When filing their tax returns, almost all individuals use the __________ method.
A. accrual
B. cash receipts and disbursements
C. recognition
D. accounting
is it B
I agree
To determine the correct answer to this question, let's break down the options and explain each one:
A. Accrual: The accrual method of accounting recognizes income and expenses when they are incurred, regardless of when the cash is actually received or paid. While some businesses use this method for tax purposes, it is not commonly used by individuals when filing their tax returns.
B. Cash receipts and disbursements: This method accounts for income when it is received and expenses when they are paid in cash. It does not consider accruals or non-cash transactions. This method is commonly used by individuals when filing their tax returns because it aligns with how they receive and spend money.
C. Recognition: The recognition method is not specific to tax accounting and is used to determine when revenue and expenses should be recorded in financial statements. It is not typically used by individuals when filing their tax returns.
D. Accounting: This option is too vague to determine the specific method. Accounting encompasses various principles, methods, and systems used to record, classify, and analyze financial information.
Based on the provided options and the explanation for each, it is clear that the correct answer is indeed B. Cash receipts and disbursements.