Accrual Accounting Flashcards
List the components of an external financial report. Define accruals and deferrals and give examples of each. Reconcile cash basis income to accrual basis income. Reconcile accrual basis income to cash basis income. Evaluate the components of accrual and deferral accounts using T-accounts.
1
Q
List all the external financial reports
A
- Income Statement
- Balance Sheet
- Statement of Cash Flow
- Statement of comprehensive Income
- Statement of changes in owner’s equity
- Footnote disclosures and supplementary schedule
- Auditor opinion
2
Q
Facts about Codification
A
- Codification includes all GAAP source, if not include in the Codification, then they are not authoritative GAAP
- SEC has additional reporting guidelines for publicly traded entities.
3.
3
Q
Accrual Account
A
Economic event occurs first, cash not pay or receive yet.
4
Q
Deferral Account
A
Pay or receive cash before happen, such as Prepaid XX
5
Q
Cash basis to Accrual basis Conversion
A
1, Convert a revenue or expense account from cash to accrual (or vice versa), it is easiest to use a T-account.
2, Convert net income from cash to accrual (or vice versa), the formula based on the accounting equation can help you remember whether to add or subtract changes in assets and liabilities when adjusting net income. However, T-accounts can also be used.
