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:

Restaurant Manager

A person responsible for overseeing the daily operations of a restaurant, including food quality, customer service, and staff management.

Instrumental Support

Practical or tangible aid provided to someone, often in the form of resources or services, to help them achieve goals or solve problems.

Job Setting

The environment, conditions, and context in which an individual's employment takes place, including physical location, company culture, and job role.

Equipment

The tools, machinery, or other apparatus used for specific purposes, especially in professional or industrial settings.