Accrual and Modified Accrual Basis of Accounting Essay

Accrual and Modified Accrual Basis of Accounting - Essay Example It recognizes noncash business engagements that include accruals, deferrals, and amortizations. This accounting basis recognizes expenditures rather than expenses (Ruppel, 2013). It recognizes revenues during the periods in which they are prone to accrual that implies their measurability and availability. Modified accrual accounting requires that incurred expenditures be recognized in the period in which their related transactions occurred (Ruppel, 2010). On the other hand, revenues are only available if they can be collectible within the current period (Wiley Cpa Exam Review 2013, Financial Accounting and Reporting, 2012). Once cash has been spent, the expenditures become measurable thereafter. A comprehensive annual financial report has three sections: the introductory segment, financial section and the section with statistical data (Ruppel, 2010). The introductory section entails the transmittal letter, while the financial section comprises a number of aspects that include the independent auditor’s report, schedules, financial statements, notes regarding financial statements, management views and analysis and the required supplementary information (Ruppel, 2010). The statistical section entails additional information relating to finances, economy, and