Cash, Modified Cash, Income Tax Flashcards
1
Q
How do cash based financial statements operate?
A
- Based solely on cash receipts and disbursements
- Cash received is revenue and cash paid is an expense
- Balance sheet only shows Cash and Equity
2
Q
How do modified cash basis financial statements operate?
A
-As a combination of elements of cash basis and accrual basis accounting
3
Q
When is modified cash basis acceptable?
A
-If modification has substantial support in practice
4
Q
What is required if modified cash basis used?
A
-All RELATED accounts must be reported using same basis of accounting
5
Q
Under income tax basis of accounting, are nontaxable receipts and nondeductible payments recognized on Statement of Revenues and Expenses?
A
-Yes in one of 3 ways