Under the modified accrual basis of accounting, expenditures generally are not recognized until:
A) They are paid in cash.
B) An obligation is incurred that will be paid from currently available financial resources.
C) Goods or services are ordered.
D) They are approved by the legislative body.

Question

Quizplus · Accepted Answer

Under the modified accrual basis of accounting, expenditures are recognized when an obligation is incurred that will be paid from currently available financial resources. This means that the government has committed to paying for the expenditure and has the resources to do so in the current period, even if payment has not been made yet. This is different from the accrual basis of accounting where expenditures are recognized when the goods or services have been received, regardless of whether payment has been made or not.

Under the Modified Accrual Basis of Accounting, Expenditures Generally Are