If WFO began business as a cash-method corporation in Year 1, in which year would it have first been required to use the accrual method?
A) Year 6.
B) Year 4.
C) Year 3.
D) Year 5.
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

A cash-method corporation is required to switch to the accrual method when its average annual gross receipts exceed $5 million for the prior three years. Assuming WFO exceeded this threshold in Year 5, it would be required to switch to the accrual method in Year 6.

If WFO Began Business as a Cash-Method Corporation in Year