Differentiate between accrual accounting and cash basis. Based on the type of business and the...
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Accounting
Differentiate between accrual accounting and cash basis. Based on the type of business and the clients accounting system, what is the impact when the revenue is recognized? Which option would you recommend for the client?
2. Based on the decision of accrual versus cash basis, describe when revenue would be recognized on the sale of inventory and how the accrual reporting differs from cash basis.
3. Determine the economic impact on the clients financial situation. Based on your decision, determine the potential tax liability, keeping in mind appropriate Internal Revenue Code and Treasury regulations.
4. Summarize the cash or accrual accounting method in relation to the selected business entity.
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