Section 1: 30–40%1C1

Measurement Focus and Basis of Accounting

Exam insight

Government accounting runs two measurement focuses and two bases of accounting, depending on which fund you're in. The question that comes up most asks which basis a given fund uses. Governmental funds use modified accrual; proprietary and fiduciary funds use full accrual. Map each fund type to its basis and the 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

Patterns in this topic

The exam re-skins the same archetypes. Recognize these here, then drill them in the Pattern Lab.

The Modified Accrual SwitchGovernmental funds run on modified accrual: revenue when measurable and available (60 days), capital outlay as an expenditure, and no depreciation.

Exam tip

Study smarter: before you expand each card, cover the screen and try to recall what the concept means from its title alone. Retrieving it from memory builds the recall the exam actually tests, and it beats re-reading.