The Taxpayer Had Incorrectly Been Using the Cash Method of Accounting.For

question 62

Multiple Choice

The taxpayer had incorrectly been using the cash method of accounting.For 2019, the company voluntarily changed to the accrual method.The adjustment due to the change in method as calculated at the beginning of 2019 was $120,000 (positive) .The adjustment as calculated as of the end of 2019 was $80,000 (positive) .As a result of the change in method, the company must:

• A)Increase its income for 2019 by $120,000.
• B)Increase its income for 2019 by $80,000.
• C)Increase its income for 2019 by $30,000.
• D)Increase its income for 2019 by $40,000.
• E)None of these.

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Definitions:

Public Utilities

Companies that provide essential services such as water, electricity, and telecommunications to the public, usually subject to government regulation.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of operations and output increases.

Making a Profit

The financial gain obtained when the revenue generated from a business activity exceeds the expenses, taxes, and costs associated with maintaining the operation.

Breaking Even

The point at which total costs and total revenue are equal, meaning no net loss or gain has been made.