Student Outlook - New Accountant

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Contents
FEATURES
STUDENT OUTLOOK
By Barry C. Broden, DBA, CPA, Professor of Accounting and Taxation,
University of Hartford and Steven B. Jarett, MPA, CPA, Associate
Professor of Accounting, Saint Joseph College
CAREER OUTLOOK
of Thumb
By Andrew D. Sharp is professor of accounting and Cecilia C. Venker
is a senior accounting honors student, both at Spring Hill College in
Mobile, Ala.
STUDENT OUTLOOK
(XBRL): What You Need to Know
By William J. Crampton, Ph.D., Associate Professor, Accounting
Information Systems Illinois State University.
college OUTLOOK
Motivational Practices
By Rabih Zeidan, Ph.D., FHFMA, CPA, Assistant Professor of Accounting
Texas A&M University-Corpus Christi
cover story
By the Bisk CPA Review Editorial Team
6 Master’s Degrees in Taxation for Accountants:
An Update
Page 6
9 Handle With Care: Ten Financial Rules
10 Extensible Business Reporting Language
14 Funancial Accounting: A Few Fun and
Page 9
18 Top 5 (Surprise!) CPA Job Opportunities
REVIEW COURSE OUTLOOK
4 Sold on a Career in M&A?
By Peter Olinto, CPA, JD, National Lead Instructor, Becker
Professional Education
Visit NewAccountantUSA.com for more information on your career
Page 18
Review Course Outlook
Sold on a Career
in M&A?
Acquire the basics you’ll need right now. By Peter Olinto, CPA,
JD, National Lead Instructor, Becker Professional Education
M
ergers and acquisitions —
usually shortened to M&A —
rank among some of the most
critical and complex business
transactions a company can undertake. They
are also the focus of a highly competitive and
rewarding area of specialization for CPAs.
Whether a company is buying, selling,
or merging for strategic advantage, management must first conduct due diligence to
ensure that the deal makes good business
sense. All of the due diligence buzz words
— fiduciary duty, reasonable care, risk
management, and the like — point logically to CPAs as preferred providers of such
services. It’s not surprising then that the
major accounting firms maintain sizeable
M&A staffs of highly qualified CPAs and
other subject matter experts.
The nature of M&A transaction services
CPAs who specialize in M&A transaction
services have the opportunity to interact
directly with some of their clients’ most
influential decision-makers — top-level
strategists, board members, CEOs, CFOs,
and other senior staff. They work in multidisciplinary teams to gather and analyze
critical financial information and assumptions, evaluate business models, prepare
forecasts, identify risks, and ultimately equip
their clients with comprehensive, reliable
decision-making information.
As a CPA, John Roselli, president of
Becker Professional Education and former
senior vice president of business development,
strategy and international at DeVry Inc, has
considerable experience in structuring M&A
4 New Accountant
transactions. He emphasizes the vital importance of expert due diligence to a successful
deal, noting that it requires strong research
and analytical skills and the ability to glean
key information from financial statements,
especially as it relates to risk.
He also notes the increasing complexity
of M&A transactions as companies expand
globally. “In a transaction we completed in
Brazil, due diligence was particularly critical
and even included “translating’ financial
statements prepared using the generally
accepted accounting principals of Brazil
into US GAAP.” He adds, “Today, CPAs
involved in M&A need to have a global
perspective. For those interested in extensive international work, a second or third
language can be a distinct advantage.”
Two career paths for CPAs
Angela Sorrell, lead campus recruiter
for transaction advisory services at Ernst
& Young, says that in recruiting she looks
for what she calls “audit overachievers,”
individuals who are enthusiastic about
assurance work, and who also have a tolerance for ambiguity and can adapt easily to
change. She describes the two most common
career paths for a new hire seeking to join
the firm’s M&A practice.
Tax practice. CPAs who follow this path
start by acquiring a solid foundation in
general tax issues on which they can build
highly specialized expertise in transactional
tax services. If you choose this path, a master’s
Continued on Page 22
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Student Outlook
New Accountants’ 11 Rules For Living...
Here is a list of 11 things that many high school and college graduates did not learn in school.
Rule #1
Life is not fair;
get used to it.
Rule #2
The world won’t care
about your self-esteem.
The world will expect you
to accomplish something
BEFORE you feel good
about yourself.
Rule #3
You will NOT make 40
thousand dollars a year
right out of high school.
You won’t be a vice
president with a cell
phone, until you earn
both.
Rule #4
If you think your
teacher is tough, wait
until you get a boss. He
doesn’t have tenure.
Rule #5
Flipping burgers is not
beneath your dignity. Your
grandparents had a different
word for burger flipping;
they called it opportunity.
Rule #8
Your school may have done away with
winners and losers, but life has not.
In some schools they have abolished
failing grades; they’ll give you as many
times as you want to get the right
answer. This doesn’t bear the slightest
resemblance to ANYTHING in real life.
Rule #6
If you mess up, it’s not
your parents’ fault, so
don’t whine about your
mistakes, learn from them.
Rule #9
Life is not divided into semesters. You
don’t get summers off and very few
employers are interested in helping you
find yourself. Do that on your own time.
