Cash basis to Accrual-Part 2-Accrued Expenses and Accrued liabilities, by Darius Clark.
Вставка
- Опубліковано 7 лют 2025
- Watch this You Tube Upload to learn what gets added and what gets subtracted on cash basis to accrual basis expense questions. The CPA FAR exam asks questions on cash basis to accrual, how do you handle accrued expenses? NASBA will greet you at Prometric with a multiple choice or simulation where an amount was paid in cash and they want to know how much was incurred. The beginning balance of the accrued liability was expensed last year, paid this year. The ending balance of the accrued liability was incurred this year, won't be paid until next year. Watch this You Tube Upload to learn what gets added and what gets subtracted. When NASBA gives you your notice to schedule, make sure to check out the AICPA blueprint for all the current FAR topics. If you like this video, be sure to comment and I will possibly make a follow up video and show you how to reconcile from cash basis to accrual basis with regard to prepaid expenses, not just accrued expenses and then from cash basis to accrual basis net income. Other FAR topics that you should review accounts and notes receivable, bad debt expense and discounting a note. Revenue recognition topics are tested in FAR and include variable consideration, input and output methods, incremental costs, principal and agent, consignment, bill and hold, warranties, re-purchase agreements, sale with right of return, refund liabilities, contract modifications, gift cards, franchise and royalty revenue, and long term construction contracts. Adjusting entries for accrued interest revenue involve both the income statement and balance sheet and the exam could ask for the impact on the financial statements, working capital, stockholders equity etc, if these entries are not made. Other FAR topics to review before your test include capitalization of interest on fixed assets, depreciation, and accounting changes. Be sure to know the difference between a change in principle and a change in accounting estimate. The concept of retrospective application and prospective treatment is often tested in simulation and multiple choice questions. Know how to test for impairment of both goodwill and assets with a finite life. Patents for example are often tested for impairment on the CPA exam. Know the difference between land and land improvements. For leases, be sure to know the criteria for a finance lease and how the right of use of asset and lease liability are impacted when there is an immediate payment (annuity due) and a first payment one year from lease inception. Know the difference between accounting for operating leases and finance leases for both the lessee and lessor. This accounting homework is very important if you want to pass the CPA FAR exam. Other FAR topics that are heavily tested include the statement of cash flows both direct and indirect methods. Adjusting entries that require reconciliation of cash basis to accrual basis are a "must know". Bonds is another big FAR topic and be sure to know when interest expense is higher than cash paid to the bondholders and when cash paid to the bond holders is higher than interest expense. This has to do with whether the bonds are sold at a discount vs sold at a premium. Stockholders equity is a topic that often gets overlooked because its not considered difficult. Recording treasury stock for example has two methods, the cost method and the par value method. Retirement of treasury stock is a popular question on the CPA Exam. Inter-company eliminations for consolidated financial statements is also heavily tested in FAR resulting from business combinations. Hedging and derivatives is worth a look before your Prometric visit. Knowing what goes to other comprehensive income and what is reported on the income statement is often tested. Be sure to know the difference between re-measurement and translation methods of converting financial statements in a foreign currency. With GASB, know the difference between modified accrual and full accrual accounting. Know the difference between Fund Level Financial reporting and government wide financial reporting especially with regard to assets and liabilities. Know when the term "expenditure" is used and when the term "expense" is used. Non-monetary exchanges are tested in FAR and you need to know how to handle the gains and losses. Pensions are a topic that sometimes candidates find difficult. Knowing how to calculate the total income statement impact and the asset and liability to be reported on the balance sheet. Deferred taxes is another big topic, knowing the difference between a deferred tax asset and deferred tax liability and how and when it reverses.
Sir~ your video is the sole reason i conceptually understand this now THANK YOU SO MUCH!
Thanks. The right teacher makes all the difference, you may want to invest in i-75 FAR. Go to CPAexamTutoring.com
What we need to do is give props to the people helping us AND spread the word to our accounting firms so instead of them paying for Becker, maybe they look into setting up a relationship with I-75 (if that’s something you would even want) I have FAR to take and I am done, but I’m definitely looking into I75
I am a Korean who is English as a second language. I had troubled to understand the circumstance due to English barrier. With your detailed and good explanation, I can sleep comfortably. I had spent to understand this for more than 2 hours. I finally understand it with two videos. I really appreciate your great teaching and thank you very much
Dude, yes!!! I've been struggling to comprehend Gleim's explanations of this topic for hours. I probably understood it within the first minute of this video, and the Part 1 video (Revenues). Thanks for taking the complexity out of accounting and approaching it with common sense!
God bless you. Wasted whole day trying to understand all those fancy formulas in review courses, until I found this video. Great
Had I known before hand about your videos and lectures, I would have never taken any CPA review course.
Im not studying for a FAR exam or whatever that is, but my teacher for my financial reporting frameworks class explained the cash to accrual concept so weird I did awful in my first exam since it was the majority of the point values :(
I was literally in tears studying the night before my test because I had no idea how to navigate the concept, and ever since I got my grade back I have been looking for hours for a video that would explain this as easily as you did. Im going through your entire cash to accrual series, and all your explanations have helped me so so so so so much the entire time Ive been studying for.
I hope that as my semester goes on I can find more of your videos to help explain the topics in my class, because your explanation for this alone has calmed down my anxiety about failing this class as I hadnt done any accounting for the past 3 semesters because of prerequisites from transferring to a university from the community college i was attending
thank you so so much for making this video I really cant stress enough how helpful this was !!!!!
Thank you!! This HELPED SO MUCH!
This was extremely helpful and your broke it down perfectly. Thank you!
you are God sent. thank you so much this helped a lot!!
You’re a legend
You're a life savior
thank you. this is so helpful. I always like to understand the material over memorizing the formula
this is soooo easy to understand! thank you!
great video
This was very helpful and well detailed.
Hi I have a quick question. I understand that Beginning AP represents "expenses incurred in a prior period" that will be paid for during this period. Also Ending AP represents expenses "incurred during this period" that will be paid for in a future period.
Lets say we have beginning accounts payable of $100 and we pay for all of it except $20. This means $20 of the beginning AP would be included in our ending AP at the end of the year because we didn't pay it. This goes against the equation because ending AP represents expenses that were incurred during this period but will be paid for in a future period. However, the $20 was apart of beginning AP which means it was incurred in a prior period and was supposed to be paid for during this period.
If $20 of our beg. AP goes to our ending AP because it didn't get paid, how does this affect our equation for the current period? And will this mess up our equation for future periods?
Sorry if this was confusing I'm just having a very hard time figuring this out. I've tried to figure it out on my own and just cant seem to understand it. I would really appreciate if you could help me.
Thank you, very helpful video.
Woot! Woot! ❤️
THANK YOUUU SIRRR!