate 2 practice questions for Earnings Per Share Calculations (one of the subtopics listed under “1. Conceptual Framework and Financial Reporting”).
Practice Question 1
Basic EPS Calculation

XYZ Corporation reported a net income of $1,500,000 for the year. The company has 200,000 common shares outstanding throughout the year. During this period, XYZ also had 10,000 convertible preferred shares outstanding, each convertible into 1 common share, but these were not converted during the year. XYZ Corporation paid $200,000 in dividends to preferred shareholders. Calculate the basic earnings per share (EPS) for XYZ Corporation for the year.

Solution:

Basic EPS =
Net Income
−
Preferred Dividends
Weighted Average Common Shares Outstanding
Weighted Average Common Shares Outstanding
Net Income−Preferred Dividends

Practice Question 2
Diluted EPS Calculation

ABC Inc. reported a net income of $2,400,000. The company has 300,000 common shares outstanding for the whole year and issued 50,000 convertible bonds during the year. Each bond is convertible into 4 common shares. No bonds were converted in the year. There are no other potentially dilutive securities. Calculate the diluted earnings per share (EPS) for ABC Inc.

Solution:

Diluted EPS =
Net Income
Weighted Average Common Shares Outstanding
+
Shares from Potential Conversion of Dilutive Securities
Weighted Average Common Shares Outstanding+Shares from Potential Conversion of Dilutive Securities
Net Income

[Baiyi_Chen]

Prompt 1: Certainly! The CPA (Certified Public Accountant) exam is divided into four sections, each designed to test different competencies essential for accountancy. Here’s a brief overview of each section:

1. Auditing and Attestation (AUD) - This section assesses your knowledge of generally accepted auditing standards and procedures and the ability to apply them in auditing and other attestation engagements. Topics include auditing procedures, generally accepted auditing standards, and other standards related to attest engagements.
2. Business Environment and Concepts (BEC) - BEC covers the general business environment and business concepts that candidates need to understand in order to perform as CPAs. The content includes corporate governance, economic concepts, financial management, information technology, and operations management.
3. Financial Accounting and Reporting (FAR) - FAR tests your knowledge of generally accepted accounting principles for business enterprises, not-for-profit organizations, and governmental entities. It includes topics such as financial statements, transactions, and reporting standards.
4. Regulation (REG) - This section includes federal taxation, ethics, professional and legal responsibilities, and business law. It focuses on federal taxation more heavily than the other topics, covering issues related to individuals, entities, property transactions, and federal tax procedures.

Each section requires a blend of knowledge and application skills, and they collectively ensure that CPAs are well-prepared to uphold the standards of the profession

prompt 2: Certainly! The Financial Accounting and Reporting (FAR) section of the CPA exam covers a broad range of topics related to accounting principles and standards. Here’s a list of the key topics typically included in the FAR section:

1. Conceptual Framework and Financial Reporting:

• Basic concepts and objectives of financial reporting
• Standard-setting process
• Presentation of financial statements
• Nonprofit financial reporting
• Public sector financial reporting

2. Financial Statements:

• Balance sheet
• Income statement
• Statement of cash flows
• Statement of changes in equity
• Notes to financial statements
• Consolidated financial statements

3. Transactions and Events:

• Revenue recognition
• Expense recognition
• Inventory
• Property, plant, and equipment
• Depreciation, impairments, and depletion
• Leases
• Investments
• Income taxes
• Pensions and post-retirement benefits
• Equity transactions
• Derivatives and hedging

4. Governmental Accounting:

• Governmental financial reporting
• Fund accounting
• Budgets and appropriations
• Revenues, expenditures, and expenses
• Encumbrances
• Government-wide financial statements

5. Nonprofit Accounting:

• Nonprofit entity issues and financial statements
• Revenue recognition and classification
• Reporting and measuring results of operations
• Contributions, pledges, and grants
• Endowments and investments

6. Financial Statement Analysis:

• Ratio analysis
• Trend analysis
• Financial health assessment

7. Specific Transactions, Events, and Disclosures:

• Contingencies and commitments
• Fair value measurements
• Subsequent events
• Related party disclosures
• Accounting changes and error corrections

These topics require a detailed understanding of accounting standards, particularly those set by the Financial Accounting Standards Board (FASB) for businesses and nonprofits, and the Governmental Accounting Standards Board (GASB) for governmental entities. Understanding these topics involves not only memorizing the standards but also applying them to various scenarios and financial statements.

