When a special revenue fund accounts for grants that are awarded on a reimbursement basis,revenues are recognized only after expenditures have been recognized.

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When grants are awarded on a reimbursement basis, the organization must first incur expenditures and then receive funds from the grantor to cover those expenses. Therefore, the revenues are recognized only after the expenditures have been recognized. This is in line with the matching principle of accounting, which requires that expenses and related revenues be recognized in the same period.

When a Special Revenue Fund Accounts for Grants That Are