Question

Which of the following is a true statement about accounting for business activities?A. An overall accounting method can only be adopted with the permission of the Commissioner.B. An overall accounting method is initially adopted on the first return filed for the business.C. The cash method can only be adopted by individual taxpayers.D. The accrual method can only be adopted by corporate taxpayers.E. None of these is true.

Answer 1

Answer:

The correct answer is letter "B": An overall accounting method is initially adopted on the first return filed for the business.

Explanation:

After filling the tax return for the very first time, a company may be able to determine what actions must be taken in order to maximize profits for the upcoming years. In that sense, to report an optimal return according to the organization's activities, an accounting method is selected to file revenues and expenses. Among the main methods there are, we can identify accrual accounting and cash accounting.