CPA Exam LabFAR
Section 1: 30–40%1C1

Measurement Focus and Basis of Accounting

Government accounting uses two different measurement systems depending on which statements you are looking at — a concept unique to state/local governments. This duality is heavily tested. If you mix up economic resources with current financial resources, every journal entry and balance will be wrong.

What AICPA Wants You to Know

  • 1Explain the two measurement focuses used in governmental accounting
  • 2Distinguish between accrual basis and modified accrual basis of accounting
  • 3Apply the correct measurement focus/basis combination to each type of fund
  • 4Define 'available' for purposes of modified accrual revenue recognition
  • 5Explain how expenditures are recognized under modified accrual