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

Question

Quizplus · Accepted Answer

Under modified accrual accounting, an expenditure to recognize interest on long-term debt should be recorded when payment is due. This is because modified accrual accounting recognizes revenues when they become available and measurable, and recognizes expenses when they become due and payable. Since interest on long-term debt is typically due at set payment dates, it should be recorded as an expenditure at that time.

Under Modified Accrual Accounting, When Should an Expenditure to Recognize