As a general rule, C corporations must use the cash method of accounting. However, under several exceptions to
this rule (e.g., average annual gross receipts of $25 million or less for the most recent 3-year period), a C corporation can use the accrual method.

Question

Quizplus · Accepted Answer

C corporations are generally allowed to use either the cash or accrual method of accounting, but there are specific circumstances, such as having average annual gross receipts of more than $25 million for the most recent 3-year period, that may require the use of the accrual method. The statement incorrectly suggests that the cash method is the default with limited exceptions for the accrual method.

As a General Rule, C Corporations Must Use the Cash