If an entity adopts a modified accrual basis of accounting, its measurement focus will automatically be on current financial resources.

Question

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Under modified accrual basis of accounting, the measurement focus is on current financial resources, which includes cash, receivables, and other short-term assets that can be converted into cash within a short period of time. This is because modified accrual basis recognizes revenues when they become available and measurable, and expenses when they are incurred, as long as they are related to current financial resources.

If an Entity Adopts a Modified Accrual Basis of Accounting