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What is an A/R rollforward simulation?

An A/R rollforward simulation is frequently seen by candidates that are sitting for the FAR section for the CPA exam. Candidates must be able to extract information from exhibits and prepare an A/R rollforward. Below is the template for an A/R rollforward from the Universal CPA materials:

Candidates will likely be given the beginning balance or have to search through the exhibits to determine what the beginning balance will be. The most common exhibit would be a prior-period trial balance or financial statement snapshot that provides the balance for the beginning of the period.

To fully understand the activity that increases or decreases the A/R balance in a rollforward, you should the different activities that debit and credit the A/R balance:

Below is an explanation of activity that increases or decreases the A/R balance:

Credit sales: When a company records credit sales, the debit is to accounts receivable and increases the A/R balance.

Cash collected: When a company receives cash from customers who purchased on credit, the credit is to accounts receivable which decreases the A/R balance (the debit is to cash).

Write-offs: When a company determines a receivable is 100% uncollectible, the company will write-off the receivable, which decreases the A/R balance. The credit in the journal entry to write-off a receivable is to A/R.

Conversion to note: If a customer converts it’s A/R balance to a not receivable, the journal entry would decrease the A/R balance.

Example A/R Rollforward

Below is a simple of example where the question gives you the activity that impacts accounts receivable throughout the period. You would be be required to use this information, along with the beginning A/R balance, to solve for ending accounts receivable.

If you were to look at the impact these activities have on the A/R balance in a T-account format, then you would see the following debit and credits:

The more common A/R rollforward that follows the BASE format would be as follows:

Example A/R Rollforward Simulation

Here is an example simulation from the Universal CPA Review platform that works through 9 exhibits. You will have to complete an A/R rollforward and an allowance for doubtful accounts (ADA) rollforward. This example is modeled off the simulation that students are seeing from the AICPA on the CPA exam.


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