FAR 2 - M6 SPECIAL PURPOSE FRAMEWORKS (CASH ACCRUAL MODIFIED CASH)

Question 1

Convert cash to accrual basis Revenue

Answer 1

Cash basis income
\+ AR end
- AR beg
- Unearned rev end
\+ Unearned rev beg
= ACCRUAL BASIS revenue

Question 2

Convert cash paid for purchases to COGS

Answer 2

Cash paid for purchases
\+ AP end
- AP beg
- Inventory end
\+ Inventory beg
= COGS

Question 3

Convert cash paid for operating expenses to Accrual

Answer 3

Cash paid for operating expenses
\+ Accrued liab end
-  Accrued liab beg
-  Prepaid exp end
\+ Prepaid exp beg
= ACCRUAL operating expenses