Rule #7
Before you were born, your
parents weren’t as boring as
they are now. They got that way
from paying your bills, cleaning
your clothes, and listening to you
talk about how cool you are. So
before you save the rainforest
from the parasites of your parents’
generation, try “delousing” the
closet in your own room.
Excerpted from “Dumbing Down Our Kids: Why American Children Feel Good
About Themselves But Can’t Read, Write or Add” by Charles J. Sykes.
Rule #10
Television is NOT real life. In real
life, people actually have to leave
the coffee shop and go to jobs.
Rule #11
Be nice to nerds.
Chances are you’ll end
up working for one.
www.newaccountantUSA.com
NewAccountantUSA.com 55
Student Outlook
Master’s Degrees in Taxation
for Accountants: An Update
With higher taxes certain for 2013 and beyond, the demand for tax professionals and
their services should increase substantially. By Barry C. Broden, DBA, CPA, Professor of
Accounting and Taxation, University of Hartford and Steven B. Jarett, MPA, CPA, Associate Professor of Accounting, Saint Joseph College
I
n the last three years the Federal
Government has enacted 13 new tax
laws to try to move the economy out
of the worst recession since the Great
Depression. With the passage of the recent
healthcare law, new taxes are looming
for the next two years. Job prospects for
tax professionals have always been good.
However, with higher taxes certain for
2013 and beyond, the demand for tax
professionals and their services should
increase substantially.
Although the “Boston Tea Party” led
to the Revolutionary War and this nation’s
independence, the new country based
its taxation policy on excise taxes and
property taxes until the Civil War. The
income tax put in place during the Civil
War lasted only four or five years. Further
attempts to tax income failed because of
its unconstitutionality. Then, in 1913,
the 16th amendment to the constitution
legalized income taxation. In 1921, a
net-worth tax was added (estate tax) and
the rest is history. Tax laws were codified
in 1939, 1954, and again in 1986.
Graduate tax education first occurred
in the New York City area at New York
University in 1950. Research in 1974
disclosed that fourteen graduate tax programs were in existence. The number of
graduate tax programs grew to 30 in 1980,
106 in 1990, and 114 by the turn of the
6 New Accountant
millennium. Much of this growth was
a result of the rapid explosion in tax laws
following the Tax Reform Act of 1969.
After the technology bubble burst in 2000,
a number of graduate tax programs were
eliminated but another phenomenon was
taking place, the 150-hour educational
requirement to sit for the Uniform CPA
exam. Therefore, these authors believed
that most CPA candidates would opt
for a graduate degree when seeking the
additional 30 hours of coursework and
that most accounting programs would
expand their offerings to include graduate
tax courses and/or a tax specialization.
In 1978, a study found that two types
of graduate tax programs existed. The
two types of graduate tax programs are
Type I, known as “academic” and Type
II, known as “professional”. Table I
below summarizes the attributes of these
programs. Once should note that some
programs may contain elements of both
types. Generally, the professional programs grew up first meeting the needs
of CPAs who were practicing in large
cities, could only take classes at night
on a part-time basis, and were strictly
interested in tax courses. The academic
programs were usually created for fulltime students who wanted to continue
on in school and get a graduate degree in
Table I - Graduate Tax Programs: An Academic Continuum
Type I
Type II
Accreditation
AACSB at graduate level
No AACSB or only at undergraduate level.
Nature
State University
Private University
Students
Full-time/Day students
Part-time/Evening Students
Faculty
Full-time/Ph.D.-DBA
Part-time/LLM-CPA
Courses
10/Daytime/Flexible Sequence
10/Evenings/Structured Sequence
Objectives
To complement a broad-based academic program with some
graduate tax courses
To produce tax specialists
Title
MBA, MS-Accounting (with tax concentration)
MS-Taxation
Enrollment
Less than 100 students
Greater than 100 students
Location
Small City, College Town
Large City
Examples
Texas, Michigan, South Carolina
Golden Gate, Bentley
MS in Accounting w/Tax Specialization and/or Concentration
American International College
Saint Thomas
University of Notre Dame 2
Appalachian State University
San Diego State University
University of Oklahoma
Boise State University
San Francisco State University
University of South Carolina
California State University–Sacramento
Southern Illinois University–Carbondale
University of Tennessee –Knoxville
Case Western Reserve University
Southern Illinois University–Edwardsville
University of Texas–Austin 1
Clemson University
Southern Methodist University
University of Virginia 2
Duquesne University
Texas A&M University–College Station 2
University of Washington 3
Florida Gulf Coast University
University of Colorado
University of Wisconsin –Madison 2
Florida State University
University of Florida 1
Utah State University
George Washington University 2
University of Georgia
Gonzaga University
University of Hartford
Virginia Polytechnic Institute
and State University
Louisiana State University
University of Hawaii
Weber State University
Miami University of Ohio
University of Illinois–Urbana 1
Michigan State University 2
University of Memphis
Northeastern University 3
University of Missouri–Columbia
Oklahoma State University
University of Missouri–Kansas City
Old Dominion University
University of Missouri–St. Louis
Penn State University 3
University of North Carolina –Wilmington
Saint Louis University
University of North Florida
www.newaccountantUSA.com
NewAccountantUSA.com 77
Student Outlook
taxation before entering the job market.
