Modified accrual accounting

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In accounting, modified accrual accounting (also called modified cash accounting), is a hybrid form of cash accounting and accrual accounting.

It generally works like cash accounting, in that revenues are recorded when payment is received, and expenses are recorded when payment is made. However, like accrual accounting, long-term assets are capitalized and subject to depreciation or amortization, and long-term liabilities are recorded as debt and reduced as payments are made.

Modified accrual accounting is commonly used by governmental entities and non-profit organizations.