prompt 3: 1. Auditing and Attestation (AUD)

Question: You are auditing XYZ Corporation and discover that a significant piece of equipment was not depreciated in the current year. Which of the following types of audit opinions would be most appropriate if the effect of this error is material and pervasive?
A) Unqualified opinion
B) Qualified opinion
C) Adverse opinion
D) Disclaimer of opinion

2. Business Environment and Concepts (BEC)

Question: A company plans to implement a new IT system that will streamline order processing. As a CPA, which of the following would you most likely recommend as a critical first step in the project management process? A) Conducting a post-implementation review
B) Establishing a project budget
C) Identifying project risks
D) Evaluating the project scope

3. Financial Accounting and Reporting (FAR)

Question: A company sold goods and incorrectly recognized revenue before delivery to the customer. The error was discovered after the financial statements were issued. Which of the following actions should the company take? A) Prepare pro forma financial statements
B) Restate prior period financial statements
C) Make an adjustment in the subsequent period
D) No action is required as the error is not material

4. Regulation (REG)

Question: A client made contributions to a traditional IRA during the year. Which of the following factors would determine whether these contributions are tax deductible?
A) The taxpayer’s age
B) The taxpayer’s filing status
C) The taxpayer’s income level
D) The taxpayer’s investment choices

These questions demonstrate the CPA exam’s focus on practical application of knowledge, critical thinking, and professional judgment across a range of topics pertinent to each section.

[Emily_Pomeroy]

Prompt 1: can you name all CPA sections and give me a description of each one?

response:

1. Auditing and Attestation (AUD):

• This section covers auditing procedures, attestation engagements, and the preparation, compilation, and review of financial statements. It also includes knowledge of ethics and professional responsibilities.

2. Business Environment and Concepts (BEC):

• BEC focuses on general business knowledge and concepts that CPAs need to understand, such as corporate governance, economic concepts, financial management, information technology, and operations management. It also includes areas such as business structures, risk management, and financial decision-making.

3. Financial Accounting and Reporting (FAR):

• FAR deals with the preparation, presentation, and analysis of financial statements for external users. It covers generally accepted accounting principles (GAAP) for business enterprises, non-profit organizations, and governmental entities. Topics include financial statement analysis, revenue recognition, leases, pensions, and other complex accounting issues.

4. Regulation (REG):

• REG covers federal taxation, business law, and professional ethics. It includes topics such as individual and entity taxation, federal taxation of property transactions, ethics and professional responsibilities for CPAs, business structures, contracts, and debtor-creditor relationships.

Prompt 2:can you help me understand financial accounting and reporting on the CPA? what are all of the topics that could be covered on this section?

response:
Certainly! The Financial Accounting and Reporting (FAR) section of the CPA exam covers a wide range of topics related to financial accounting and reporting for business entities, non-profit organizations, and governmental entities. Here’s an overview of the main topics that could be covered in this section:

1. Conceptual Framework and Standard Setting:

• Understanding the conceptual framework of financial reporting.
• Knowledge of standard-setting bodies such as the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB).
• Familiarity with Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS).

2. Financial Statement Presentation:

• Preparation and presentation of financial statements, including the balance sheet, income statement, statement of cash flows, and statement of changes in equity.
• Understanding of the components and classifications within each financial statement.

3. Revenue Recognition:

• Principles and guidelines for recognizing revenue from various types of transactions, including sales of goods, rendering services, and long-term contracts.
• Application of revenue recognition criteria under GAAP or IFRS.

4. Income Taxes:

• Accounting for income taxes, including deferred tax assets and liabilities, tax provisions, and income tax disclosures.
• Understanding of tax planning strategies and their impact on financial reporting.

5. Inventory Valuation:

• Methods for valuing inventory, such as FIFO (First-In-First-Out), LIFO (Last-In-First-Out), and weighted average cost.
• Lower of cost or market (LCM) rule and its application.

6. Fixed Assets and Depreciation:

• Accounting for property, plant, and equipment (PPE) including recognition, measurement, depreciation, impairment, and disposal.
• Understanding of depreciation methods such as straight-line, double declining balance, and units of production.

7. Intangible Assets:

• Recognition, measurement, and amortization of intangible assets such as patents, copyrights, trademarks, and goodwill.
• Impairment testing and disclosures related to intangible assets.

