Why do you have to convert accrual to cash basis financials for taxes?
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Why do you have to convert accrual to cash basis financials for taxes?
Accrual accounting records income and expenses as they happen, not as they are paid. Cash accounting records only the cash received and paid for the period of the report.
When paying taxes, it is an advantage in some businesses to pay tax only on what they have actually received, versus what they hope to receive. This makes tax returns for cash basis preferred by some businesses.
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