Under modified accrual accounting, when should an expenditure be recorded to recognize interest on long-term debt?
A) At the end of each accounting period.
B) When payment is due within one fiscal year.
C) When it reduces current financial resources.
D) When cash is available to pay the interest.
E) When the interest is incurred.

Question

Quizplus · Accepted Answer

Under modified accrual accounting, expenditures are recognized when they reduce current financial resources, which means when the interest payment is due and payable, not necessarily when incurred.

Under Modified Accrual Accounting, When Should an Expenditure Be Recorded