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Special purpose frameworks

FAR Chapter 8 · Area I · Blueprint I.E

Not every business needs full GAAP statements. A small medical practice or a family partnership may keep its books on the cash basis or the way it files its tax return. The Blueprint asks you to prepare statements under the cash basis, the modified cash basis and the income tax basis, and to recall the right titles for them. The most tested skill is converting cash basis numbers to accrual, which is the same working capital logic you used in the cash flow chapter, run backwards.

In this chapter

1. What a special purpose framework is
2. Titles and disclosures
3. The cash basis and the modified cash basis
4. Converting cash basis to accrual: revenue
5. Converting cash basis to accrual: costs and expenses
6. The income tax basis
7. Choosing a basis and checking the statements

This chapter has 7 lessons, 50 practice MCQs with explanations and 10 simulations, plus flashcards and a recall sheet.

What this chapter covers

• Statement titles
• cash and modified cash basis
• converting cash basis to accrual
• income tax basis statements

Chapter 7: Public company reporting and earnings per share · Chapter 9: Ratios and performance metrics