Homework Answers
Solution
There are two main accounting methods used for record keeping
1. cash basis
2. Accrual basis
since in the given case the taxpayer became ineligible to use cash basis method of accounting , hence he has to follow accrual basis which results in change in accounting method.
Calculation of amount of adjustment due to change in accounting method
Particulars Amount(in $)
opening balance of accounts receivable 240000
opening balance of accounts payable 80000
Amount of adjustment to income 160000
There is no adjustment to stock in hand due to change in accounting method.
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LO.2. In 2019, the taxpayer became ineligible to use the cash method of accounting. At the...
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1)
2)
3)
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