Question

What did you learn in general? Schedule C using the accrual method?

that US TAX

Answer 1

• Section C Accounting Method - An accounting method is the method which helps to determine how we report income and expenses on our return.
• An accounting method is selected when we first file our tax return. Three accounting methods are: Cash basis, Accrual basis & Hybrid method.
• Under the accrual method, we report income when they are earned and expenses when they are incurred. Under this method, income is recorded when the work is done rather than when the money is received.
• Until one is a smaller business taxpayer, he must use accrual method of accounting to record the inventory and their sales and purchases.
• Accrual basis accounting helps in achieving an accurate measurement of a company's periodic net income since it helps to match revenues and expenses related to the same accounting period. Under the accrual method, expenses are recorded in the year incurred, rather than when we actually paid it. Accrual basis is difficult than cash basis accounting. It needs a higher knowledge of accounting principles and procedures. But, it gives more accurate financial information, which is useful for an effective management of the business.