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 means that when a business files its first tax return, it must select an accounting method to use for reporting its income and expenses. Once an overall accounting method is chosen, it generally cannot be changed without the permission of the Commissioner. However, certain changes in accounting method may be allowed without the Commissioner's permission under certain circumstances. The cash method can be adopted by individual taxpayers and some small businesses, while the accrual method can be used by both individuals and corporations.

Which of the Following Is a True Statement About Accounting