Do both modified accrual accounting and accrual accounting recognize expenditures/expenses when a liability is incurred?

Both modified accrual accounting and accrual accounting indeed recognize expenditures or expenses at the point when a liability is incurred.

In accrual accounting, expenses are recognized when they are incurred, regardless of when the cash is paid. This approach ensures that the financial statements reflect the economic activities of an organization as they happen, providing a more accurate picture of its financial performance and position.

Modified accrual accounting, often used by governmental entities, applies a similar principle but with some specific nuances related to revenues. Under this method, expenditures are recognized when the related liability is incurred, much like in full accrual accounting, ensuring that the financial statements provide insight into current obligations and resources available to meet those obligations.

Therefore, the assertion that both modified accrual accounting and accrual accounting recognize expenditures or expenses when a liability is incurred is indeed true, as it aligns with the fundamental principles of these accounting methods.