📏CPA EXAM PREP

Special Purpose Frameworks

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Question

Is a statement of cash flows required under cash-basis SPF reporting?

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Answer

No.

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Question

What does an increase in inventory do to accrual COGS?

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Answer

It reduces COGS.

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Question

Why does an increase in prepaid expenses decrease accrual expense?

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Answer

It means cash was paid before the expense was incurred.

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Question

Why does an increase in accounts payable increase accrual expense?

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Answer

It means more was incurred than paid.

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