The modified accrual basis is a distinct system of accounting that contains financial statement elements that appear nowhere else. Among these are expenditures and fund balances.

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Revenues follow different recognition criteria between the two bases. There are additional differences; unlike accrual accounting, modified accrual accounting does not recognize long-term assets and long-term liabilities. Modified accrual basis is a distinct system of accounting that contains financial statements elements that appear nowhere else. Expenditures and fund balance are two examples. Expenses are not recorded.

The Modified Accrual Basis Is a Distinct System of Accounting