[NikkiSkupnjak]

Do they prepare you well enough? I am trying to focus more on MCQ and concepts on my flashcards rather than worrying about practicing SIMs since there’s no telling what they will be like.

Also, I was doing one of the last Becker SIMs and it said:

On November 1, Year 1, XYZ Company forecasts production of 10,000 barrels of oil in January of Year 2. Oil is currently selling for $85 per barrel. To hedge the risk that the price of oil will decrease before the oil is sold, XYZ takes a short position in a forward contract for 10,000 barrels of oil at $85 per barrel to be settled on January 31, Year 2. The forward contract requires net settlement, rather than the actual delivery of oil. The oil is sold on February 1 for $71 per barrel. XYZ classifies the hedge as a cash flow hedge of the anticipated change in cash flows from the forecasted oil sales. Relevant forward contract prices are as follows:

Oil/Barrel Forward

November 1, Year 1

$85.00

December 31, Year 1

$79.00

January 31, Year 2

$71.00

I got everything correct, but the answer for Becker has the Feb. 1 journal entry debiting A/R for 710,000 and crediting Sales for 710,000. I debited Cash for 710,000…The question doesn’t really specify if it was cash or on account. Will it be more specific on the real exam??

Thanks I appreciate any advice 🙂

FAR 92
AUD 99
REG 94
BEC

Becker Self-Study, Wiley Test Bank

[Anonymous]

I've been doing the same thing as you as I've read the Becker SIMs don't prepare near as well as hammering out the MCQ's.

I've also noticed some problems where based on the question and fact pattern you could debit Cash/AR or credit Cash/AP. I hope its more specific on the actual exam as well. I would assume it would have to be.

[Author]

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