Modified Cash Basis Accounting

The cash basis of accounting which has been modified to deviate from the simple cash receipts-cash disbursements criteria by recognizing and recording certain items that otherwise are accrual in nature. The deviation may be the result of preference of the owner, or, more commonly, the result of tax or other laws. The most common modifications would be recognizing, and recording in the statement of financial position, the purchase of capital assets; and recognizing, and recording in the statement of income, the depreciation charges (which are non-cash expenses). Commonly referred to as cash accounting, notwithstanding the inclusion of certain accrual items.

Authorization Path: 2.2.5.2.43.1