Accounting Rules Flashcards
1
Q
Two Accounting Methods
A
(1) Cash Method (people)
2) Accrual Method (businesses
2
Q
Cash Method
A
INCOME = When payment is actually or constructively RECEIVED
DEDUCTION = Available when taxpayer has PAID the amount in question
3
Q
Accrual Method
A
INCOME = When ALL EVENTS have occurred that fix the right to payment and the amount can be determined with REASONABLE ACCURACY
DEDUCTION = Available when ALL EVENTS have occurred that fix the obligation to pay, the amount can be determined with REASONABLE ACCURACY, and ECONOMIC PERFORMANCE with respect to the liability has occurred
4
Q
Taxable Year: Calendar Year
A
Ends on December 31
5
Q
Taxable Year: Fiscal Year
A
Ends on the last day of any month other than December
