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Cash Method of Accounting

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Cash Method of Accounting
One of the two most common methods of accounting, the other of which is the accrual method defined elsewhere in this glossary. Under the cash method of accounting, income is reported in the tax year actually or constructively received and expenses are deducted in the tax year paid.


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that sell only services, the cash method of accounting can be a good choice.
74) Stated simply, the tax treatment of borrowing is contrary to the cash method of accounting that is followed by the huge majority of taxpayers.
It would increase in value, but would produce neither taxable income nor payments considered income under the cash method of accounting.
 
 
 
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