The modified cash basis of accounting: generally recognizes revenues and expenses when cash is received or paid out. is the most acceptable accounting practice. generally recognizes revenues when sales are made or services rendered and recognizes expenses when they are incurred. does not allow the recording of non cash expenses such as depreciation. D Question 16 2 pts Failure to record the accrual of an asset or the accrual of a liability will: cause the accounting equation to be out of balance. always be canceled out in the coming fiscal period. affect only the balance sheet. affect both the income statement and the balance sheet