Other Comprehensive Basis of Accounting - OCBOA

AAA

DEFINITION of 'Other Comprehensive Basis of Accounting - OCBOA'

Financial statements prepared using a system of accounting that differs from GAAP, the most common being tax-basis and cash-basis financial statements. Other Comprehensive Basis of Accounting (OCBOA) systems also include a statutory basis of accounting such as that used by insurance companies to comply with the rules of a state insurance commission, as well as financial statements prepared using defined criteria that are well-supported in popular literature.

INVESTOPEDIA EXPLAINS 'Other Comprehensive Basis of Accounting - OCBOA'

Two major advantages of financial statements prepared under OCBOA are: they are easier to understand than statements prepared under GAAP, which can be quite complex, and they may cost significantly less to prepare than GAAP-based statements. A key difference between GAAP-basis financial statements and those prepared under OCBOA is that the latter does not require a statement of cash flows.

One criticism of OCBOA statements is that disclosures are not adequate. As a result, it is recommended that comprehensive disclosures be made by a company that has adopted OCBOA, including the basis of accounting used, contingent liabilities and risks and uncertainties.

RELATED TERMS
  1. Hierarchy Of GAAP

    An outline for determining the most appropriate sources for obtaining ...
  2. Generally Accepted Accounting Principles ...

    The common set of accounting principles, standards and procedures ...
  3. International Accounting Standards ...

    An older set of standards stating how particular types of transactions ...
  4. Certified Public Accountant - CPA

    A designation given by the American Institute of Certified Public ...
  5. Accident Year Experience

    Premiums earned and losses incurred during a specific period ...
  6. Book Value Reduction

    Reducing the value at which an asset is carried on the books ...
Related Articles
  1. Bonds & Fixed Income

    Accounting Rules Could Roil The Markets

    FAS 142 is an accounting rule that changes the way companies treat goodwill. Be aware of the impact it has on reported earnings to avoid making bad investment decisions.
  2. Personal Finance

    Top 8 Ways Companies Cook The Books

    Find out more about the fraudulent accounting methods some companies use to fool investors.
  3. Fundamental Analysis

    Detecting Accounting Manipulation

    "One-time charges" and "investment gains" are two strategies companies can use to distort their numbers.
  4. Investing

    How To Evaluate Pension Risk By Analyzing Annual Costs

    Learn how to assess whether a company's pension plan is posing more risks than what the footnotes indicate.
  5. Taxes

    What is the best method of calculating depreciation for tax reporting purposes?

    Learn the best method for calculating depreciation for tax reporting purposes according to generally accepted accounting principles, or GAAP.
  6. Fundamental Analysis

    Are accounts receivable used when calculating a company's debt collateral?

    Learn how accounts receivables are recorded as assets on a balance sheet; they are used when calculating a company's total debt collateral.
  7. Fundamental Analysis

    Work In Progress (WIP)

    Work in progress, also know as WIP, is an asset on the company balance sheet. WIP is the accumulated costs of unfinished goods that are currently in the manufacturing process.
  8. Fundamental Analysis

    What is the difference between cost of equity and cost of capital?

    Read about some of the differences between a company's cost of equity and its cost of capital, two measures of its required returns on raised capital.
  9. Fundamental Analysis

    Is depreciation only used for tangible assets?

    Learn if tangible assets can be depreciated, as well as what other assets are eligible for depreciation so you can account for them accurately.
  10. Fundamental Analysis

    What does a high weighted average cost of capital (WACC) signify?

    Find out what it means for a company to have a relatively high weighted average cost of capital, or WACC, and why this is important to lenders and investors.

You May Also Like

Hot Definitions
  1. Multiplier Effect

    The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends ...
  2. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  3. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  4. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  5. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  6. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
Trading Center