The Only Difference Between Modified Accrual Accounting and Accrual Accounting

question 44

True/False

The only difference between modified accrual accounting and accrual accounting is the difference in the recognition of long-term assets and liabilities.

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Definitions:

Prepaid Rent

An asset account that represents rent payments made in advance of the rental period to which they relate.

Normal Balance

Normal Balance refers to the typical or expected balance side (debit or credit) of an account based on double-entry bookkeeping principles.

Financial Statement

Formal records that outline the financial activities and condition of a business, including the balance sheet, income statement, and cash flow statement.

Permanent/Temporary

Refers to types of accounts in accounting, where permanent accounts show cumulative amounts that carry over to future periods, and temporary accounts are closed at the end of each period.