The Accrual Method Generally Is Required for the Following Types

question 4

Multiple Choice

The accrual method generally is required for the following types of businesses:

• A)A real estate management company, operating as an S corporation, with over $10 million of gross receipts.
• B)An incorporated public accounting firm with gross receipts in excess of $5 million.
• C)A partnership that has a partner that is an S corporation.
• D)A grocery store with average annual gross receipts of $800,000.
• E)None of the above.

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Definitions:

Balance Sheet

A statement detailing an organization's assets, liabilities, and owners' equity on a certain date.

Sales On Account

Transactions in which a customer purchases goods or services but payment is delayed, typically recorded as receivables on the seller's balance sheet.

Cost Of Goods Sold

Direct costs attributable to the production of the goods sold by a company, including material and labor costs.

Current Ratio

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, by comparing current assets to current liabilities.