Question

Which of the following is true regarding modified accrual accounting?

a. Debt service expenditures for principal and interest are generally recorded when due and are not accrued at year-end.
b. If a government has resources available in a debt service fund at year-end, an expenditure may be accrued as long as the maturity date is no longer than one month from the end of the year.
c. Both of the above are true.
d. Neither of the above is true.

Answer 1

Both option a and option b are true regarding modified accrual accounting in relationship to debt service expenditures for principal and interest.

Step-by-step explanation:

Modified accrual accounting is a method of accounting used by government entities. Based on the options provided, both option a and option b are true regarding modified accrual accounting in relationship to debt service expenditures for principal and interest:

1. Option a: Debt service expenditures for principal and interest are generally recorded when due and are not accrued at year-end.
2. Option b: If a government has resources available in a debt service fund at year-end, an expenditure may be accrued as long as the maturity date is no longer than one month from the end of the year.

Therefore, the correct answer is Option c: Both of the above are true.