What is the Other Comprehensive Basis of Accounting?

An other comprehensive basis of accounting (OCBOA) is a non-GAAP accounting framework that is used to generate financial statements. The use of OCBOA may apply when financial statements are needed for a specific purpose, or when the preparer wants to use a simpler system than GAAP that requires fewer disclosures. It is frequently less expensive to use an OCBOA to prepare financial statements. A downside of using an OCBOA is that the resulting information tends to be skimpier or more summarized than would have been the case if GAAP had been used.

Examples of Other Comprehensive Bases of Accounting

Here are several common examples of other comprehensive bases of accounting:

Cash basis of accounting. This is the practice of recording revenue when cash has been received, and recording expenses when cash has been paid out. The cash basis is commonly used by individuals and small businesses (especially those with no inventory), since it involves the simplest accounting.
Modified accrual basis of accounting. Modified accrual accounting combines aspects of accrual basis accounting with cash basis accounting. The purpose of this approach is to measure the flows of current financial resources in governmental fund financial statements.
Income tax basis of accounting. This is an approach where the accounting rules are set by the applicable taxing authority.