Which of the Following Taxpayers Is Required to Use the Accrual

question 40

Multiple Choice

Which of the following taxpayers is required to use the accrual method of accounting?

• A) A retail business with average annual gross receipts of $8,000,000.
• B) A medical doctor with average annual gross receipts of $2 million.
• C) An insurance agency with average annual gross receipts of $5 million.
• D) All of the above are required to use the accrual method.
• E) None of the above is required to use the accrual method.

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Definitions:

Funding Stages

The various phases of financial support provided to startups and businesses, which typically progress from seed funding to later-stage investments.

Dutch Auction IPO

A method of initial public offering in which the price of the shares is determined after taking in all bids and finding the highest price at which the total offering can be sold.

Private Placements

The sale of securities to a relatively small number of select investors as a way of raising capital.

Bond Issue

entails a corporation or government raising funds by selling bonds to investors, which are debt securities obliging the issuer to pay interest and repay the principal at maturity.