What basis of accounting is used to account for the transactions of a government's permanent fund?
A)Full accrual basis of accounting.
B)Modified accrual basis of accounting.
C)Cash basis of accounting.
D)Budgetary basis of accounting.
Use the following information to answer Questions #14-16
Previously a local private-sector charity received a $1 million gift, the income from which was restricted to support activities for senior citizens.During the current year the endowment earned $40,000 of interest revenues, of which the charity designated $30,000 to support senior citizen activities.

Question

Quizplus · Accepted Answer

The use of the term "restricted" indicates that the charity is subject to the modified accrual basis of accounting. This means that only the $30,000 designated by the charity can be recognized as revenue, and the remaining $10,000 of interest earned cannot be recognized until it is designated for use. Therefore, the charity should only record $30,000 of revenues in the current year.

What Basis of Accounting Is Used to Account for the Transactions