What accounting method (cash or accrual) would you recommend, Financial Accounting

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What Accounting method (cash or accrual) would you recommend for the following businesses?
a. A gift shop with average annual gross receipts of $900,000
b. an accounting partnership with annual gross receipts of $12 million.
c. A drywall subcontractor who works on residences and has annual gross receipts of $3 million.
d. An incorporated insurance agency with annual gross receipts of $6 million.

Ross company is a computer consulting firm. the company also sells equipment to its clients. the sales of equipment account for approximately %40 of the company's gross receipts. the company has consistently used the cash method to report its income from services and the accrural method to report its income for the sale of inventory. In June of the current year, Ross's accountant discovered that as a small business, the company qualifies to use the cash method for all of its activities. The company is a calendar year taxpayer. As of the begininngin of the current year, the company had $120,000 of inventory on hand and $90,000 aof accounts receivable from the sales of equipment and $30,000 of receivables from the counseling services.
a. Compute the adjustment due to the change in accounting method.
b. Is the adjustment postive or negative? explain.
c. when can the adjustment be taken into account in computing taxable income?

 


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