In the case of an accrual basis taxpayer, an item of income:
A) Is not recognized until cash is received.
B) From services is never recognized until the services are performed.
C) Is not recognized if the customer can return the goods.
D) Is recognized when all the events have occurred to fix the taxpayer's right to receive the income and the amount of the income can be determined with reasonable accuracy.
E) None of the above.

Question

Quizplus · Accepted Answer

An accrual basis taxpayer recognizes income when all the events have occurred to fix the taxpayer's right to receive the income and the amount of the income can be determined with reasonable accuracy. This means that income is recognized when it has been earned, regardless of when cash is received or when services are performed. The possibility of a customer returning goods does not affect the recognition of income for an accrual basis taxpayer.

In the Case of an Accrual Basis Taxpayer, an Item