Question

Which of the following best describes the modified accrual approach used to record interest income earned by individual taxpayers from an investment​ contract?

A. Interest income is recorded when received unless it was reported in a previous period.

B. Interest​ income, regardless of whether the interest is received or​ receivable, is reported on each anniversary date of the investment contract unless it was reported in a previous period.

C. Interest​ income, regardless of whether the interest is received or​ receivable, is recorded on the last day of the fiscal period of the investment contract unless it was reported in a previous period.

D. Interest​ income, regardless of whether the interest is received or​ receivable, is recorded based on the calendar year unless it was reported in a previous period.

Answer 1

Option B is correct.

Out of the above, best describes the modified accrual approach used to record interest income earned by individual tax payers from an investment contract is:

Interest income, regardless of whether the interest is received or receivable, is reported on each anniversary date of the investment contract unless it was reported on the previous year.

Because modified accrual approach is a combo of cash basis and accrual basis.

Expenditures are recorded whenever it is incurred.

Incomes are recognised whenever they become fully available and measurable