Financial Reporting (30% - 40%) - IV

Question 1

What is special purpose frameworks?

Answer 1

Other Comprehensive Basis of Accounting other than GAAP in preparing financial statements

Question 2

What are some of the appropriate special purpose frameworks?

Answer 2

1. Tax basis of accounting
2. Cash basis of accounting
3. Modified cash basis of accounting
4. Regulatory basis of accounting
5. Contractual basis of accounting

Question 3

What is the tax basis of accounting?

Answer 3

Basis of accounting used to file taxes

Question 4

What is the cash basis of accounting?

Answer 4

Basis of accounting that records cash receipt and cash disbursements. Income and expenses are not accrued

Question 5

What is the modified cash basis of accounting?

Answer 5

A combination of cash and accrual basis of accouting allowing for the accrual of taxes and depreication of fixed assets

Question 6

What is the regulatory basis of accounting?

Answer 6

Basis of accounting used to comply with regulatory agencies

Question 7

What is the contractual basis of accounting

Answer 7

Basis of accounting used to compy with a contract agreement between the entitry and one or more third parities

Question 8

How is accrual to cash basis of accounting computed?

Answer 8

Accrual net income
+/- assets accounts (opposite of the YoY change)
+/- liability accounts (same as the YoY change)
= Cash net income

Question 9

How is cash to accrual basis of accounting computed?

Answer 9

Cash net income
+/- assets accounts (same as the YoY change)
+/- liability accounts (opposite of the YoY change)
= Accrual net income