Public Sector Management (PSM)
The modified accrual basis of accounting requires that only financial
transactions that are short-term in nature be reported. Examples of
modified accrual transactions that are different than full accrual transactions include the following:
- Long-term assets are shown as capital expenses when incurred.
- Long-term assets are reported in a different account group, with no depreciation reported.
- Long-term debt issued is shown as another financial resource, with
premium or discount reported as current financial resources.
- Long-term liabilities are reported in a separate account group, with no premium or discount reported.
- Investments are not adjusted to reflect market value.
- Non-current revenues and expenses are not included in the calculation
of net income and are not carried forward into the fund balance.