Exam 27: Accounting Periods and Methods

Alvin,a practicing attorney who also owns an office supplies store,may use the cash basis for his legal practice and the accrual basis for his office supplies store.

A business which provides a warranty on goods sold will deduct a reserve for warranty expense consistent with the reporting on its financial statements.

A newly married person may change tax years to conform to that of his or her spouse so that a joint return may be filed.

A taxpayer must use the same accounting method on the personal tax return that the taxpayer uses in the taxpayer's trade or business.