In short
The modified accrual basis is used by governmental funds. Revenues are recognized when measurable and available to pay current-period liabilities; expenditures are generally recognized when the related liability is incurred.
Key takeaways
- It focuses on current financial resources, so capital assets and long-term debt aren't reported in governmental funds.
- Buying a capital asset is an expenditure; debt proceeds are an other financing source.
- Government-wide statements use the full accrual basis instead.
Where it's tested
FAR: Governmental Accounting — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Governmental funds use which measurement focus and basis of accounting?