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Question

Which one of the following is NOT an advantage of the cash method for reporting income?-Taxpayers have some control over when income is received and expenses are paid which assists in tax planning.-The cash method generally simplifies the computation of income.-Taxpayers are able to deduct expenses in the period incurred, which may be before they actually pay them.-Taxpayers recognize income in the period they receive it, giving them the wherewithal to pay the tax.

Answer

Taxpayers recognize income in the period they receive it, giving them the wherewithal to pay the tax. This is not an advantage of the cash method for reporting income.

  • Identify the four options provided.
  • Determine which option is not an advantage of the cash method.