ACCRUAL ACCOUNTING Flashcards

ACCRUAL ACCOUNTING

1
Q

General Purpose of financial reporting components

A
    • Income Statement
  1. -Balance sheet
  2. -Statement of cash flow
  3. -statement of Retained earnings
    • Statement of comprehensive income
  4. -Footnote disclosures and supplemtary schedules
  5. -Auditors Opinion
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2
Q

FASB Accounting Codification

A

FASB ASC in the sloe source for authoritative US GAAP for the private sector except for the SEC Guidance. there is no longer Hierarchy of GAAP.
Is not include in the codification is nonauthoritative.

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3
Q

NON-GAAP matters not included in the codification

A

i. Other compehensive basis of Accounting
ii. Cash Basis
iii. Income Tax basis
iv. Regulatory accounting Principles

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4
Q

Accrual Basis of Accounting

A

Recognized and reports the Economic Activities in the period the activity was incurred
Used by US and International GAAP
Rev recognized when earned regardless of cash collection
Exp recg when incurred regardless of period of cash pymt
Recognized all resource changes when they occur

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5
Q

Accruals and Deferrals

A

Transt Event Acct Created Example Revenue Cash Recv Bef Deferred Rev - Rent,subscr
rev earned Liablility gift certificat
Rev earnd bef Accr Asset – Sales on Acct
cash recevd Asset Interest,Rent

Expense Cash paid bef Deferred Exp- Prepaid Ins,
exp incurred Asset suppl,rent, PP&E
Exp incurred Accr Exp - Salaries, wages,
bef cash paid Liability Int, tax

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6
Q

Conversion of Accrual to Cash Basis

A

Net Income on accr basis
-Increases in Assets/+Decreases in assets
+ increases in Liabilites/-Drecrease in liabilities
= Net Income on an Cash basis

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7
Q

Conversion of Cash basis to accrual Basis

A

Net Income on Cash Basis
+Increase in Assets/- Decrease in Assets
-Increase in Liabilities/+Decreases in Liabilities
=Net income on an accrual basis

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8
Q

accrued Liabilites

A

Accrued Expenses- anything payable Liability

Unearned revenue

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9
Q

What does GAAp address

A

Recognition
Measurement
disclosure

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10
Q

Royalties paid

A

Royalties paid should be reported as an expense in the period incurred(accrual basis)

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11
Q

Revenue

A

Under GAAP revenue is not recognized until it is earned

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12
Q

Capital acct bal on Accrual or cash basis

A

Beg Capital+Invst+Income-Drawings=Ending capital

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13
Q

notes

A

if Prepaid exp increase at the ye are not included in accrual basis exp

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