Your knowledge about the different concepts, rules, and regulations embodied in different areas of accounting, auditing, finance, law and taxation is very important for your success in the CPA Exam. Various rules especially taxation and business laws are very difficult to keep in our heads. Fortunately, there are various techniques we can use in order to simplify those difficult rules and easily download them from our memory during the exhausting CPA Board Examinations.
One of the most effective techniques I will mention in this section is mnemonic. Mnemonics help you to easily memorize the hard rules and concepts and help you retain them in your memory for a long time. It will help you to simplify and to put into perspective everything that you need to learn. Like for example in the case of employee benefits-- it is quite difficult to compute pension or benefit expense if you don't know the different components of that account. Sir Rey Ocampo, our reviewer in Practical Accounting 1 and Auditing Problems helped us to simplify everything by using a certain mnemonic for the components of pension expense. He used the key word "CI RAPE" which consists of the following: "C" for Current Service Cost; "I" for Interest Cost; "R" for expected Return on Plan Assets; "A" for Actuarial Gains and Losses; "P" for Past Service Cost; and "E" for Effects of curtailment and settlement. In that case, the computation of pension expense is much more easier if you simply know the key words of the components.
You can apply this technique especially if you have a hard time memorizing all the rules that you need to know. Like in the case of Business Law wherein you need to remember so many rules. You can use mnemonic in order to simplify everything and keep them in your head without losing them in the long run.
In a video below, Roger Philipp, CPA, a very respected reviewer and the CEO of Roger CPA Review talks about the importance of mnemonics. He used as an example the topic in leases wherein he simplified some of the qualifications for finance lease. Find out below.
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