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Established Community Backer ***

Re: Does Your Business Use Cash or Accrual Method Accounting?

It is not just the writing off to bad debt as it is more the forward looking having to claim as income yet not having collected the cash to pay the taxes in that income. You bill a client in December yet they pay in May, sure they are paying and you know they are going to pay, but you have to front a tax due prior to having the money in hand that caused you to have a tax due.

Big business, such as publicly traded corporations (even private such as TrUs) is required by the IRS to report accrual, they have no choice