The document
review simulation
Document review simulation CPA questions have one property worth knowing before anything else: keeping the original wording has to be a right answer, and in a well-made one it often is. In our own DRS, two of the four marked passages are correct as drafted. That is a deliberate design decision rather than an accident: if every highlighted passage were wrong, the simulation would reward the habit of replacing anything that has been marked, and it would be measuring pattern recognition instead of judgement.
Source: AICPA, CPA Exam toolkit — exam structure and scoring · checked 2026-08-15 · simulations and the structure of the exam
DRS on the CPA exam: why KEEP has to be a right answer
Consider what a candidate learns from a document review simulation in which all four marked passages need replacing. They learn that a highlight is a signal, that reading the passage against the guidance is optional, and that the fastest route to a good score is to pick the most technical-sounding replacement. Every one of those is a habit that costs them on the real exam and in practice.
Now consider the version where two of the four are correct as written. The highlight carries no information about the answer. The only way through is to read each passage against the guidance and form a judgement, which is the skill the format exists to test. It also makes the simulation diagnostic in a way the first version is not: a candidate who replaces all four has told you something specific about how they read, and that is a different problem from not knowing revenue recognition.
The grading is symmetric, which is the part candidates underweight. Replacing a correct passage costs the point exactly as much as leaving an incorrect one. There is no partial credit for caution and no bonus for activity.
Our own DRS, all four passages
our own practice item Written by us against the public Blueprint. Not an AICPA question and not taken from any review course.
Facts. On 1 October Year 3, Orsted Software signed a $600,000 contract with Larkin Health covering a perpetual software licence delivered on 1 October and two years of post-contract support beginning the same day. Both are sold separately by Orsted; standalone selling prices are $450,000 and $150,000. The contract itself lists the licence at $500,000 and the support at $100,000.
| Passage | What the draft memo says | Correct action |
|---|---|---|
| [1] | The licence and the support are each capable of being distinct and separately identifiable, so there are two performance obligations | Keep |
| [2] | Allocate the transaction price using the prices stated for each item in the signed contract | Replace |
| [3] | Recognise licence revenue on 1 October Year 3, when control transferred | Keep |
| [4] | Recognise support revenue when Larkin pays each annual support invoice | Replace |
Why [2] fails. The transaction price is allocated in proportion to standalone selling prices, not to the amounts written into the contract. Here the standalone prices are $450,000 and $150,000, so the allocation is $450,000 to the licence and $150,000 to the support. The contract’s own split of $500,000 / $100,000 moves $50,000 of revenue into the period the licence is delivered. The stated prices are evidence of what the parties agreed to pay; they are not evidence of standalone selling price.
Why [4] fails. Post-contract support is satisfied over the two-year term, so revenue is recognised over that period. Collection is not a recognition event: when the customer pays says nothing about when the entity satisfied its obligation.
Why [1] and [3] survive. Both are simply correct. [1] applies the distinct test properly, and [3] recognises licence revenue at the point control transferred. A candidate who has learned that highlighted means wrong replaces both and loses two of the four cells without ever making a technical error.
How to work a document review simulation: CPA exam technique
Read the guidance exhibit before the document. A DRS normally supplies a summary of the relevant rules alongside the draft. Reading the memo first primes you to see what it says rather than what the guidance requires, and the whole task is a comparison between the two.
Decide each passage on its own. There is no reason for the number of replacements to be two, or three, or any particular figure, and reasoning from “there must be more wrong ones than this” is how a correct passage gets replaced.
Say what is wrong before you look at the options. If you can state the defect in a sentence, the right replacement is usually obvious. If you cannot, the passage may not have one.
Budget by cell. Our budget for this simulation is 18 minutes across the four passages, weighted toward the two that turn on allocation and timing rather than spread evenly. What happens when one passage eats the budget →
Common questions
What is a document review simulation on the CPA exam?
A task-based simulation built around a document — a memo, a set of financial statements, a contract — with passages marked for review. For each marked passage you decide whether the original wording should stay or be replaced with one of the offered alternatives, and each passage is graded on its own.
Is every highlighted passage in a DRS wrong?
Not in a well-made one. In our own document review simulation, two of the four marked passages are correct as drafted and the right answer is to keep them. If every highlighted passage were wrong, the simulation would test pattern recognition rather than judgement, and a candidate could score well by replacing everything without reading it.
What is the cost of changing a correct passage?
The same as leaving a wrong one. Passages are graded individually, so replacing correct wording loses that passage's point exactly as failing to fix incorrect wording loses its own. That symmetry is what makes 'when in doubt, change it' an expensive habit.
Related
Revenue recognition, the group this memo sits in → · The journal entry simulation → · The research simulation →
Source: NASBA, “CPA Examination” · checked 2026-08-15 · exam sections and administration