Under Modified Accrual Accounting, When Should an Expenditure Be Recorded

question 75

Multiple Choice

Under modified accrual accounting, when should an expenditure be recorded to recognize interest on long-term debt?

• A) At the end of each accounting period.
• B) When payment is due within one fiscal year.
• C) When it reduces current financial resources.
• D) When cash is available to pay the interest.
• E) When the interest is incurred.

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Definitions:

Interest Amount

the sum paid or charged for the use of money or for borrowing money.

Periodic Interest Rate

The interest rate charged or earned over a particular period of time, often expressed as a percentage.

Annual Percentage

Often referred to in context of the annual percentage rate (APR), it represents the annual rate charged for borrowing or earned through an investment.

Return Requirement

The minimum rate of return an investor expects to achieve on an investment, influencing the types of assets included in their portfolio.