F2-M7 Special Purpose Frameworks

Question 1

What is the equation for converting cash basis revenue to accural basis revenue?

Answer 1

Cash basis revenue + Ending AR - Beginning AR - Ending unearned revenue + Beginning unearned revenue = Accrual basis revenue

Question 2

What is the equation for converting cash paid for purchases to COGS?

Answer 2

Cash paid for purchases + Ending AP - Beginning AP - Ending Inventory + Beginning Inventory = COGS

Question 3

What is the equation for converting cash paid for Operating Expenses to Accrual Basis Operating Expenses?

Answer 3

Cash paid for operating expenses + Ending accrued liabilities - Beginning accrued liabilities - Ending prepaid expenses + Beginning prepaid expenses = Accrual basis operating expenses

Question 4

What’s an alternative approach to converting from cash-basis to accrual-basis?

Answer 4

Add increases in current assets.
Subtract decreases in current assets.