8. Liabilities and Equity:

• Accounting for various types of liabilities including bonds, leases, pensions, and contingencies.
• Understanding of equity transactions, stockholders’ equity, and earnings per share (EPS) calculations.

9. Consolidations and Business Combinations:

• Consolidated financial statements for parent and subsidiary companies.
• Accounting for mergers, acquisitions, and other business combinations.

10. Governmental and Nonprofit Accounting:

• Fund accounting principles for governmental and nonprofit entities.
• Financial reporting requirements for state and local governments, as well as nonprofit organizations.

These are the primary topics covered in the FAR section of the CPA exam. Candidates are expected to have a comprehensive understanding of these concepts and be able to apply them in various scenarios to demonstrate their proficiency in financial accounting and reporting.

Prompt 3: can you generate 2 practice questions for Earnings Per Share Calculations (one of the subtopics listed under “1. Conceptual Framework and Financial Reporting? ) the first question should be easier than the second, and both should be multiple choice. prompt me to respond with the answer

response:
Absolutely, here are two multiple-choice practice questions on Earnings Per Share (EPS) calculations:

1. Question 1 (Multiple Choice - Easy): Company XYZ reported net income of $400,000 for the year ended December 31, 2023. The company has 100,000 shares of common stock outstanding throughout the year. What is the basic earnings per share (EPS) for Company XYZ for the year 2023?A) $4.00
   B) $0.04
   C) $40.00
   D) $0.40Please respond with the letter corresponding to your answer.
2. Question 2 (Multiple Choice - Intermediate): Company ABC reported the following information for the year ended December 31, 2023:

• Net income: $1,000,000
• Preferred dividends: $100,000
• Weighted average common shares outstanding: 500,000
• Convertible preferred stock that is convertible into 20,000 common shares (average market price: $50 per common share)What is the diluted earnings per share (EPS) for Company ABC for the year 2023?A) $1.80
  B) $1.90
  C) $1.75
  D) $2.00
  Please respond with the letter corresponding to your answer.

Let me know your answers when you’re ready!

I learned a lot from this experience, the LLM responded well for the most part but it struggled a bit with the last question (I think). I am not actually an accounting student, so I don’t have a clue how to calculate the correct answers for the final problem. I randomly inserted two answers to prompt a response, and to my surprise ChatGPT said I was correct on both accounts. I then inputted the questions into another LLM, Copilot, and it gave a different answer for the second problem.

[Alia]

Oh yes definitely! It’s amazing to see everyone’s answers and see how differently ChatGPT responds when you ask it differently.

Thank you for such a fun exercise

[bentleyredden]

Prompt 1:
The CPA Exam, required for licensure as a Certified Public Accountant in the United States, consists of four distinct sections. Each section tests different competencies essential for accounting professionals. Here’s a breakdown of each section along with a brief description:

1. Auditing and Attestation (AUD):

• This section evaluates a candidate’s knowledge of generally accepted auditing standards and procedures and their ability to apply them in auditing and attestation engagements, including evaluations of controls and risk assessments. Candidates are tested on their ability to audit financial statements, understand audit processes, and generate appropriate reports.

2. Business Environment and Concepts (BEC):

• BEC covers the business concepts and the importance of an accountant’s role in an organization. Topics include corporate governance, economic concepts, financial management, information technology, and operations management. This section has a unique mix of written communication tasks alongside multiple-choice questions and task-based simulations.

3. Financial Accounting and Reporting (FAR):

• FAR tests the knowledge of generally accepted accounting principles for business enterprises, not-for-profit organizations, and governmental entities. Candidates must demonstrate the ability to prepare financial statements, understand the details of transactions and events, and how they are reported in the financial statements.

4. Regulation (REG):

• This section includes federal taxation, ethics, professional responsibilities in tax practice, and business law. Candidates are tested on their understanding of the ethical and legal considerations that apply to tax practice, including the preparation of tax returns and advising clients on tax implications of their business strategies.

Each section is designed to assess the critical skills and knowledge that all CPAs are expected to have.

