Under the modified accrual basis of accounting, which of the following revenues is recognized when it is both measurable and available?

Answer options:

Sales taxes collected by merchants 90 days after year-end

Property taxes collected 45 days after year-end

Income taxes refunded to taxpayers

Parking fines assessed but not expected to be collected for 6 months

How to approach this question

Recall the 'Measurable and Available' criteria for Modified Accrual revenues. 'Available' typically means collected within the current period or soon enough thereafter to pay current liabilities (standard is 60 days for property taxes).

Full Answer

B.Property taxes collected 45 days after year-end✓ Correct

Under modified accrual accounting (used by governmental funds), revenue is recognized when it is measurable and available. 'Available' is defined as collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For property taxes, GASB standards specifically define 'available' as collected within the period or within 60 days after year-end.

Common mistakes

Confusing full accrual (earned) with modified accrual (measurable and available).

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