Question

please a need some help with this long written question:

due Sep 25 This is a graded discussion: 100 points possible Chapter 1-4 discussion board 55 S5 During our study of governmental funds, we were introduced to a new accounting treatment called modified accrual accounting. Please identify one accounting treatment that differs between accrual accounting and modified accrual accounting. Explain why you feel the modified accrual treatment is better or worse for the readers of the financial statements. Remember, each forum requires at least 3 posts-one original post and two responses to co- learners-to receive full credit. The posts should be entered directly into the discussions, not in the form of an attachment. Attachments should be held to a minimum and used only if needed for illustration, e.g., chart, image, or table. The first post will serve as your original post in reply to the discussion instructions and must be 100-200 words in length. The remaining two posts are to be responses to co-learners' posts. These posts must be 50-100 words in length. They must contribute to the conversation through supportive addition or critique. When the responses are of the latter, they must argue the issue, never the author. Follow up responses can be posted until the unit closes Search entries or author Unread Subscribe Reply (917) 533-0381 (419) 270-5965 (302) 650-0443 (7861 282.6700 haroldehilawgroup.com [email protected] [email protected]

Answer 1

Accounting treatment that differs between accrual accounting and modified accrual accounting :

In accrual accounting revenues are recorded only when they are earned and expenses are recorded when they are incurred. While the modified accrual accounting is a mixture of cash accounting with accrual accounting. It distinguises the transactions as short term events and long term events and then applies cash basis accounting for short-term events and accrual accounting for long term events. In short term events , inventory, account receivables and payables, etc are included and in long term events, long term debts, assets are included.

For example, when credit sale is made

In accrual accounting the accounts receivables is debited and sales account is credited even though cash is received or not. But in modified accrual accounting the transaction is recorded only on receipt of cash because it is a short term event and therefore cash basis is applied. This is the difference of accounting treatment between accrual accounting and modified accrual accounting.

The modified accrual accounting method is worse for the readers of the financial statements because it does not provide genuine information to the readers. In order to provide correct information accrual accounting is only used. Modified accrual accounting is introduced by Government Accounting Standards Board (GASB) and doesn't comply with Generally Accepted Accounting Principles (GAAP). This is the reason why most of the other companies do not follow modified accrual accounting. Only for the Government funds modified accrual accounting is used. Government wide state uses accrual accounting.

The modified accrual accounting is also worse while making decisions. In other way it is said that modified accrual accounting is influencing the readers of the financial statements by providing false information.

The only way where modified accrual accounting is best at is by providing current period information or current information which for the present status. Using the modified accrual accounting, the accounts can be generated for the current period where it stands.

The difference of accrual accounting and modified accrual accounting is worst at comparing our financial statements with that of others within the peers due to change in accounting treatment.