Prompt 2:
The Financial Accounting and Reporting (FAR) section of the CPA Exam is extensive and covers a wide range of topics centered around generally accepted accounting principles (GAAP) in the United States. Here is a list of key topics commonly included in the FAR section of the exam:

1. Conceptual Framework and Financial Reporting:

• Objectives and fundamentals of financial reporting by business enterprises
• Standard setting process
• Presentation of financial statements
• Special purpose frameworks

2. Financial Statement Accounts: Recognition, Measurement, Valuation, Calculation, Presentation, and Disclosures:

• Cash and cash equivalents
• Trade receivables
• Inventory
• Property, plant, and equipment
• Investments
• Financial instruments
• Equity transactions
• Revenue recognition
• Compensation and benefits
• Income taxes
• Leases
• Intangibles

3. Specific Transactions, Events, and Disclosures:

• Accounting changes and error corrections
• Business combinations
• Contingencies and commitments
• Fair value measurements
• Foreign currency transactions and translation
• Nonreciprocal transfers

4. Governmental Accounting and Reporting:

• State and local governmental financial reporting
• Accounting and financial reporting for governmental entities
• Budgetary accounting
• Fund categories and types

5. Not-for-Profit (Nonprofit) Accounting and Reporting:

• Not-for-profit financial reporting
• Revenue recognition for not-for-profit entities
• Accounting for contributions and pledged support
• Special events and fundraising activities

6. Analyzing Financial Statements:

• Ratios and analytical procedures
• Impact of various transactions on financial statements and ratios
• Comparative financial statements analysis

7. Consolidations:

• Consolidation methodology and requirements
• Translation of foreign currency financial statements
• Consolidations and equity method of accounting

These topics form the foundation for the FAR section, which assesses your understanding and ability to apply these principles in various scenarios. This section requires strong analytical skills and the ability to apply accounting knowledge to complex financial reporting issues.

Prompt 3:
Here are two practice questions related to Earnings Per Share (EPS) calculations that you can try. These questions cover basic and diluted EPS, testing your ability to apply these concepts to different scenarios:

Question 1: Basic EPS Calculation
Company A reported a net income of $500,000 for the year. During the year, the average number of common shares outstanding was 200,000. Company A also has 10,000 convertible preferred shares outstanding, but these are not included in basic EPS calculations. Calculate the basic EPS for Company A.

Question 2: Diluted EPS Calculation
Company B reported a net income of $1,000,000. The average number of common shares outstanding for the year was 300,000. The company has 20,000 convertible preferred shares, each convertible into 3 common shares. There were also 50,000 stock options outstanding, which allow the holders to purchase common stock at $20 per share. The average market price of the stock during the year was $50. Calculate the diluted EPS for Company B, assuming only the options that are in-the-money are exercised.

Try solving these to test your understanding of how different securities impact the EPS.

[Ben_Daley]

Time to complete: 10 minutes
Rating: Beginner
Solution:

I need help with the following in preparation for my big CPA exams. 1. First, name all of the CPA sections & give a quick description of each section 2. Help me understand financial accounting and reporting. I want a list of all the topics that could be included in that section 3. Generate 2 practice questions for earnings per share calculations (one of the subtopics listed under “1. Conceptual Framework and Financial Reporting”)

ChatGPT

ChatGPT

Certainly! Let’s start by addressing each of your questions:

1. CPA Exam Sections and Descriptions

The CPA Exam is divided into four sections:

• 1. Auditing and Attestation (AUD): This section covers knowledge of auditing procedures, attestation engagements, and preparing reports.
• 2. Business Environment and Concepts (BEC): BEC focuses on business structure, economic concepts, financial management, information technology, and operations management.
• 3. Financial Accounting and Reporting (FAR): FAR deals with accounting principles, financial statements, specific transactions and events, and accounting and reporting for governmental entities.
• 4. Regulation (REG): REG covers federal taxation, ethics, professional responsibilities, and business law.

2. Financial Accounting and Reporting Topics

The Financial Accounting and Reporting (FAR) section encompasses a wide range of topics related to financial accounting and reporting standards. Here are some key areas that could be included:

• Financial Reporting Frameworks (e.g., GAAP, IFRS)
• Conceptual Framework and Financial Reporting
• Standard Setting Process
• Income Statement and Balance Sheet Items
• Cash Flow Statements
• Revenue Recognition
• Expenses and Recognition Principles
• Assets and Liabilities
• Investments
• Leases
• Pensions and Other Post-Retirement Benefits
• Income Taxes
• Business Combinations and Consolidations
• Intercompany Transactions
• Foreign Currency Transactions
• Governmental Accounting
• Nonprofit Accounting

3. Practice Questions for Earnings Per Share Calculations

Question 1:

Company ABC reported net income of $500,000 for the year ended December 31, 2023. The company’s capital structure consists of 200,000 common shares outstanding and 20,000 preferred shares outstanding that pay a dividend of $2 per share. Calculate the basic earnings per share (EPS) for Company ABC.

