Discussion:How to describe "other" method of acctg
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Discussion Forum Index --> Basic Tax Questions --> How to describe "other" method of acctg
Discussion Forum Index --> Tax Questions --> How to describe "other" method of acctg
| 2 September 2008 | |
| Taxpayer uses a hybrid method of accounting. Accrual method for purchases and sales of inventory, and cash for service income and regular operating expenses. On the tax return the "Other" box would be checked for method of accounting. What would be the proper description of this method (that fits in the space provided)? | |
| 2 September 2008 | |
| I would call it the "modified cash basis". Below is a definition from the CPA journal.
The modified cash basis is a hybrid method such combines features of both the cash basis and the accrual basis. Modifications to the cash basis accounting include such items as the capitalization of assets and the accrual of income taxes. If these modifications are made, the resulting balance sheet would include long-term assets, accumulated depreciation, and a liability for income taxes. The income statement would report depreciation expense and income tax expense. Modified cash basis financial statements are intended to provide more information to users than cash basis statements while continuing to avoid the complexities of GAAP. | |
