Question

Can you use different methods for tax and finacial purposes? What is the purpose of doing this?

Answer 1

Answer: Generally, big business firms need to adhere to tanc accounting, while small business owners need to use the financicy accounting method of the tesc accounting method. The difference between accounting methods is the time between when selles and purchases are recorded on a discounteel basis. many smell businesses we fine ciccounting while using different accounting methods can have clifferent effects on their business. Accounting practices appear to refer to these basic rules, uncler which their financial records are cuso kept in the management. The internas Revenue Depardment needs tencation. It is important to decide which methocl to use. Considering the lacco, it is important to keep some kind

of record, but it cuso helps the information maneger to excellente the financial position of the company. financial accounts are particularly knoon as deposit method, companies will report the profit on the sale cmel the purchase account when they receive the purchase account, regarde less of whether the caesh was paid from the sale and whether the cash was paid for the purchase. Teve account Tuzo Alcounting re's often referred to a cash accounting. Thus, en ciclelition to related selles, clireet cash tran- sactions are carefully focusedl. Unless there are cash tocms actions.. companies do not record amy transaction, choosing am accounting methock for business accounting emel financial

reporting has the effect of taxing a small business because the parallel accounting method is often used to pay taxes, es es cuso a pawesi i