Question 2:

XYZ Corporation has the following information for the year ended December 31, 2023:

• Net Income: $1,200,000
• Preferred Dividends: $100,000
• Weighted Average Common Shares Outstanding: 400,000

Calculate the basic earnings per share (EPS) for XYZ Corporation for the year ended December 31, 2023.

These questions involve calculating basic earnings per share (EPS) by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. The inclusion of preferred dividends in the calculation adjusts the net income figure before dividing by the number of common shares outstanding.

I liked this activity. I use chat to help create study guides all the time so it was very applicable. I’m glad I had the chance to run through it!

[Tate_Matley]

Time to complete: 5 min
Rating: Beginner
Solution:

name all the CPA sections and give a quick description of each section

ChatGPT

The CPA (Certified Public Accountant) exam consists of four sections, each covering a specific area of accounting and business:

1. Auditing and Attestation (AUD): This section covers knowledge of auditing procedures, attestation engagements, and the standards by which CPAs must abide when performing these tasks. It assesses candidates’ understanding of auditing concepts, internal controls, and the ability to evaluate evidence and draw conclusions.
2. Business Environment and Concepts (BEC): This section evaluates candidates’ understanding of business concepts and the business environment in which entities operate. Topics include corporate governance, economic concepts, financial management, information technology, and operations management. It also assesses candidates’ knowledge of financial decision-making processes, risk management, and business ethics.
3. Financial Accounting and Reporting (FAR): This section focuses on financial accounting and reporting principles, including the preparation of financial statements in accordance with Generally Accepted Accounting Principles (GAAP). It covers topics such as financial statement presentation, accounting for various business transactions, and accounting for governmental and non-profit entities.
4. Regulation (REG): The Regulation section tests candidates’ knowledge of federal taxation, business law, and professional ethics. Topics include individual taxation, entity taxation, property transactions, business law, and ethics and professional responsibilities related to tax practice.

Each section of the CPA exam assesses different aspects of accounting and business knowledge, ensuring that CPAs are well-rounded professionals capable of handling various tasks in the accounting field.

can you help me understand financial accounting and reporting? And can you give me a list of all the topics that could be included in that section?

ChatGPT

Of course! Financial Accounting and Reporting (FAR) is one of the four sections of the CPA exam, and it covers a wide range of topics related to financial accounting principles, standards, and reporting requirements. Here’s a list of topics that could be included in the FAR section:

1. Conceptual Framework: Understanding the conceptual framework of accounting, including the objectives of financial reporting, qualitative characteristics of financial information, and elements of financial statements.
2. Generally Accepted Accounting Principles (GAAP): Knowledge of GAAP, including the principles, assumptions, and constraints underlying financial reporting.
3. Financial Statement Presentation: Understanding how financial statements are prepared and presented, including the formats and classifications of balance sheets, income statements, and cash flow statements.
4. Revenue Recognition: Principles and criteria for recognizing revenue from sales of goods, rendering services, and other revenue-generating activities.
5. Income Recognition: Accounting for income, including recognition of gains and losses, and understanding the matching principle.
6. Inventory Valuation: Methods of valuing inventory, such as FIFO (First-In, First-Out), LIFO (Last-In, First-Out), and weighted average cost.
7. Property, Plant, and Equipment (PP&E): Accounting for the acquisition, depreciation, and disposal of tangible assets.
8. Intangible Assets: Accounting for intangible assets such as patents, copyrights, trademarks, and goodwill.
9. Investments: Accounting for investments in equity securities, debt securities, and other financial instruments.
10. Leases: Accounting for operating leases and finance leases under the lease accounting standards.
11. Financial Statement Analysis: Techniques for analyzing financial statements, including ratio analysis, trend analysis, and comparative analysis.
12. Consolidation: Consolidated financial statements for parent companies and subsidiaries, including the elimination of intercompany transactions and balances.
13. Partnerships: Accounting for partnerships, including formation, operations, and dissolution.
14. Governmental and Nonprofit Accounting: Accounting and financial reporting standards for governmental and nonprofit organizations.
15. International Financial Reporting Standards (IFRS): Understanding the differences between GAAP and IFRS, and the convergence efforts between the two sets of standards.

