Interactive Guide to Special Purpose Frameworks

Beyond GAAP: Special Purpose Frameworks

Discover the alternative accounting methods, also known as OCBOA, used in specific situations when full U.S. GAAP reporting isn't required.

Common Types of Frameworks

While not GAAP, these frameworks have widespread support and are tailored for specific needs. Explore the most common types below.

Cash Basis

The simplest form. Revenue is recognized when cash is received, and expenses when cash is paid.

Modified Cash Basis

A hybrid approach. Starts with cash basis but adds some accrual elements, like depreciating assets.

Tax Basis

Follows the rules the company uses for its income tax return. Often used for simplicity.

Regulatory Basis

Used to comply with the rules of a specific government agency, such as for insurance companies.

Cash-to-Accrual Converter

See how simple cash-basis numbers are converted to GAAP-compliant accrual-basis results. Input your own values below to understand the adjustments needed to recognize revenue and expenses in the correct period.

Revenue Conversion

Cash Collections Ending AR + Beginning AR - Ending Unearned Rev. - Beginning Unearned Rev. +

Accrual Revenue $108,000

Expense Conversion

Cash Paid for Expenses Ending Accrued Exp. + Beginning Accrued Exp. - Ending Prepaid Exp. - Beginning Prepaid Exp. +

Accrual Expenses $61,000

Cash vs. Accrual Income

Initial Cash Basis Net Income:

$40,000

Converted Accrual Basis Net Income:

$47,000