Under the modified accrual basis of accounting, revenues should be recognized when they are:
A) Authorized by the budget ordinance
B) Earned and measurable
C) Measurable and available to finance expenditures of the current period
D) Realized through collection

Question

Quizplus · Accepted Answer

Under the modified accrual basis of accounting, revenues should be recognized when they are measurable and available to finance expenditures of the current period. This means that the revenue must be earned and measurable, and must also be expected to be received in cash or other usable form within the current fiscal period, or soon enough thereafter to be used to pay current liabilities. Authorization by the budget ordinance is a necessary step for legally recognizing revenue, but it is not sufficient in itself to meet the recognition criteria. Realization through collection is not a criteria for recognizing revenue under modified accrual accounting.

Under the Modified Accrual Basis of Accounting, Revenues Should Be