Special Purpose Frameworks Flashcards
Cash payments to suppliers XXX
+ Increase in AP (cr.) XXX
(-) Increase in inventory (Dr.) XXX
________________________________
COGS accrual basis
True, Increase in AP will be added and Increase in inventory will be subtracted
Dr. Increase in prepaid Decrease in payable
Cr. Decrease in prepaid Increase in payable
True
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?
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.
Unearned revenue will be subtracted from accrual basis
Yes.
Accrual basis = Cash collected + Ending AR - Beginning AR + Beg Unearned Fee - Ending Unearned Fee
Cash to Modified Cash Accrual basis : EXPENSES
Add: Increase in accrued liabilities
Add: Decrease in Prepaid expenses
Less: Decrease in accrued liabilities
Less: Increase in Prepaid expenses
OCBOA includes- GAAP, Cash basis, Modified Cash basis, Income tax basis! What is not an other comprehensive basis of Accounting?
NOT OCBOA - Pure or Full Accrual Basis
Depreciation is acceptable under modified cash basis
What to be added and subtracted when calculating accrual basis?
Accrual basis
If AR is increasing at year end (+)
Unearned fee (-)
Decrease in Accrued Expense (-)
Capitalizing inventory
Modification to modified cash basis
Conversion from cash basis revenue to accrual basis revenue ___________
Subtract ending contract liability from cash receipts from customers
Operating expenses will work same way as calculation of ACCRUAL
BECKER MCQ 08247
Difference between tax basis and GAAP
Recognize certain revenue and expenses in different reporting periods
Interest expense -
Calculate same as cash basis
No disclosure is necessary for companies that file with SEC with respect to the date
Increase in unearned fee will be added to accrual basis
Yes
Form 8k is filed within _______of major event or transaction
4 days
Form S-1
Registers shares on national exchange
Cash to Accrual
+ increase in receivables
+ decrease in payables
(-) Increase in Prepaids
(-) Decrease in Accrued Expense
Accrual basis Expense = To be reported in income statement
Cash basis expense
+ Increase in payable
-Decrease in payable
-Increase in prepaid
+Decrease in prepaid
=Accrual basis expense
Accrual basis NI
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
GAAP Accrual NI
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
Converting cash receipts to accrual based revenue
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
Decrease in prepaids while calculating NI should be
Subtracted (Same as AR)
Unearned fee to be subtracted to calculate accrual basis service revenue
True
General purpose frameworks
GAAP and IFRS
Special purpose frameworks
Income tax basis, Cash basis, Contractual basis, Regulatory basis
Statement of Financial Position is not counted under OCBOA method of accounting
Only cash and Income tax basis are counted
EPS Treasury Stock Method
Number of shares - (No. of shares * Exercise Price /Avg Mkt price)
2000-((2000*40)/50)=400 shares
Direct write-off method for calculating credit loss expense
It recognizes credit loss expense when a specific account is determined to be uncollectible.
