Section 1: 30–40%1C1
Measurement Focus and Basis of Accounting
Government accounting uses TWO different measurement focuses and TWO different bases of accounting depending on which fund you're in. The AICPA's most common trap: asking which basis a specific fund uses. Governmental funds use modified accrual; proprietary and fiduciary funds use full accrual. Get the fund types mapped to their bases and this topic becomes manageable.
What AICPA Wants You to Know
- 1Explain the two measurement focuses used in governmental accounting
- 2Distinguish between accrual basis and modified accrual basis of accounting
- 3Apply the correct measurement focus/basis combination to each type of fund
- 4Define 'available' for purposes of modified accrual revenue recognition
- 5Explain how expenditures are recognized under modified accrual