Special Purpose Frameworks

Question 1

Cash payments to suppliers XXX
+ Increase in AP (cr.) XXX
(-) Increase in inventory (Dr.) XXX
________________________________
COGS accrual basis

Answer 1

True, Increase in AP will be added and Increase in inventory will be subtracted

Question 2

Dr. Increase in prepaid Decrease in payable
Cr. Decrease in prepaid Increase in payable

Answer 2

True

Question 3

A co. prepared FS on cash basis of accounting. The cash basis was modified so that an accrual of income taxes was reported. Are these FS in accordance with the modified cash basis of accounting?

Answer 3

YES. Under a strict cash basis of accounting, revenues and expenses are recorded only when cash is received or paid. Under a modified cash basis of accounting, certain accruals and/or deferrals are recorded for FS purposes.

Question 4

Unearned revenue will be subtracted from accrual basis

Answer 4

Yes.
Accrual basis = Cash collected + Ending AR - Beginning AR + Beg Unearned Fee - Ending Unearned Fee

Question 5

Cash to Modified Cash Accrual basis : EXPENSES

Answer 5

Add: Increase in accrued liabilities
Add: Decrease in Prepaid expenses
Less: Decrease in accrued liabilities
Less: Increase in Prepaid expenses

Question 6

OCBOA includes- GAAP, Cash basis, Modified Cash basis, Income tax basis! What is not an other comprehensive basis of Accounting?

Answer 6

NOT OCBOA - Pure or Full Accrual Basis

Question 7

Depreciation is acceptable under modified cash basis

Question 8

What to be added and subtracted when calculating accrual basis?

Answer 8

Accrual basis
If AR is increasing at year end (+)
Unearned fee (-)
Decrease in Accrued Expense (-)

Question 9

Capitalizing inventory

Answer 9

Modification to modified cash basis

Question 10

Conversion from cash basis revenue to accrual basis revenue ___________

Answer 10

Subtract ending contract liability from cash receipts from customers

Question 11

Operating expenses will work same way as calculation of ACCRUAL

Answer 11

BECKER MCQ 08247

Question 12

Difference between tax basis and GAAP

Answer 12

Recognize certain revenue and expenses in different reporting periods

Question 13

Interest expense -

Answer 13

Calculate same as cash basis

Question 14

No disclosure is necessary for companies that file with SEC with respect to the date

Question 15

Increase in unearned fee will be added to accrual basis

Answer 15

Yes

Question 16

Form 8k is filed within _______of major event or transaction

Answer 16

4 days

Question 17

Form S-1

Answer 17

Registers shares on national exchange

Question 18

Cash to Accrual

Answer 18

+ increase in receivables
+ decrease in payables
(-) Increase in Prepaids
(-) Decrease in Accrued Expense

Question 19

Accrual basis Expense = To be reported in income statement

Answer 19

Cash basis expense
+ Increase in payable
-Decrease in payable
-Increase in prepaid
+Decrease in prepaid
=Accrual basis expense

Question 20

Accrual basis NI

Answer 20

Cash basis Net income
Add: Decrease in AP
(-) Increase in Unearned revenue
(-) Increase in Wages payable
+ Increase in Prepaid rent
(-) Decrease in AR
ACCRUAL BASIS NI

Question 21

GAAP Accrual NI

Answer 21

Cash basis Net Income
+ Increase in receivables
+Increase in prepaids
+Decrease in payables
(-) Decrease in receivables
(-) Decrease in prepaids
(-) Increase in Payables
GAAP accrual NI

Question 22

Converting cash receipts to accrual based revenue

Answer 22

Cash collected during the current year
+ Ending A/R
+ Beginning Unearned Revenue
(-) Beginning A/R
(-) Ending Unearned Revenue
= Accrual basis Revenue for the current year

Question 23

Decrease in prepaids while calculating NI should be

Answer 23

Subtracted (Same as AR)

Question 24

Unearned fee to be subtracted to calculate accrual basis service revenue

Answer 24

True

Question 25

General purpose frameworks

Answer 25

GAAP and IFRS

Question 26

Special purpose frameworks

Answer 26

Income tax basis, Cash basis, Contractual basis, Regulatory basis

Question 27

Statement of Financial Position is not counted under OCBOA method of accounting

Answer 27

Only cash and Income tax basis are counted

Question 28

EPS Treasury Stock Method

Number of shares - (No. of shares * Exercise Price /Avg Mkt price)

Answer 28

2000-((2000*40)/50)=400 shares

Question 29

Direct write-off method for calculating credit loss expense

Answer 29

It recognizes credit loss expense when a specific account is determined to be uncollectible.