Cash, Modified Cash, Income Tax

Question 1

What are types of special reporting frameworks?

Answer 1

• Cash Basis
• Modified Cash Basis
• Income Tax Basis
• Regulatory Basis
• Other Basis

Sometimes referred to Other Comprehensive Basis of Accounting (OCBOA)

Question 2

Key Points to know:

Answer 2

Basics of each presentation format

The reporting of certain information within an special purpose framework

Financial statement titles must be descriptive

This is important because GAAP Accrual Accounting is NOT used by:

• Sole Proprietors (over 20 million)
• Partnerships (Over 2.8 million in the US)

Question 3

What are cash basis financial statements

Answer 3

Pure cash basis. Cash coming in=Revenue. Cash going out = Expense. Cash = Equity. No other assets or liabilities.

Question 4

Modified cash basis financial statements

Answer 4

Combination of cash and accrual.

Includes assets on the financial statements.
PPE- Have to depreciate and amortization
A/R
Interest-Bearing Payable

Question 5

Income Tax Basis Financial Statements

Answer 5

Based on income tax rules and regulations

• Taxable amount = Revenue
• Deductible amount= Expenses

Question 6

When cash basis of accounting is used or modified cash basis of accounting is used, what is the name for their version of the income statement?

Answer 6

Statement of Cash Receipts and Cash Disbursements