F2M7 Special Purpose Framework

Question 1

Determining service revenue on accrual basis, when cash basis was used for the previous year

Answer 1

Cash Basis Revenue
+ Ending AR
- Beginning AR
- Ending Unearned Fees
= Accrual Basis Revenue

Question 2

Presentation guidelines for other comprehensive basis of accounting (OCBOA) the financial statements should

Answer 2

• FS titles should Differentiate OCBOA financial statements from accrual basis FS
• OCBOA FS disclosures should be similar to GAAP FS disclosures (regarding amount of details)
• OCBOA FS should include FS equivalent to the accrual basis balance sheet and income statement. A statement of cash flow is not required
• OCBOA FS do report equity and should explain changes to equity accounts during the period

Question 3

FS titles that are appropriate for OCBOA financial statements

Answer 3

• Statement of Cash and Equity
• Statement of Income- income tax basis
• statement of assets and liabilities arising from cash transactions

Question 4

What are special purpose frameworks

Answer 4

Non-GAAP presentations that include other bases of accounting such as the cash basis and modified cash basis

Question 5

What’s an example of financial statement prepared in conformity with a special purpose framework?

Answer 5

The Statement of Cash Receipts and Disbursements which is an example of a cash basis income statement

Question 6

An accounting basis which is a hybrid of cash basis and accrual accounting basis

Answer 6

The modified cash basis of accounting (a special purpose framework otherwise known as other comprehensive basis of accounting, OCBOA)

Question 7

1. Balance sheet - Modified Cash basis
2. Statement of assets and Liabilities arising from cash transactions
3. Statement of revenue collected and expenses paid

Are all examples of:

Answer 7

Financial statements prepared on the modified cash basis of accounting