FAR - Framework, Overview & Statements - Special Purpose Framework - Cash, Modified Cash, Income Tax

Question 1

Describe a modified cash basis of accounting.

Answer 1

A modified cash basis of accounting results from adjustments made to cash basis accounting. Specifically, while most items continue to be accounted for using the cash basis, some items are accounted for using the accrual basis. As a consequence, the financial statements reflect accounts and amounts based on a combination of the cash basis and the accrual basis.

Question 2

Identify the other comprehensive basis of accounting (OCBOA).

Answer 2

1) cash basis; 2) modified cash basis; 3) income tax basis; 4) regulatory basis; 5) a define set of accounting criteria that has substantial support in practice and which is applied to all material financial statement items (e.g., price level/inflation adjusted statements).

Question 3

Identify some bases of accounting that are not OCBOA.

Answer 3

1) Accounting based on US GAAP; 2) Accounting based on the unique provisions of a loan agreement; 3) Accounting based on the unique provisions of an acquisition agreement.