Question

Recognizing revenues when measurable and available for paying current obligations and expenditures when incurred describes which basis of accounting?

-Accrual.
-Modified accrual.
-Modified cash.
-Budgetary

Answer 1

The accounting basis that recognizes revenues when they are measurable and available and recognizes expenditures when incurred is the modified accrual basis.

Step-by-step explanation:

Recognizing revenues when measurable and available for paying current obligations and expenditures when incurred describes the modified accrual basis of accounting. Unlike accrual accounting, which recognizes revenues when earned and expenses when incurred, or cash accounting, which recognizes revenues when cash is received and expenses when cash is paid, modified accrual accounting has a unique approach. It recognizes revenues when they are both measurable and available to fund the year's expenditures, and it recognizes expenditures when liabilities are incurred.