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 the choices are true.

Question

Quizplus · Accepted Answer

An overall accounting method is initially adopted on the first return filed for the business. This statement is true as businesses are required to choose an accounting method that best reflects their income and expenses for tax purposes. The chosen method must be used consistently from year to year, and any changes to the method must receive approval from the IRS. The cash method can be adopted by businesses as well as individual taxpayers, and the accrual method can be adopted by both corporate and individual taxpayers. The statement regarding needing permission from the commissioner is not accurate.

Which of the Following Is a True Statement About Accounting