The authors have listed in Table II the
graduate tax programs that (to their best
knowledge) represent Type I and Type
II schools. Again, one should note that
some schools have both types of programs
and some schools offer these at several
locations throughout their respective
states. Today, several institutions offer
their graduate tax programs online and/
or in executive weekend programs while
others have combined LLM programs
with MST programs so that attorneys
and accountants are in the same classes.
Once you have identified schools that
you are interested in, more detailed
information can be obtained online
or through each college/university’s
catalogue. One should also examine
their course offerings and decide which
one(s) meet your criteria.
Recently, Tax Talent, an online
network for tax professionals, released
survey results of over 3,000 “Masters
in Tax” graduates assessing the most
highly ranked graduate tax programs.
These programs were ranked in the top
10th percentile, 20th percentile, or top
30th percentile. Our Table II shows a 1,
2 or 3 next to the college or university,
representing the respective percentile
of the survey. Tax Talent is going to
survey “Chief Corporate Tax Officers”
this year to assess their perspective on
the best M.S. tax programs. They can
be visited at www.TaxTalent.com.
For many years there have been calls
for revising the tax system, but to no avail.
The system gets more complicated with
many more forms and provisions. It has
also become more computerized and
more competitive. Even if tax reform
does happen, given the complex state of
our world with so many types of taxes
(e.g. federal, state, local, international,
etc…) and the growing importance of
financial planning on both a personal
level and a business level, the future
demand for tax professionals appears
to be stronger than it has ever been. NA
Master of Science in Taxation
American University 2
Hofstra University
Univ. of Wisconsin –Milwaukee
Arizona State University
Kings College
University of Akron
Baruch College 3
Long Island Univ.–Brooklyn
University of Alabama
Baylor University
Long Island Univ.–C.W. Post
University of Baltimore 3
Bentley College 1
Mississippi State University
University of Central Florida
Brigham Young University 1
National University
University of Cincinnati
Bryant University 3
New York University 1
University of Denver 1
California State U.–Northridge
Northern Illinois University 2
University of Illinois–Chicago 2
California State Univ.–East Bay
Nova Southeastern University
University of Miami
California State Univ.–Fullerton
Pace University 1
University of Minnesota 2
Capital University
Philadelphia University
University of Mississippi
DePaul University 1
Robert Morris University 3
University of New Haven
Drexel University
Rutgers University 2
University of New Orleans
Fairfield University
San Jose State University
University of North Texas
Fairleigh Dickinson University
Seton Hall University
University of San Diego
Florida Atlantic University
Southeastern University
University of Texas–Arlington
Florida International University
St. John’s University
University of Tulsa
Fontbonne University
Suffolk University
Villanova University 2
Fordham University 3
SUNY–Albany
Virginia Commonwealth Univ.
Georgia State University
SUNY–Old Westbury
Walsh College 2
Golden Gate University 1
Texas Tech University 3
Wayne State University (MI)
Grand Valley State University 3
Univ. of Southern California 1
Widener University
8 New Accountant
Career Outlook
Handle With Care:
Ten Financial Rules of Thumb
C
ertain rules of thumb provide
assistance with financial decisionmaking. Accounting students
are exposed to the following ten
(and more) financial rules of thumb in their
course of study.
1. At a minimum, save 10% of your
income.
2. Build an emergency fund to cover
three to six months of expenses.
3.
Subtract your age from 100, then
invest the resulting percent in equity
securities (stocks) and the age percent
in debt securities (bonds).
4. Do not use in excess of 5% of your
available funds on any single trade.
5. Assume your investments in the stock
market will yield an average annual
return of 10%.
6. Using the Rule of 72, dividing 72 by
the annual interest rate as a percentage
will produce the approximate number
of years for an investment to double
in value.
7. Monthly home mortgage payments
should not exceed 20% to 25% of
one’s take-home (net) pay.
8. Refinance your home mortgage, if the
new rate is at least one percentage
point lower than your current rate.
9.
No more than 36% of your pre-tax
monthly income should be used to
satisfy your car loan, home mortgage,
student loan and other consumer debt
(e.g. credit card) obligations.
10.Have life insurance coverage of 7 to 10 times your annual income.
The financial rules of thumb reflected
above are general and broad guidelines
that can be applied to specific situations.
Such is similar to the deductive (from the
general to the specific) approach the FASB
implements in its standards-setting role.
In their basic form, these rules of thumb
are characterized as easy and simple. Thus,
they merely represent a starting point as they
do not consider many factors that may be
relevant to your particular issue. Therefore,
you must customize the rules of thumb to
take into account the complexities of your
personal financial situation. The following
variables (not exhaustive) should be considered for each matching numbered (e.g., 1.)
financial rule of thumb earlier listed.
1. What is your goal, when did you start
saving, what is your age, how much
have you saved.
6. Is the money being reinvested at the
same rate, what is the time period of the investment.
7. What is your credit record/score, how
high is your income, what is the
interest rate.
8.
How long do you plan to live in the
house, how much are the refinancing/
closing costs, how much time is left
on your current mortgage.
