SPECIAL PURPOSE FRAMEWORKS Flashcards

1
Q

Special Purpose Frameworks

A

also known as Other Comprehensive Bases of Accounting (OCBOA)

they are non GAAP presentations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

General Presentation Guidelines

A
  1. FS Titles should differentiate
  2. FS are equivalents of the accrual basis BS and income statement
  3. should explain changes in equity acc
  4. Disclosures in OCBOA FS should be similar to GAAP
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Cash Basis and Modified Cash Basis FS

A

Cash Basis - includes statement of cash and equity and statement of cash receipts and disbursement

recognised when cash is received and expenses are recognised when cash is paid.

Modified Cash Basis - hybrid method of both cash and accrual basis

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Income Tax Basis of FS

A

entities that are not required to use the accrual basis of accounting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

One approach for converting from cash-basis to accrual-basis is as follows:

A

Add increases in current assets. For example, when AR increases, the increase is not considered to be income under the cash basis because the cash has not been collected, but the increase is income under the accrual basis.
Subtract decreases in current assets. Conversely, when AR decreases, then cash-basis counted it as revenue when the cash was collected, but under the accrual basis, the income was recognized in a prior period and should not be recognized again in the current period.
Add decreases in current liabilities. For example, when AP decreases, this represents a cash outflow that is recorded as an expense under the cash basis. However, under the accrual basis the paid expenses were recorded in a prior period and should not be recorded again in the current period.
Subtract increases in current liabilities. Conversely, when AP increases, this represents expenses incurred under the accrual basis method that have not been recorded under the cash basis method because they have not been paid.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly