Modified cash basis accounting is also commonly known as?

• A. Modified accrual
• B. Pure cash basis
• C. Accrual basis
• D. Tax basis accounting

Answer: (A)

Modified cash basis accounting blends cash timing with some accrual features, which is why it’s commonly described as modified accrual. In this approach, revenues are recognized when they are measurable and available to finance current operations, and expenditures are recognized when the related liability is incurred, not just when cash is paid. This sits between pure cash basis (recognizes only cash transactions) and full accrual (recognizes revenues and expenses when earned or incurred for all items). It’s not tax basis accounting, which follows tax rules. The hybrid naming reflects this middle ground, so the term that best captures it is modified accrual.