9. What is the interest rate, how much
of this is the mortgage payment, what
rate are you earning on your
investments.
10.Age of children, college costs,
earnings potential of spouse, existing
debt, value of net assets.
A financial rule of thumb is not meant
to be a one-size-fits-all tool for decisionmaking. In practice, these rules of thumb
should be handled with care.
2. How much do you make, how much
do you spend, what is the inflation rate.
3.
What is your planned retirement
date, what is your tolerance for risk,
how does the value of your portfolio compare to your investment goals.
4. Is it your employer’s stock, is it a
diversified fund, is it a managed fund.
5.
Average is not normal, wide variations
in short periods, historical averages
not always predictive of future, may
miss target with too high of an
assumed return.
Article By
Andrew D. Sharp
Professor of Accounting, Spring
Hill College in Mobile, Ala.
Cecilia C. Venker
Senior accounting honors
student, Spring Hill College in
Mobile, Ala.
NewAccountantUSA.com 9
College Outlook
Extensible Business Reporting Language
(XBRL): What You Need to Know
XBRL, or “interactive data” as the SEC often refers to it, is a language, free of license fees, that enables and facilitates the recording, communicating, and analysis of business information. By William J. Crampton, Ph.D., Associate Professor, Accounting Information Systems Illinois State University.
O
n December 17th, 2008, the
United States Securities and
Exchange Commission (SEC)
adopted new rules mandating
the use of the eXtensible Business
Reporting Language (XBRL) for all
public companies. Under the new rules,
the largest companies are required to start
furnishing XBRL with their quarterly
June 2009 SEC filings. All other public
companies are required to submit XBRL
filings within three years.
It is important to note that these
XBRL filings do not replace, but rather
supplement, the filings that are currently
required by the SEC. They are viewed
by the SEC as unofficial, yet required,
submissions that must meet accuracy
guidelines but, currently, are not required
to be audited. Regardless, these unofficial
and supplementary filings represent a
major revolution in the way in which
businesses report their data to the SEC.
This adoption of XBRL will have a
huge impact not only on the reporting
companies and the SEC but on all
those involved in the business reporting
supply chain; including: the reporting
companies, the SEC, accounting firms,
lenders, financial analysts and the
investing public. While all accountants
should have a basic understanding of this
new reporting requirement, accountants
involved in the preparation and review of
10 New Accountant
these new filings need to be well versed
in XBRL.
What is XBRL?
XBRL, or “interactive data” as the
SEC often refers to it, is a language, free
of license fees, that enables and facilitates
the recording, communicating, and
analysis of business information. It was
conceived of and initially developed
by Charles Hoffman, a certified public
accountant, in order to automate the
reporting of business information
by computers and over the Internet.
Today, XBRL International, a non-profit
consortium of over 550 corporations
and government agencies, oversees its
development and supports its worldwide adoption (www.xbrl.org).
XBRL is based on XML (eXtensible
Markup Language) which is a language
that is widely used to identify information
and allow for its communication over
the Internet. Both XML and XBRL use
“tags” to accomplish this; however, XBRL
“tags” are developed specifically for
business information (both numbers and
text) such as that contained in corporate
annual and quarterly reports. An example
of which might be the number 1230000,
representing the “net profit” for a
corporate enterprise. A “standard” XBRL
tag is placed around this number that
uniquely identifies it as “net profit” and
allows it to be individually processed by a
computer with XBRL-enabled software.
The computer can now search for this
number, extract it, perform calculations
on it, and compare it to other numbers,
thereby, greatly facilitating the exchange,
presentation and analysis of the data. For
this reason, an XBRL-tagged number is
sometimes referred to as intelligent or
“interactive.” In addition to identifying
this number as “net profit” and allowing
it to be processed by a computer, the
XBRL tag also provides other useful
information relating to the interpretation
and treatment of this number; such
as: its currency, level of precision, and
relationship to other data.
This tag is “standard” because it comes
from a list of approved business tags
included in a standardized accounting
classification called a “taxonomy.” Because
the nature of business reporting varies
depending upon the industry involved,
different industry-based taxonomies have
been developed. In the United States,
these taxonomies have been developed by
XBRL.US, a non-profit organization whose
mission is to support the implementation
of XBRL in the US. Some examples of
these taxonomies, based on US generally
accepted accounting principles, GAAP,
include: the commercial and industry
taxonomy, the banking and savings
institutions taxonomy and the insurance
taxonomy. For a complete listing of these
taxonomies, please see www.xbrl.us.
A great deal of work has gone into
the development of these taxonomies
to be as complete as possible: thousand
of tags are included in the 2009 XBRL
GAAP taxonomies. However, early on in
the development of these taxonomies, it
was realized that it would not be possible
to specify every possible business
reporting situation for every possible
firm. Therefore, the designers of these
taxonomies and the SEC permit the
taxonomy to be extended. This is what
the “X” of XBRL is meant to represent;
namely, that it can be extended or that
it is eXtensible. This eXtensibility allows
the reporting firm to create and define
new tags unique to its situation that are
not included in the taxonomy; such as:
gross profit on consulting services or
revenue from the Midwest region.
