Question

Which of the following is a true statement regarding the cash method of accounting?
A A check does not constitute “payment” until it's cashed.
B
Cash basis taxpayers generally take deductions in the year
items are actually or “constructively” paid.
C
If a taxpayer can unconditionally demand income from
another party, it's not taxed to the taxpayer until demand is
made.
D
Receipt of a check by the taxpayer's agent is considered
receipt by the taxpayer.

Answer 1

in cash basis the transactions are recognised when the cash/ check is recieved or paid by the entitiy and not when they are accrued. This method is said to be inferior to accrual basis of accounting in which expense or income is recognised when it is actually earned and not when it is paid or recieved.

in cash basis the taxpayer usually takes deductions in the year items are actually or constructively paid meaning when the cash is paid or recieved. The statement is correct as is concludes every principle of cash basis of accounting.

Hence statement B is True