Which of the following best describes the combined accounting approach of modified accrual?

The combined accounting approach of modified accrual is best described by recognizing both cash and certain accruals, which means that revenues and expenditures are recorded when they become measurable and available, rather than strictly when cash is exchanged. This approach is particularly significant in governmental accounting, where it is necessary to track financial performance while ensuring that resources are available for current obligations.

Modified accrual accounting allows for the recognition of revenues when they are both earned and available for expenditure, meaning they are collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Expenditures are recorded when a liability is incurred, with exceptions for long-term assets, which might be capitalized as they provide benefits beyond the current fiscal period.

This method strikes a balance between cash basis accounting, which only recognizes cash transactions as they occur, and full accrual accounting, which records revenues when earned regardless of cash. Thus, it provides a more accurate picture of a government's short-term financial status while ensuring accountability for public resources.