The Benefits of XBRL
To understand the benefits of XBRL,
consider how firms have traditionally
reported their data to the SEC. Firms
submitted their forms (e.g. 10-K, 10-Q,
8-K) to the SEC’s electronic data-gathering,
analysis, and retrieval (EDGAR) system
in either plain text or hypertext markup
language (HTML.) While this manner of
Continued on Page 21
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Take 30 credit hours of MSM coursework and earn 6 credits for taking the CPA exam.
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TESC4149-1_AccountingAd_NewAccountantMag.indd 1
8/24/11 11:37 AM
NewAccountantUSA.com 11
Student Outlook
14 New Accountant
Funancial Accounting:
A Few Fun and Motivational Practices
A
mong the many challenges of
teaching and learning introductory
financial accounting, the first accounting course for accounting and
other business and non-business majors, is
the concept of normal balances for different
accounts and basically for cash account. Recording cash transactions is an issue which
stands out for experienced business proprietors and students alike and for most laymen:
this is the issue of debiting cash account to
increase cash and crediting cash account to
decrease cash. In addition, accrual accounting causes not only students but even nonaccounting scholars to struggle with many
terms and concepts of accrual accounting.
Few selected topics are tackled in this set of
motivational approaches to make these topics more interesting and more comprehensible to students.
In the Beginning was Pacioli, and the Rest is Dual Entry
T
he accounting equation is one of the
first presentations of accounting and
accounts. Left hand side accounts are
equal to right hand side accounts; a
balance-scale has left and right pans to hold standard
weights on one side and items to be weighed on the
other side and the scale is in balance when both sides
are of equal weight. Why assets or resources on left?
Blame Pacioli! (Students can visit Pacioli’s tomb in
Italy to express their gratitude or frustration). Thus,
it was decided that left side is debit-DR (own) and
right side is credit-CR (owe) [two sides or two teams
where points for each team is recorded on one side].
Students need to realize that these norms were set
long time ago, are time tested, and that how things
are: Assets on left side and Liabilities and Equity on
right side. Two-party system is another affirmation:
red states’ points on left side and blue states’ points
on right side, Republican and Democrat (of course
the accounting conservatism principle dictates that
Democrats are on the liability side with no need for
student survey!). Exhibits A and B can be referred
to in explaining left side and right side accounts and
emphasizing the duality of journal entries.
NewAccountantUSA.com 15
Student Outlook
Vanna White to the Rescue
If Pacioli does not
suffice, The Wheel of
Fortune and Vanna White
may come to the rescue.
Exhibit A is not a photo
of Vanna White, but it is
of a female advertising
storage bins (Vanna White
Assets = Liabilities + Equity
retired but the Wheel of
Fortune game is still recognized by younger students). Storage bins are regarded as accounts, boxes of T-Accounts, used
to store the results of transactions affecting or applicable to
one account (storing dollar amounts or bills in cash bin).
The visual depiction of multiple storage bins on left and
right may help students absorb the accounting equation,
help students understand the concept of T-Accounts or
ledger accounts, help them realize that there are a multitude
of accounts comprising the chart of Accounts (COA), and
make vertical classifications of assets (cash, receivables, then
inventory, etc…) into separate bins in same column or on
the left side versus amounts of many accounts owed and
equity accounts in bins on the right columns.
Which Came First, Counting
or Accounting?
An intriguing hypothetical question makes students focus on the
nature and true value of accounting. This question can be introduced when describing the sequence of capturing a business transaction and in the process of recording the transaction through a journal
entry. The first major step is to analyze the business transaction and
its effect on the accounting equation. A mere purchase of five [X?]
for $100,000 focuses attention on dollars and cents (everybody criticizes the “dollars and cents” focus but it is popular to all); five [of]
what? The context of the archeologist research (“Before Writing…:
From Counting to Cuneiform”) poses an interesting question of
whether counting came before accounting! Analyzing the economic
transaction is more important than just knowing the amount of the
transaction; when it is announced in class that students are given five
each, the immediate question (instantaneously and unanimously)
comes back as “five [of] what?” Of course, jokingly the answer is
five debit points on their grade! Students recognize immediately the
value of determining which accounts are being affected and whether
the accounts are increased or decreased; the amount of the entry
becomes secondary. Accounting is mainly about analyses and it is
much more than just bookkeeping.
Account Normal Balances vs. Transactions Applied to Each Account
Many students have difficulty distinguishing between normal balance of an
account (for example cash’s normal balance
is a debit balance) and when a journal
entry for an actual transaction (Debit-DR
or Credit-CR) increases or decreases the
account itself. One student exclaimed and
in a grumbling tone that “normal balance of
asset is a debit balance, you just stated that,
so how come you are crediting the account
in this transaction!”
Realizing the dilemma that the new
language of accounting is creating, there
is a need to use grammar and language
artifacts to save the day. Oh No, language
and grammar to help solve accounting
ambiguities! Blind leading the blind! How
about nouns and adjectives (state of the
account) versus verbs or doing (working
with the account); this approach may not
16 New Accountant
be helpful but serves as a good reason for
students to focus on alternative explanations as follows:
• T-Accounts example. After recording
few journal entries, creating a T-Account
which has two sides can tell the story of how
part of a journal entry is recorded on one
side; the net effect of left and right amounts
recorded is the balance in that Account.
