Which of the following businesses can use the cash method?
I.The Donner Group, a partnership with 3 equal partners, of which one is The Garden Corporation. Average revenues for the Donner Group, a consulting firm, over the last three years are $34,000,000.
II.The Mongoose Corporation, a computer software consultant that has average annual fees from services over the last three years are $2,100,000.

Question

Which of the following businesses can use the cash method?
I.The Donner Group, a partnership with 3 equal partners, of which one is The Garden Corporation. Average revenues for the Donner Group, a consulting firm, over the last three years are $34,000,000.
II.The Mongoose Corporation, a computer software consultant that has average annual fees from services over the last three years are $2,100,000.
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Quizplus · Accepted Answer

Businesses can use the cash method of accounting if their average annual gross receipts over the last three years do not exceed $25 million. As the average revenues of The Donner Group are $34,000,000, they cannot use the cash method. On the other hand, The Mongoose Corporation's average fees from services over the last three years are $2,100,000, which is below the $25 million threshold, so they can use the cash method. Therefore, only statement II is correct.

Which of the Following Businesses Can Use the Cash Method