GAAP and Accrual Accounting

Question 1

Authoritative GAAP

Answer 1

• FASB Accounting Standards Codification
  
  • compilations of pronouncements issued by APB, CAP, and FASB
• SEC Guidance for public companies

Question 2

Non-authoritative GAAP

Answer 2

FASB concepts
IFRS
AICPA issues papers

Question 3

What topics does FAASB not include?

Answer 3

1) cash
2) income
3) other comprehensive basis of accounting
4) regulatory acc principles

Question 4

Accrual Basis Accounting

Answer 4

recognizes and reports the economic activities of the firm in the period that the activity occurred regardless of when the cash activity takes place
-matching concept

payable (future cash outflow)
receivable (future cash inflow)

Question 5

Deferred Revenue Liability

Answer 5

Cash received before the revenue is earned (eg. prepaid rent, subscription, gift certificates)

Question 6

Accrued Revenue Asset

Answer 6

Revenue earned before cash received (eg. AR or interest receivable)

Question 7

Deferred Expense Asset

Answer 7

Cash paid before expense incurred (eg. prepaid insurance, supplies, PPE, etc.)

Question 8

Accrued Expense Liability

Answer 8

Expense incurred before cash is paid (eg. interest payable, tax payable, salaries payable)

Question 9

Deferral Accounts

Answer 9

cash received/paid-> accrual (unearned revenue or prepaid expense) -> event (service performed or used)

Question 10

Theme of accruals and deferrals

Answer 10

Accrual: when the economic event occurs first you create an accrual account ( accruing cash owed as a asset/liability)

Deferral: cash activity occurs first, defer the recognition of an expense or revenue as an asset or liability)