• The T-Account example is used to
reinforce the difference between the current
status (balance of the account) versus the
changes to that account represented by
journal entries which can fall on any side,
on debit or credit side.
• Using Excel® to build a T-Account with
a continuous running balance for that Account (in a column next to the CR column).
Students can experience creating a formula
in Excel to calculate the balance after each
entry to that account. During that process
of adding debits (for cash as an example)
and subtracting credits, students enforce
their learning of what is the running balance
in that account and how the daily journals
can fall on both sides and mainly where a
debit to cash increases cash while a credit
entry decreases cash balance. Following up,
as cash is on the left side of the accounting
equation the balance has to acquire the left
side label “Debit” and, hence, normal balance for cash and assets is a debit balance.
Another demonstration is an e-copy or
paper bank statement which shows the list
of transactions, few transactions decreasing
and few increasing cash in bank, and the
balance at the beginning and end of the
month (or bank statement period).
Cash is Debited and YET or YES it is Increased!
Small business owners or proprietors
coming back to school to understand
more how to run their businesses struggle the most with accounting terminology especially as it relates to cash entries.
Switching terminology from that used
by banks and in daily laymen language
is somehow difficult to assimilate, such
as, “we credited your account” memo
from bank meaning increased cash in
your bankExhibit
accountB
(bank liability to
DEBIT : LEFT SIDE
ASSETS
you increases) whereas on balance sheet
debit increases cash.
In conjunction with example of TAccounts and sample of bank statement,
Exhibit B attempts to re-emphasize that
the rules of the accounting equation,
blame Pacioli again, is that assets are on
the left side and it is the debit side. Any
asset account, such as cash, residing on
the left can receive amounts (or votes)
on the left side and thus increases, and
=
CREDIT : RIGHT SIDE
LIABILITIES + [ EQUITY
when these amounts (or votes) leave
and go to the right and opposite side the
cash decreases.
Horizontal depiction is much better
but the vertical representation can be
used as an illustration of a cup where
one pour in debits and it increases the
red portion, and when one put in blue
then credits grow and the red or cash
decreases (laws of chemistry has to cease
and not allow mixing of colors!).
( + REV -­‐ EXP ) ]
DR
CR
The demo/exhibit/story below is for Cash or Assets
CASH
DR= RED
LEFT
CR= BLUE
RIGHT
The following are not the s ame:
1 BALANCE OF THE ACCOUNT (normal balance)
2 TRANSACTION Debiting or Crediting the account
Cash Account (Box/Drawer) -­‐ Horizontal View
Add cash => the red area expands= go right
as RED expands Empty space or Blue space is reduced
Pay Cash or take away or reduce cash => red area decreases = go down
So, if you CREDIT Cash i.e. Blue expands => red is reduced
thus, CREDITS reduces Cash and DEBITS increase Cash
This applies to all ASSETS: DR increase assets and CR decreases assets.
L
e
f
t
=
D
R
Cash Account (Box/Drawer) -­‐ Vertical View
Add cash => the red area expands= go up
as RED expands Empty space or Blue space is reduced
R
E
D
=
D
R
Pay Cash or take away or reduce cash => red area decreases = go down
So, if you CREDIT Cash i.e. Blue expands => red is reduced
thus, CREDITS reduces Cash and DEBITS increase Cash
This applies to all ASSETS: DR increase assets and CR decreases assets.
THE STORY ABOVE IS EXACTLY THE OPPOSITE FOR LIABILITIES AND EQUITY
Red is empty space for Liabilities and Equity, whereas Blue is the full-amount or Credit Balance
NewAccountantUSA.com 17
Cover Story
Top 5 (Surprise!) CPA
Job Opportunities
A CPA career doesn’t have to mean sitting in a cold, quiet office preparing taxes – or simply offering
financial advice. There are many different and exciting CPA career opportunities currently available,
and with some careful research and planning, you have a strong chance of finding the job you’ve been
dreaming of. By the Bisk CPA Review Editorial Team
A
ccording to the U.S. Bureau of Labor
Statistics’ 2010-2011 Occupational
Outlook Handbook, accountants and
auditors can expect to experience a
significant growth – possibly up to 22 percent – in
employment opportunities through 2018. CPAs are
most likely to benefit from these figures. Average
nationwide earnings as of May 2008 for the middle
18 New Accountant
half of the occupation was between approximately
$45,900 and $78,210, with the median salary at just
under $60,000.
Now is the time to explore specialized career
paths that can make a big difference in your life
and the life of your clients. Below, we provide an
overview of five opportunities you may not have
considered.
“
The right educational path is critical to a successful career in accounting. Most accounting positions require
a bachelor’s degree in accounting or a
similar field, with more and more employers preferring master’s degrees in accounting or business administration.
5. Forensic Accounting
If you have an interest in
detective work, forensic
accounting may be for you.
This type of accountant
typically investigates and
examines any evidence of
white-collar financial crimes like fraud and embezzlement.
