The Taxpayer Had Incorrectly Been Using the Cash Method of Accounting

question 26

Multiple Choice

The taxpayer had incorrectly been using the cash method of accounting. For 2018, the company voluntarily changed to the accrual method. The adjustment due to the change in method as calculated at the beginning of 2018 was $120,000 (positive) . The adjustment as calculated as of the end of 2018 was $80,000 (positive) . As a result of the change in method, the company must:

• A) Increase its income for 2018 by $120,000.
• B) Increase its income for 2018 by $80,000.
• C) Increase its income for 2018 by $30,000.
• D) Increase its income for 2018 by $40,000.
• E) None of the above.

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Definitions:

Strategic Alignment

The process of aligning an organization's resources and actions with its strategic objectives to achieve long-term goals.

Target Forecasting

The process of estimating future sales, revenue, or other quantitative metrics based on historical data, market trends, and business analysis.

Replacement Selection

The process of identifying and selecting a candidate to replace an existing employee within an organization.

Mission Statement

A brief description of an organization's fundamental purpose and guiding principles, intended to inform its strategic vision and direction.