Not-for-profit organizations and governmental organizations operate under somewhat different bases of accounting. Generally, not-for-profit organizations are required to use accrual accounting while governmental organizations are required to use modified accrual accounting for governmental funds and accrual accounting for proprietary funds. The accrual basis of accounting recognizes revenues in the accounting period in which they are earned and become measurable. Expenses should be recognized in the period incurred, if measurable. The modified accrual basis of accounting recognizes revenues in the period when they become both measurable and available to finance expenditures of the current period. Under the modified accrual basis of accounting, expenditures.