Forensic accountants often serve as expert witnesses during
legal proceedings and are responsible for preparing and
presenting evidence in court.
4. Environmental Accounting
Environmental accounting, or
social accounting, examines and
measures the environmental
and social impacts of business
decisions. A CPA working in
environmental accounting may
help a company determine how it can be both environmentally
responsible and profitable at the same time. An accountant in
this field may be hired to work on environmental compliance
or may be asked to set up systems to ensure compliance and
avoid any disputes or claims in the future.
”
3. Internal Auditing
Accountants within this
branch
of
accounting
examine an organization’s
records for waste, fraud or
mismanagement.
Internal
auditors confirm the accuracy
of their company’s records and management procedures,
and assess efficiency and compliance in regard to laws and
government regulations.
2. Information Technology
Services
If you have an IT
background, you may wish to
pursue work with companies
seeking employees to design
and implement their custom
advanced software systems. A CPA with strong IT skills
may find work in e-commerce, consulting with colleagues
and other IT or accounting professionals to make sound
financial and technological decisions for the company.
NewAccountantUSA.com
NewAccountantUSA.com 19
19
Cover Story
The Road to a Great CPA
Career Often Starts Online
Although some job opportunities for
CPAs may be surprising, one thing isn’t:
Today’s CPA candidates enjoy learning
online. Among the most technologically
savvy individuals of any generation,
they are increasingly embracing
e-learning – including preparation for
the CPA exam.
1. Education
As the CPA employment outlook continues to be
optimistic, experienced CPAs are in demand to
teach new generations of CPAs who are coming
into the field. While a teaching degree may be
required to teach at a college or university, CPAs
without a degree can still teach CPA Exam Review
courses or write and teach CPE courses as well.
Previous experience in the field is also desirable, so colleges and universities
endeavor to assist students in finding internships and/or part-time work with
local accounting firms while attending school.
In addition to a college degree, aspiring accountants may gain professional
recognition through certification or licensure, thus increasing their job prospects.
An individual can earn a CPA designation with the combination of the required
amount of college credits, practical experience and by passing the Uniform CPA
Examination. Also, most states require public accountants and CPAs to fulfill
continuing education requirements in order to get their licenses renewed.
“A world of opportunities opens up once you pass the CPA exam. That’s
the key to entering any of these exciting areas,” says Bob Monette, JD, CPA, a
nationally recognized expert and Bisk CPA Review instructor who has helped
tens of thousands of candidates pass the exam.
Prospective students are encouraged to conduct independent research
as employment opportunities may vary depending on location, experience,
education and other factors.
About Bisk CPA Review
Founded in 1971 by Nathan M. Bisk, JD, CPA (FL), Bisk Education is the world’s
largest exclusive provider of professional education online. With its CPA Review
(http://www.CPAExam.com), CPE (http://www.CPEasy.com), and University
Alliance (http://www.UniversityAlliance.com) divisions, Bisk Education has more
than 450,000 enrollments, has awarded more than 12 million credit hours, and has
helped more than 140,000 candidates pass the CPA exam – including Elijah Watt
Sells Gold Medal winner John McInnis, who achieved a perfect score!
20 New Accountant
Helping meet the demand is Bisk’s
CPA Review online program, which
offers access to courses 24/7, so you
can study anytime, anywhere. You
also can interact directly with some
of the industry’s most knowledgeable
CPA review instructors via email, chat
rooms and message boards.
The Bisk CPA Review online course
features seven weeks of structured
assignments, streaming lectures,
robust study guides, hundreds of review
questions, assignments and practice
quizzes, as well as all of the features
and benefits of our self-study program,
including the Bisk Personal Trainer. In
addition to online learning, Bisk offers
the following format choices: software,
DVDs, textbooks or live review.
“With Bisk’s CPA Review online
program, students get all the benefits
of a live class, with instruction from
leading experts and structured weekly
assignments,” said Valerie Wendt,
Bisk Education Product Manager.
“But they also get the flexibility to
study when and where they want, and
review the material as much as they
need to. So it’s no surprise that our
students have achieved such excellent
results on the exam.”
Learn more by visiting
www.cpaexam.com/NAM today.
Career Outlook
Extensible Business Reporting Language: What You Need to Know
business reporting satisfied the requirements
of the SEC, it did little to facilitate the
sharing or analysis of the data being
reported since data contained in either
format could not be individually processed
by a computer. In addition, the creation
and subsequent use of the data reported was
expensive, time-consuming and error-prone.
How-ever, this all changes with an XBRLenabled filing. The use of XBRL provides
the following benefits to those involved in
the business reporting supply chain.
Lower reporting costs while speeding
up the reporting process.
Initially, reporting firms will be
required to incur additional costs to
implement XBRL in their data collection
and reporting processes; however, once
implemented, these XBRL-enabled processes will lower the on-going costs of
reporting to the SEC. Instead of trying to
pull together all the SEC-required data,
often from different and incompatible
systems in a wide variety of formats,
standardized, XBRL-enabled data will
flow to those responsible for producing
the required reports. This will not only
lower the firm’s on-going reporting costs
but allow it to spend less time in the
report-generation process.
Reduce the time and errors associated
with the manual entry of data.
