please explain the difference between the modified accrual method and the full a
ID: 2655642 • Letter: P
Question
please explain the difference between the modified accrual method and the full accrual method?
"Under modified accrual accounting, the term expenditure is used instead of expense. Expenditures are generally recognized when the liability is incurred." Why do you think this difference is made in governmental accounting?
as you probably saw in your Statement of Revenues, Expenditures and Changes in Fund Balances, the General Fund is always considered to be a major fund. When are other governmental funds considered major?
This is for a non profit accounting class:)
Explanation / Answer
Modified accrual accounting is the method in which revenues are recognized in the period in which they become available and expenditure is recognized in the period in which the liability is created.
difference between expenditure and expense:
Amounts spent out of Government funds are termed as expenditure and amounts spent for goverment activities are termed as expenses. This difference is made in the government accouting because nothing is earned out of such amounts spent.
Other Government funds that are considered major basing on the amount of financial activity or in case certain bench marks are set reaching on which the funds are to be reported separately considering them as a major fund.
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