FAR Special Purpose Frameworks

Question 1

What are the types of special purpose frameworks

Answer 1

1. Cash basis and modified cash basis of accounting
2. Tax basis of accounting
3. Regulatory basis of accounting

Question 2

What are the F/S of the cash basis of accounting

Answer 2

1. Statement of Cash and equity (Balance Sheet)

2. Statement of cash receipts and Disbursements

Question 3

What are the F/S of the modified cash basis of accounting

Answer 3

1. Statement of Assets and Liabilities (B/S)
2. Statement of revenues and expenses and retained earnings or statement of revenues collected and expenses paid (P&L equivalent)

Question 4

What are the F/S of the tax-basis of accounting

Answer 4

1. A statement of assets & liabilities and equity (B/S eq.)

2. A statement of revenues and liabilities (P&L eq.)

Question 5

How do we report nontaxable revenues and expenses?

Answer 5

1. Separate line items in the revenue and expense sections of the statement of revenues
2. Additions and deductions to net income
3. disclosure in a note

Question 6

Formula to convert Cash basis REVENUE to Accrual

Answer 6

Cash basis revenue
\+ Ending AR
- Beginning AR
- Ending unearned revenue
\+ Beginning unearned revenue
= Accrual basis revenue

Question 7

Formula to convert Cash basis PURCHASES (COGS) to Accrual

Answer 7

Cash paid for purchases
\+ Ending AP
- Beginning AP
- Ending Inventory
\+ beginning Inventory
= COGS

Question 8

Formula to convert Cash paid for OPERATING EXPENSES to Accrual basis

Answer 8

Cash paid for operating expenses
\+ Ending accrued liabilities
- Beginning accrued liabilities
- Ending prepaid expenses
\+ beginning prepaid expenses
= Accrual basis operating expense