Without XBRL, reporting firms, as
well as those wishing to analyze the data
reported by these firms, are often required
to manually enter data. Data originating
from different and incompatible systems
frequently requires the reporting firm to
take the data produced by one system
and manually enter them into another
system. Those wishing to analyze the
data reported to the SEC must search
21 New Accountant
through plain text or HTML documents,
extract the desired data and enter it into
another package for analysis; such as: a
spreadsheet. This process of manually
entering data is not only time-consuming
and tedious but error-prone. Automated
XBRL-enabled processes will greatly
reduce, if not eliminate, this timeconsuming and error-prone activity.
Improve the quality of the data being
reported leading to better decisions.
The automation and standardization
involved in these XBRL-enabled data
collection systems will mean that the
data collected by the reporting firms will
be more accurate, reliable and consistent.
This, in turn, should lead to better decisions
Continued from Page 11
by those involved in the consumption of
this data; including: financial analysts,
lenders and the investing public.
Increase the time spent on detailed
analysis while speeding up the overall
decision-making process.
With XBRL-enabled data, those
wishing to analyze SEC-required data
will be able to get much faster access to
the data they desire allowing them to
spend more time on the important task of
analysis and less time on the mundane task
of data collection. This, in turn, will lead
to faster (and, hopefully, better) decisions
by those involved in the consumption of
this data.
Continued on Page 22
Are You CPA Ready?
Get ready with
Temple University’s Master of
Accountancy (MAcc) Degree
MAcc students will:
• Meet the new 150 hour CPA license
education requirement
• Receive a customized CPA exam review
course to facilitate passing the exam
• Participate in colloquia with
industry experts
• Develop communication and
leadership skills
We are currently accepting
applications for Fall 2012!
Visit www.fox.temple.edu/MAcc or
contact Sheri Risler, CPA, at 215-204-6482.
NewAccountantUSA.com 21
Review Course Outlook
Your First Audit: Some Ins and Outs from the Voices of Experience Continued from Page 4
degree in accounting with an emphasis on
taxation is a clear advantage.
Assurance practice. Entry-level CPAs
spend a few years gaining core knowledge
essential for the financial due diligence that
M&A work requires and then move into
transaction services. For this career path,
a master’s degree in accountancy carries a
great deal of clout.
What can you do to prepare now?
John Roselli recommends starting to
build your resume early, while you’re still
in school. “Join the finance club,” he advises, “Take courses outside the accounting
curriculum, in finance for example. Read
up on major M&A transactions reported
in the business press. And be sure to tell
recruiters that you’re specifically interested
in M&A. It demonstrates initiative.”
You can also investigate an internship
within an M&A practice. E&Y’s Sorrell
says her firm offers several each year. “And
they’re not always just number crunching,”
she adds. “Two of our interns spent the
summer travelling through Tennessee and
Arkansas photographing the real estate assets
a client had purchased when they acquired
their major southern regional competitor.
The interns loved the experience.”
Roselli also emphasizes one other highly
important step you must take: “Sit for the
CPA Exam as early as possible, preferably
before you begin work as a professional. Even
if you’re not planning a long-term career
in tax or assurance, the CPA designation is
an ideal gateway to the career you envision
for yourself in M&A.”
Extensible Business Reporting Language: What You Need to Know
Continued from Page 21
Improve data comparability leading to greater
transparency.
Since firms will be required, by and large, to report their
data using tags from a standardized accounting classification
scheme, data comparability across firms will be improved. A
number tagged as “net profit” for one firm will be comparable
with the “net profit” figures of other firms similarly tagged.
Each will be defined and calculated in the same way and
the person comparing them will be assured that they are
comparing “apples with apples.” This, in turn, will lead to
greater transparency. It will be very clear in this case, for
example, which of the firms has the largest net income and
which has the smallest. This is in stark contrast to the current
reporting situation where firms define and calculate their
reported numbers in different ways leading to difficult and,
often, inconclusive comparisons across firms.
it appears clear that accounting students who have a greater
knowledge of XBRL will have an advantage over those with
less. Take this opportunity to set yourself apart from other
job candidates and learn all you can about XBRL.
What XBRL Will Mean to You
The emergence of XBRL as a financial reporting standard
has not been lost on firms who hire accounting students.
They realize that the accounting field, by its very nature, is
intimately involved with financial reporting and that XBRL
is here to stay both in the US and around the world. More
and more of these firms would like, and even expect, their
new hires to be “XBRL-literate.”
Given the increased interest shown by firms in this topic,
• Ernst and Young. www.ey.com
22 New Accountant
Where to Learn More about XBRL
The following organizations have websites that contain a
wealth of information about XBRL.
• XBRL International. News, taxonomies, case studies,
education and training. www.xbrl.org
• XBRL US. News, taxonomies, events, training, case
studies and white papers. www.xbrl.us
• The “Big Four” Accounting Firms. News and
downloadable reports. (Search for XBRL)
• Price Waterhouse Coopers. www.pwc.com
• Deloitte. www.deloitte.com
• KPMG. www.kpmg.com
Also, check with you accounting program director to see
if there are any current or planned courses that will provide
you with a good grounding in XBRL.