The basis of accounting that should be used in preparing fund financial statements is:
A) Choice A
B) Choice B
C) Choice C
D) Choice D

Question

The basis of accounting that should be used in preparing fund financial statements is: 
A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D

Quizplus · Accepted Answer

The basis of accounting that should be used in preparing fund financial statements is the modified accrual basis. This recognizes revenue when it is measurable and available, and expenditures when the related liability is incurred. Choice A is incorrect because cash basis accounting is not appropriate for fund financial statements. Choice B is incorrect because full accrual basis accounting is not used for fund financial statements. Choice D is incorrect because tax basis accounting is not relevant for fund financial statements.

The Basis of Accounting That Should Be Used in Preparing