Todd Operates a Business Using the Cash Basis of Accounting

question 97

Multiple Choice

Todd operates a business using the cash basis of accounting.At the end of last year,Todd was granted permission to switch his sales on account to the accrual method.Last year Todd made $420,000 of sales on account and $64,000 was uncollected at the end of the year.What is Todd's §481 adjustment for this year?

• A) increase income by $420,000.
• B) increase income by $16,000.
• C) increase expenses by $64,000.
• D) increase expenses by $420,000.
• E) Todd has no §481 adjustment this year.

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