F2M7-Special purpose framework

Question 1

Special purpose framework

Other comprehensive basis of Accounting
OCBOA

Answer 1

Cash basis
Modified cash basis
Tax basis
regulatory basis
price level fin statement

Question 2

OCBOA -general presentation guidelines

Answer 2

Don’t use GAAP Terms
Statement of Cash flow not required
Disclosure required
Should explain changes in equity

Question 3

Cash basis fin statement

Answer 3

Statement of Cash & Equity=B/s (Cash is only asset and Equity =Cash)
Statement of Cash receipt & Disbursement = I/S

Question 4

Modified Cash basis

Answer 4

Hybrid method - Cash + Accrual

Common modification

1. Capitalizing and depreciating asset
2. Accrual of Income tax
3. Recording liabilities
4. Capitalizing invetory
5. Reporting invt at Fair value

Statement of Asset & Liabilities (Modified)-Do not use GAAP term
Statement of Revenue & Expense(IS)

Question 5

Income Tax basis

Answer 5

Method or principle used for Tax

Non taxable revenue & Expense reported –separate line item
-additional deduction to netincome
-A disclosure note
Statement of Asset & Liabilities (Income tax basis)-Do not use GAAP term
Statement of Revenue & Expense(IS)

Question 6

Revenue

Converting Cash basis to Accrual

Answer 6

Revenue per cash basis
\+Ending AR
-Beg AR
-Ending unearned revenue
\+Beg unearned revenue
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Accrual basis Revenue

Question 7

COGS

Converting Cash basis to Accrual

Answer 7

Cash paid for purchases
\+Ending AP
-Beg AP
-Ending inventory
\+Beg inventory
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
COGS

Question 8

Operating Expense

Converting Cash basis to Accrual

Answer 8

Cash paid operating exp
\+Ending Accrued liabilities
-Beg Accrued liabilities
-Ending prepaid exp
\+Beg prepaid exp
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Accrual basis of Expense