Question

The taxpayer performs services with payment due from the customer within 30 days. All customers pay within the time limit. What would be the benefit to the taxpayer using the cash method of accounting rather than the accrual method.

Answer 1

Answer:

Defer Income

Explanation:

• They generally report profits in the year accrued under an aggradation accounting method, then exclude or subtract costs in the year sustained.

• Include all types of money you directly or constructively earn during your tax year in the gross income, using the cash form.

• Therefore, as consumers or suppliers compensate after the taxpayer delivers the goods or conducts the programs, the taxpayer may delay profits by using the cash accounting method.