Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

Which of the following titles is appropriate for a statement of revenue and expenses using an other comprehensive basis of accounting (OCBOA)?

1. Income statement.

2. Statement of activities.

3. Statement of income-regulatory basis.

4. Statement of operations.

The correct answer is: Statement of income-regulatory basis.

The most appropriate title for a statement of revenue and expenses prepared using an other comprehensive basis of accounting (OCBOA) is "Statement of income-regulatory basis." This title clearly indicates that the financial statement is prepared under a specific OCBOA, which is often used in particular industries or jurisdictions that have regulatory requirements for reporting. When using an OCBOA, the terminology and presentation can vary significantly from typical GAAP financial statements. In this context, referring to it as a "Statement of income-regulatory basis" provides clarity concerning the basis of accounting utilized and highlights that the statement may not adhere to generally accepted accounting principles. It helps users understand the context of the financial information they are reviewing. Other titles may not convey this specific relationship with the regulatory framework effectively. For example, "Income statement" is more commonly used for GAAP-compliant financial statements and does not indicate that an OCBOA is being used. Similarly, "Statement of activities" is typically associated with non-profit organizations although it may lack specificity about the basis of accounting. "Statement of operations" is a broader term that could encompass a variety of accounting methods but lacks the precise definition regarding regulatory compliance found in the "Statement of income-regulatory basis."