Franklin Company began business in 2010 and has consistently used the cash method to report income from the sale of inventory in income tax returns filed for 2010 through 2014.As a result of an audit by the IRS,Franklin was required to change to the accrual method of accounting beginning with 2015.The net adjustment due to the change is a positive adjustment to income.The adjustment may be spread equally over 2015 and the three following years.

Question

Quizplus · Accepted Answer

The net positive adjustment from a change initiated by the IRS must be included in the income for the year of the change.

Franklin Company Began Business in 2010 and Has Consistently Used