To help you become familiar with the accounting standards, this case is designed to take you to the FASB’s Web site and have you access various publications. Access the FASB’s Web site at www.fasb.org. Click on “Pronouncements & EITF Abstracts.” For this case, we will use Statement of Financial Accounting Concepts No. 6. Open Concepts Statement No. 6.
1. Read paragraph 137. Based on the information in this paragraph, what is a transaction?
2. Read paragraph 139. What is the difference between transactions with “cash consequences” and transactions involving “cash”?
3. Read paragraph 141. Based on the information in this paragraph, what is the primary difference between an accrual and a deferral?