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    lhamry0604's Avatar
    lhamry0604 Posts: 1, Reputation: 1
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    #1

    May 7, 2009, 09:48 PM
    Converting accrual to cash basis financials
    Why do you have to convert accrual to cash basis financials for taxes?
    Booky's Avatar
    Booky Posts: 24, Reputation: 1
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    #2

    May 10, 2009, 02:57 PM

    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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