Modified Accrual Accounting

Modified accrual accounting is a method used primarily by government entities to record financial transactions. It combines elements of cash and accrual accounting but recognizes revenues when they become measurable and available, and expenses when they are incurred. This approach helps ensure that resources are allocated and reported accurately in the periods they are actually usable or owed, providing a clear picture of financial health. Unlike pure accrual accounting, it emphasizes current financial position over future obligations, making it suitable for government budgets and public sector reporting.