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CPA FAR Simulation Examples

CPA Exam candidates studying for the FAR section of the CPA exam should be prepared for a simulation that focuses on adjustments to inventory. The simulation would have you start with the unadjusted inventory balance from the trial balance and determine what adjusting journal entries need to be recorded. Accounting departments would perform this type of evaluation at the end of the period to determine what the final adjusted inventory balance would be.

The visual below illustrates how a company would take the unadjusted trial balance, record adjusting entries, and that prepares the final adjusted trial balance.

Adjusting journal entries could relate to inventory purchases in-transit, customer orders in-transit, consigned inventory, and results of the physical inventory count.

Candidates would likely have to prepare a rollforward and understand whether the adjusting entries increase or decrease inventory. Below is an example of the rollforward that was prepared for the inventory adjustment simulation in the Universal CPA Review platform.

The YouTube video below is from the Universal CPA Review course. The video explains the instructions, briefly reviews the exhibits, and then walks the candidate through the explanation in a step-by-step manner. Universal CPA Review is the only CPA review course with explanation videos that use visual learning for every MCQ and simulation.


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