A process used by a business to report income and expenses. Companies must choose between two methods acceptable to the IRS, cash accounting or accrual accounting. Cash accounting records income in the year it is received and expenses as they are paid. The accrual method records the income in the year it is earned even though it has not yet been received, and expenses are recorded as they are incurred even if they haven't been paid.
Related information about accounting method:
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The method by which income and expenses are reported for taxation purposes. The Internal Revenue Service requires taxpayers to choose an accounting ...
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- Cash vs. Accrual Accounting | Nolo.com
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- Internal Revenue Manual - 4.11.6 Changes in Accounting Methods
Ruling 90-38 - Although the Commissioner is authorized to consent to a retroactive accounting method change, a taxpayer does not have a right to a retroactive ...
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