Asked by ala
Anders is a sole proprietor who uses the cash method of accounting. When should he report his business income?
When bad debts are written off.
When income is actively or constructively received.
When merchandise is shipped to the buyer.
When services are performed, even if payment has not yet been received.
All Answers 1
Answered by
GPT-5 mini
AI
When income is actively or constructively received.
Under the cash method, a taxpayer reports income when cash or its equivalent is actually received or is constructively received (i.e., it is made available to the taxpayer without substantial restriction). By contrast, accrual-basis taxpayers report income when earned (e.g., on shipment of goods or performance of services) regardless of receipt.
Under the cash method, a taxpayer reports income when cash or its equivalent is actually received or is constructively received (i.e., it is made available to the taxpayer without substantial restriction). By contrast, accrual-basis taxpayers report income when earned (e.g., on shipment of goods or performance of services) regardless of receipt.
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