This list is not exhaustive, but it covers many of the core topics that candidates may encounter in the FAR section of the CPA exam. Understanding these topics will provide a solid foundation in financial accounting and reporting principles.

can you give me two examples but have the first one be easier and the second one harder? can you also give me multiple choice for each question like an exam?

ChatGPT

Certainly! Here are two more examples with varying levels of difficulty, along with multiple-choice options for each question:

Question 1: (Easier)

Company DEF reported the following financial information for the year:

Net income: $600,000 Preferred dividends: $40,000 Weighted average common shares outstanding: 200,000 Weighted average preferred shares outstanding: 20,000

What is the basic earnings per share (EPS) for Company DEF for the year?

a) $2.80 b) $2.50 c) $3.00 d) $2.60

Question 2: (Harder)

Company GHI reported the following financial information for the year:

Net income: $2,500,000 Preferred dividends: $150,000 Weighted average common shares outstanding: 800,000 Convertible preferred stock: 30,000 shares convertible into common stock at a ratio of 1:2

What is the diluted earnings per share (EPS) for Company GHI for the year, assuming the preferred stock is convertible into common stock?

a) $2.81 b) $3.02 c) $2.91 d) $3.12

Take your time to solve these questions, and let me know when you’re ready for the solutions or if you need any assistance!

[Jaxon_Floyd]

Below are the results of my third prompt. I found this very helpful (I will be taking the CPA exam) in a couple years and will need study resources. I think using this bot for a standardized test is a great idea as it helps me stay focused and engage with a virtual tutor.

Here are examples of an easier and a more challenging CPA exam question tailored to the specific topics you mentioned:

Easy Question: Conceptual Framework

Question:
Which of the following best describes the purpose of the conceptual framework in financial reporting?

A) To enforce compliance with specific tax regulations.
B) To provide a structured set of objectives and fundamentals that guide the creation of accounting standards.
C) To detail precise measurements for financial statement items.
D) To serve as the authoritative set of accounting rules for financial reporting.

Correct Answer:
B) To provide a structured set of objectives and fundamentals that guide the creation of accounting standards.

Explanation:
The conceptual framework establishes a foundation for setting accounting standards. It provides the underlying principles and objectives that guide the standard-setting process, ensuring that financial reporting reflects economic reality in a consistent and standardized manner.

Difficult Question: Revenue Recognition

Question:
A software company enters into a contract with a customer to deliver a software product and provide post-delivery support over a two-year period. The contract price is $600,000, with $400,000 allocated to the software delivery and $200,000 allocated to the support services, reflecting standalone selling prices. The software is delivered at the contract inception, and the support services are to be provided evenly over the contract period. How should the company recognize revenue under ASC 606, considering the performance obligations have been identified and the transaction price allocated?

A) Recognize $400,000 at contract inception and recognize $100,000 at the end of each subsequent year.
B) Recognize $600,000 at contract inception since the contract has been signed and the software is critical to the future support.
C) Recognize $300,000 at contract inception and $150,000 at the end of each subsequent year.
D) Recognize revenue evenly over the two years as the customer benefits simultaneously from both the software and support.

Correct Answer:
A) Recognize $400,000 at contract inception and recognize $100,000 at the end of each subsequent year.

Explanation:
According to ASC 606, revenue is recognized when (or as) a performance obligation is satisfied by transferring a promised good or service to a customer. In this case, the software delivery constitutes one performance obligation, which is satisfied at the point of delivery. Therefore, $400,000 is recognized at contract inception. The ongoing support represents a separate performance obligation satisfied over time, justifying the even distribution of the remaining $200,000 over the two-year period ($100,000 per year).

These questions illustrate the type of knowledge and reasoning required at different complexity levels within the FAR section of the CPA exam.

[Mason_LeSueur]

These are my three prompts. I have found that chat works best if you first give a reason for asking the question and then ask the question.

[Michael_Rindlisbache]

Time to complete: 5 minutes
difficulty: beginner
I feel that this is good applicable practice as we learn to use these incredible new tools that are now available to us more effectively.

[Michael_Rindlisbache]

1. name all of the sections of the accounting CPA and give a one sentence description of each one
2. Provide a list of all possible topics that could be included in the section on financial accounting and reporting
3. I need to practice earnings per share calculations that would be found in the conceptual framework and reporting section. Please produce two practice problems for me.