Difference between revisions of "Modified accrual accounting"
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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. | 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. | + | Modified accrual accounting is commonly used by governmental entities and larger non-profit organizations under [[fund accounting]] principles. |
[[Category:Accounting]] | [[Category:Accounting]] | ||
Latest revision as of 15:10, February 25, 2024
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 larger non-profit organizations under fund accounting principles.