Which of the Following Businesses Is Prohibited from Using the Cash

question 61

Multiple Choice

Which of the following businesses is prohibited from using the cash receipts and disbursement method of accounting for tax purposes?

• A) Partnership with two individual partners with $9 million average annual gross receipts
• B) Personal service corporation with $8 million average annual gross receipts
• C) Corporation with $3 million average annual gross receipts
• D) None of the businesses are prohibited from using the cash method

---

Definitions:

Cash Over

A situation where the amount of cash on hand is greater than the expected amount, indicating possible errors or oversight.

Cash Short

A situation where the actual cash on hand is less than the expected amount, often due to errors or theft.

Income Statement

A financial statement that provides a summary of a company's revenues, expenses, and profitability over a specific period.

Petty Cash Receipts

Petty cash receipts are documents that record the disbursements made from a petty cash fund for small, incidental expenses.