Recognizing revenues when measurable and available for paying current obligations and expenditures when incurred describes which basis of accounting?

• A. Cash Basis
• B. Accrual Basis
• C. Modified Accrual
• D. Budgetary Basis

Answer: (C)

The described approach is the modified accrual basis. In governmental funds, revenues are recognized when they are measurable and available to pay current obligations, meaning they can be used to finance the current period’s expenditures. Expenditures are recognized when the related liability is incurred, aligning with the purpose of using current financial resources. This hybrid method differs from cash basis (recognizes revenues and expenditures only when cash is received or paid) and full accrual (revenues and expenses recognized when earned or incurred regardless of availability). It also isn’t a budgetary measurement, which is separate from the GAAP financial reporting basis. So, the scenario matches the modified accrual basis.