Question

Assume you are a small business owner and operate within your own home. You must determine which accounting method and accounting period to use. What would you choose? Explain your reasoning.

Your reflection should be at least 150 words.

Answer 1

If you are a small business owner then one of the accounting method that can be used is cash basis method where in the accounting is done on the basis of actual cash received an actual cash expensed. This type of accounting is very simple and do not have any difficulties on following.

Also one of the other accounting method is accrual basis where in accounting can be done as per the accrued basis whether revenue and expenses are to be recorded on the accrual of them even if it is not received or spent. This type of accounting is very cumbersome and time consuming.

Also accounting period that should be used by the business owner should be the actual accounting year or the financial year which is being followed by small or large business owner because this will give a better picture of the accounting as a transactions done by them can be with large business owners who follow financial year as accounting year and thereby can create a confusion if both of them uses a different accounting year. Also the accounting year should be same for all the years and consistent.

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